Major gains on 2017 proposals signal growing concern over financial impacts of climate change
Shareholder advocates view high votes and corporate commitments on climate policies during 2017 proxy season as evidence that unchecked GHG emissions are seen as serious and material risks by both corporations and investors.
NEW YORK, NY, MONDAY, JUNE 26TH, 2017 – On the heels of a series of significant votes, the 2017 proxy season represents a clear tipping point for shareholder advocates pressing for corporate progress on climate change.
This season saw a considerable number of majority and near-majority shareholder votes supporting proposals calling for meaningful climate action, along with a large number of resolution withdrawals as a result of corporate climate commitments.
“Without a doubt, the 2017 proxy season is being seen as historic by shareholders who have long advocated for climate change mitigation strategies, including science-based GHG emissions reductions,”said Christina Herman, Program Director for Climate Change at the Interfaith Center on Corporate Responsibility. “We attribute this to several factors, but the momentum is clear and we predict it will only grow in strength as companies struggle to integrate new climate realities into their business planning.”
ICCR members filed 66 resolutions directly related to the impacts of climate change in 2017. Many of these proposals were filed at multiple companies and were co-filed by a large group of investors.
Seventeen companies, mainly representing the energy sector, received a resolution requesting business planning for a 2-degree C temperature increase consistent with the Paris Climate Agreement. The resolution achieved a majority vote at two oil and gas companies, ExxonMobil and Occidental Petroleum, and at the remaining companies either achieved above 40% or was withdrawn due to promising corporate commitments. The exception in the group was Entergy Corporation, where the proposal still received the support of over one third of shareholders.
“Companies and their investors are increasingly accepting the need to formally integrate 2-degree goals into their business planning,” said Aaron Ziulkowski of Walden Asset Management. “While we have long advocated for climate change mitigation in the responsible investment community, this year we saw unprecedented support from a growing group of large mainstream asset managers who were able to push the votes over the top. Once that happens, these votes are no longer viewed as advisory and become much more of a mandate for meaningful climate action.”
Said Mary Minette of Mercy Investment Services, “Electric utilities, one of the largest sources of carbon pollution in the U.S., have great potential to reduce emissions through low-carbon energy investments. Investors believe significant progress and transformative change are both possible and practical for this industry and this year’s high votes at AES, Ameren, Southern and other energy companies – all between 40-50% - support our view.”
Another successful approach this proxy season that positively impacted votes on climate resolutions was engagement and a resolution with large asset managers seeking alignment of proxy voting with risks related to climate change. Investment managers such as Blackrock, Vanguard, Fidelity, BNY Mellon, T. Rowe Price, JPMorgan Chase and others that collectively vote hundreds of thousands of proxies on behalf of their clients, received the resolution. While these managers have historically opposed shareholders’ climate proposals, this year their changed voting policies led to new large votes.
Said Timothy Smith of Walden, who led this year’s investor campaign on proxy voting, “Investors highlighted for these companies the climate risk their portfolios faced as well as the inconsistency between their institutions’ environmental positions and their proxy voting records on climate change proposals. In a number of cases, these shareholder resolutions were withdrawn when these managers updated their proxy voting policies related to climate change. In addition, companies like BlackRock published forward-looking papers highlighting the importance of companies in which they owned shares confronting the risks climate change presented to their businesses."
ICCR also saw strong votes supporting resolutions calling for enhanced measurement and greater disclosure on methane leaks from companies involved in oil and gas production. Methane is known to be a dangerous greenhouse gas, roughly 86 times more potent than carbon dioxide, and a major spur to climate change.
“Last year’s massive methane leak in Aliso Canyon, CA drove home the importance of detecting and controlling these methane flares and leaks if we are to adhere to the 2-degree scenario,” said Allan Pearce of Trillium Asset Management. “Trillium was able to withdraw its resolution at EOG Resources because the company committed to enhanced measurement and disclosure on methane, which demonstrates to us that they see this not only for the environmental risk it represents, but as a clear business risk with serious financial implications.”
Concluded Herman, “This may have been a breakthrough year on investor action on climate, but when you consider what’s at stake, our advocacy on this is still at the ‘mission critical’ level. We plan to intensify our work with heavy emitting sectors, and press companies to look at their value chains for opportunities to accelerate the transition to a clean energy economy. The opportunities are many, but a massive and rapid energy transition is needed to avert impacts that will affect whole continents and their people.”
To see the results of all ICCR-sponsored climate resolutions for the 2017 proxy season, please visit this page on ICCR’s website.
About the Interfaith Center on Corporate Responsibility (ICCR)
Celebrating its 46th year, ICCR is the pioneer coalition of shareholder advocates who view the management of their investments as a catalyst for social change. Its 300 member organizations comprise faith communities, socially responsible asset managers, unions, pensions, NGOs and other socially responsible investors with combined assets of over $200 billion. ICCR members engage hundreds of corporations annually in an effort to foster greater corporate accountability. www.iccr.org