Climate Action 100+ investor signatories achieve major gains during 2020 U.S. Proxy Season

Corporate lobbying, governance proposals receive record levels of shareholder support at virtual annual general meetings and help to advance initiative’s aims 

Proposals filed by Climate Action 100+ investor signatories calling on major oil and electric power companies to disclose lobbying activities and improve governance on climate change garnered record levels of support at this year’s U.S. Proxy Season.

Due to the COVID-19 pandemic, the 2020 annual general meetings were virtual, forcing shareholders to join remotely by video conference. But, despite this change of forum, the vote outcomes were further evidence of the increasing concerns over the global climate crisis and its impact on shareholder value.

In a big win, a 53% majority of shareholders at Chevron Corp. voted for a resolution seeking a commitment from the oil giant to align its lobbying activities on climate policy with the goal of the Paris Agreement, which is to keep global average temperature rise to well-below 2 degrees Celsius with the aim of limiting it to 1.5 degrees. Filed by Climate Action 100+ investor signatory BNP Paribas Asset Management, this was the first climate-related proposal ever to win a majority of Chevron shareholder votes and it was the only proposal on Chevron’s 2020 proxy ballot that won a majority.

“This landmark vote at Chevron signals an evolution of investor concerns about corporate lobbying activities. Lobbying that is inconsistent with the goals of the Paris Agreement presents a direct threat to our portfolios, our economies, and our clients,” said Adam Kanzer, Head of Stewardship for the Americas, BNP Paribas Asset Management, the lead sponsor of the proposal. “More than fourteen large European companies, including BP, Shell and Total, have agreed to publish reviews of their trade associations, using the Paris Agreement as a benchmark. There is no reason why American companies can’t do the same.”

Similar lobbying proposals filed by Climate Action 100+ investor signatories won significant support, although short of a majority, at Duke Power with 42.4% in favor, ExxonMobil with 37.5%, Caterpillar with 34% in favor, General Motors with 33%, Delta at 45.9% and United Airlines at 31.4%. All of these companies are listed on the initiative’s focus list.

Climate Action 100+ investor signatories also filed proposals seeking independence between the position of board chair and CEO at a number of companies - based on the expectation that an independent board will take a longer-term view of the climate risks facing a company. Independent board chair resolutions won high votes at power companies Dominion Energy and Duke Energy at 46.6% and 40.1% respectively, at oil giant ExxonMobil with 32.7% and at Southern Company with 22%.

"Climate Action 100+ investor signatories are propelling the transition to net-zero emissions, calling on companies to account for their climate risks, disclose their lobbying, and act on climate,” said New York City Comptroller Scott Stringer, who filed proposals at several of the companies. “We were pleased to see encouraging vote results on proposals that we led at Dominion Energy, Duke Energy, and General Motors. Companies are on notice that investors demand climate action from the companies they own."

Despite Exxon’s concerted opposition, the refiled resolution seeking an independent board chair continued to receive significant support, 32.7%. “Companies that fail to address investors’ climate risk concerns ​do so at ​great peril,” said New York State Comptroller Thomas P. DiNapoli. “Exxon, in particular, has made itself an outlier for its refusal to seriously account for the demands of a lower carbon global economy. Climate Action 100+ investors will continue to make ground as we advance corporate reforms that address ​risks posed by the climate crisis.” ​

The Exxon Independent Chair vote did garner support from BlackRock, the world’s largest asset manager. Earlier this year, CEO Larry Fink promised to put sustainability and climate change at the center of its investment strategy and analysis.

BlackRock, an investor signatory of Climate Action 100+, also voted against the re-election of two ExxonMobil directors - and took the leading step of posting a public bulletin explaining its vote on the day of the AGM, stating that ExxonMobil was not making adequate progress on its climate goals.

The largest U.S. pension fund -- California Public Employees Retirement System (CalPERS) -- also voted against two ExxonMobil directors and publicly declared the board’s failure to disclose greenhouse gas emissions across the company’s full value chain. These directors received 83% and 84% support overall, a low outcome compared to the 95% support directors of US companies receive on average, according to Proxy Insight calculations.

“Climate change poses a systemic risk for investors like CalPERS. As fiduciaries, we need to hold boards accountable for setting targets for reducing the greenhouse gas emissions that cause global warming,” said Anne Simpson, CalPERS interim managing investment director, and a member of the global steering committee of Climate Action 100+. “We need a full count, not half measures. Not counting emissions does not make them go away.”

“Holding corporate management and boards publicly accountable for failure to support the transition to a 1.5 degree world is a step in the right direction,” said Mindy Lubber, Ceres CEO and President, and a member of the global steering committee of Climate Action 100+. Ceres supports the coordination of shareholder proposals filed by the initiative’s North America investor signatories. “The record high votes for Climate Action 100+ shareholder proposals and the near unanimous support for them from proxy advisors is clear evidence that capital market influencers are aligning around the goals of the Paris Agreement.”

Climate Action 100+, launched in 2018, aims to ensure the world’s largest corporate greenhouse gas emitters take necessary action on climate change. The companies include 100 ‘systemically important emitters’, accounting for two-thirds of annual global industrial emissions, alongside more than 60 others with significant opportunity to drive the clean energy transition. The initiative has grown to include more than 450 investor signatories with combined assets under management of more than $40 trillion. Signatories engage with companies through dialogues and wider engagement which often result in significant progress. However, when dialogues do not produce the momentum needed, signatories file shareholder proposals.

Following a combination of dialogue and shareholder proposals over the past several years, Southern Company, one of the largest electricity producers in the U.S., announced a breakthrough commitment at its annual general meeting in May. The company pledged to set a goal to achieve net zero emissions by 2050, a huge step for a large power company with operations in many states.

About Climate Action 100+

Climate Action 100+ is an investor initiative to ensure the world’s largest corporate greenhouse gas emitters take necessary action on climate change. More than 450 investors with more than $40 trillion in assets collectively under management are engaging companies on improving governance, curbing emissions and strengthening climate-related financial disclosures. The companies include 100 ‘systemically important emitters’, accounting for two-thirds of annual global industrial emissions, alongside more than 60 others with significant opportunity to drive the clean energy transition.

About Ceres

Ceres is a sustainability nonprofit organization working with the most influential investors and companies to build leadership and drive solutions throughout the economy. Through powerful networks and advocacy, Ceres tackles the world’s biggest sustainability challenges, including climate change, water scarcity and pollution, and inequitable workplaces. Ceres is a founding member of Climate Action 100+.