With the 2023 proxy season underway investors are highlighting proposals and other votes at North American and European focus companies to inform their fellow shareholders about priority issues at companies that are lagging behind peers in their management of material climate risks. The flagged votes come as early proxy season wins include seven agreements between investors and focus companies on climate action in exchange for withdrawals, including three agreements on greenhouse gas emissions targets and four on climate lobbying practices.
Climate Action 100+, of which Ceres is one of five investor networks partners, flags key shareholder proposals and other votes for investors to take into consideration as they decide how to vote during proxy season. This year’s include calls for companies to reduce greenhouse gas emissions, improve climate governance and disclosures, and support global efforts to achieve a zero emissions economy. Notably, there are also two flagged proposals calling for oil and gas companies to report financial risks of asset retirement obligations. A similar proposal flagged by CA100+ received a majority vote last year at ExxonMobil.
The following 2023 votes have been flagged on the Climate Action 100+ website:
Berkshire Hathaway – California Public Employees’ Retirement System to WITHHOLD votes from Audit Committee members Christopher Davis, Susan Decker and Meryl Witmer. Â
Berkshire Hathaway – Adopt board oversight of material sustainability issues. Filed by Robeco and The Office of the Treasurer for the State of Illinois as Trustee of the Bright Start College Savings Trust.Â
Berkshire Hathaway – Report on physical and transition risks and opportunities. Filed by California Public Employees' Retirement SystemÂ
Engie SA – Resolution on modification of the articles of association on the company’s climate strategy. Filed by MN and ERAFP and 14 others.Â
Imperial Oil – Adopt GHG reduction targets. Filed by Bâtirente and Ferique Fund Management with the support of ÆquoÂ
Imperial Oil – Report on impact of energy transition on asset retirement obligations. Filed by British Columbia Investment Management CorporationÂ
Marathon Petroleum – Report on asset retirement obligations. Filed by New Jersey Division of Investment.Â
Marathon Petroleum – Report on climate-related just transition plan. Filed by International Brotherhood of Teamsters General Fund.Â
PACCAR Inc – Report on lobbying in line with Paris Agreement. Filed by Calvert Research & ManagementÂ
Suncor Energy – Report on capital expenditure alignment with GHG reduction targets. Filed by Investors for Paris Compliance.Â
Valero Energy Corp – Report on GHG targets and transition plan. Filed by Mercy Investment Services, Inc.
Note: The Climate Action 100+ flagged votes list is updated regularly as new proxy statements are printed. The list is informed by more than five years of engagement history with the relevant focus companies. Â
“For investors looking to spur action on addressing the material financial risks posed by the climate change, flagging shareholder resolutions is a powerful tool for change,” said Kirsten Spalding, vice president of the Ceres Investor Network at Ceres, a founding member of Climate Action 100+. “As investors assess a focus company’s progress towards achieving a zero emissions future, they are considering a plethora of metrics from climate lobbying practices and emission reduction targets to climate accounting and capital expenditures. Flagged shareholder proposals are a clear signal to companies that they must work with CA100+ investors on specific topics that will help them reduce climate risks and prepare their businesses for the low carbon future.”
Tracking by Ceres, whose Investor Network members include Climate Action 100+ signatories, has found that investors in North America have filed 216 climate-related shareholder resolutions this year. This record number exceeds the 210 resolutions that were filed in 2022 and shows an increasing trend of investors acting where they see opportunities for companies to improve and mitigate climate risk.
This monumental proxy season action continues despite the backlash in the U.S. against investors and companies who factor climate and sustainability risks into decision-making. It also comes in the wake of another sobering report from the Intergovernmental Panel on Climate Change (IPCC) that reaffirms urgent action is needed in order to meet our global goal of limiting average temperature rise to no more than 1.5 degrees Celsius. It called for embracing deep, rapid, and sustained transformative action to reduce emissions.
One noteworthy action from this year’s proxy season is California Public Employees' Retirement System (CalPERS) move to withhold votes—the only mechanism for dissent on the Berkshire Hathaway proxy—for three directors on the audit committee due to failure to “provide accurate and timely disclosure of environmental risks and opportunities.” This action builds on shareholder proposals that CalPERS and others have co-filed previously requesting TCFD-aligned disclosures. In fact, Berkshire Hathway is the only Climate Action 100+ North American focus company that has not made any of the disclosures requested by the initiative’s Net Zero Company Benchmark.
Drew Hambly, Investment Director at CalPERS says, "CalPERS has a fiduciary duty to understand the risks and opportunities to its investments arising from climate change. Doing so means having enough information from our partners to make a full assessment. In our view, Berkshire Hathaway's existing disclosures are insufficient to adequately assess the company’s climate-related risks and opportunities.”
Berkshire Hathaway has recommended voting against CalPERS’ proposal for enhanced climate disclosure, and as noted in CalPERS’ filings, is not responding to investors’ multiple requests for engagement on this topic. This will also prompt scrutiny from other quarters. As the U.S. Securities and Exchange Commission prepares to finalize its mandatory disclosure for publicly traded companies in the US, Berkshire and other companies that fail to disclose will find themselves out of compliance. In addition to CalPERS’ flagged vote, the Office of the Illinois State Treasurer has filed an exempt solicitation in support of their proposal for improved governance at the company.
“Disclosure of a company’s material financial risks will allow investors to make informed decisions about their portfolios. This is why investors are requesting this information, and those requests are simply not going to go away,” added Spalding. “Investors can support companies willing to address these risks, but information is key.”
The flagged votes process is designed purely for information-sharing purposes and to highlight upcoming key votes at the initiative’s focus companies. It is at the discretion of each signatory investor to determine how they vote.
Climate Action 100+ does not require or seek collective decision-making or action with respect to acquiring, holding, disposing and/or voting of securities. Signatories are independent fiduciaries responsible for their own investment and voting decisions.
Read Climate Action 100+’s disclaimer here.
About Ceres
Ceres is a nonprofit organization working with the most influential capital market leaders to solve the world’s greatest sustainability challenges. Through our powerful networks and global collaborations of investors, companies, and nonprofits, we drive action and inspire equitable market-based and policy solutions throughout the economy to build a just and sustainable future. For more information, visit ceres.org and follow @CeresNews.