JPMorgan, for one, is putting the new SEC policy to the test, and asking the agency to toss a series of climate-related resolutions brought by, among others, a group of activist nuns. In theory, this could allow for reductions in carbon harms as plants are taken offline within 15 years rather than in many decades, whilst also allowing time for workers to find new jobs, achieving a more just transition. In the US, the Biden administration is revisiting - with a view to no longer enforcing - the rules adopted in 2020 that questioned whether pension funds can take ESG factors into account when making investment and voting decisions. That is despite the tiny activist hedge fund holding only 0.02% of Exxons shares. Ceres has also launched an initiative focussing on lowering the carbon output of six of the US highest emission sectors. "But by playing nice with those profiting offthe causes of climate change, he's making the political choice to reject climate science, which makes absolutely clear that a rapid transition from all fossil fuels is unquestionably urgent and necessary. A record 22% of resolutions focusing on environmental or social issues passed at US companies during the year, according to RBC Capital Markets. Potentially unsubstantiated claims can also draw the ire of regulators as DWS is finding out in Germany and the US, following allegations that Deutsche Banks asset management arm misleadingly claimed that more than half of its $900 billion in assets under management have been invested in accordance with ESG criteria. The Childrens Investment Fund Foundation has already abandoned Say on Climate votes in the US in favour of pressing corporates to file resolutions for disclosure of climate transition plans only (rather than a yes or no vote on them). It is also a reflection of the pace with which the sector moves, allowing multiple, competing initiatives to come forward. You can find more information in our data protection declaration. In part, this mix reflects the diversity of views on how urgently we need to tackle climate change. In the UK, climate-related resolutions have been put to eight FTSE 100 companies. The miner saw 94% vote in favour and management pledge to reach net zero by 2050 and cut emissions by 40% by 2030. Sometimes they even push for the company to be sold or broken up. Executive pay has also been in the crosshairs. So too for law firms, with the founding of the Net Zero Lawyers Alliance by Slaughter and May and others earlier this year, which commits its members to be greener but also to work with clients to offer legal services that will help their clients become greener and decarbonise their businesses fully by 2050. Although the vote failed (only a fifth voted in favour), it garnered double the votes won by the previous climate resolution in 2019, suggesting that whilst shareholders are giving boards a chance, they are keeping the spotlight on them to offer credible transition plans. Thisis only likely to accelerate due to COP26 and what comes after. BlackRock recently announced it is working with Citi and Allianz to discuss how industrial companies handle their dirty assets, including coal, which is expected to be discussed further at COP26 in November, and may see more pressure come to bear in this area. Some votes have seen near unanimous approval, others languish in the sub-20% range of support. Businesses may look to take practical steps to prepare. Not everyone is buying it. "If 2021 has taught us anything, it is that ESG is on the radar of investors and it is likely to remain so," Edna Frimpong, head of international research at Diligent Institute, told IR magazine, an investor relations publication. Putting the long-term interest of all stakeholders, including customers and employees, over short- term profits will be better for business overall, he argues, a concept he calls stakeholder capitalism. activists shareholder protested cnn resists This copy is for your personal, non-commercial use only. Those that take steps now to be on the front foot and get ahead of the changes that will be needed to address the climate emergency will be especially well placed to thrive, not just survive. In November, the US Securities and Exchange Commission made it easier for shareholders to include ESG issues on a company's proxy statement, which provides essential information ahead of the annual meeting of the shareholders. climate change barclays bank england business reuters lawrence activists target photograph The UNs Race to Zero, for example, has mobilized a coalition of leading net zero initiatives, representing 733 cities, 31 regions, 3,067 businesses, 173 of the biggest investors, and 622 Higher Education Institutions forming the largest ever alliance committed to achieving net zero carbon emissions by 2050 at the latest. Taking NZICI as an example, it has brought together 12 global investment consulting firms, setting them nine actions to undertake in order to support reaching net zero. The vote passed with overwhelming support, suggesting the value of management engaging with activists. According to investor advocacy group Ceres, it was the first time for such a net-zero proposal to pass at any company. qsuper activism Sustainability and Climate Change Resources, backed about 75% of environmental proposals in in Q1 of 2021, Taskforce for Natural-related Financial Disclosures, to buy Asian coal-powered powers plants on favourable terms in order to shut them down early, Net Zero Investment Consultants Initiative, continue to press companies to be greener, 18% rise in shareholder dissent over executive remuneration, Shareholder Climate Change Activism in the 2021 AGM Season - and what's coming next, Modern Slavery Slavery and Human Trafficking Statement. ", But what does Fink himself think?

Once resolved, in principle, shareholder activists will be better able to assess what action they should be taking and the impact it is having. Increased shareholder attention, combined with tightening but still quite loose - statutory climate change regimes across the world, and the risk of stranded assets, means that holding onto high-carbon and hard-to-abate assets is becoming less and less attractive. greener must activists greenpeace

However, compared to even last year, the direction of travel towards demanding that more businesses have more credible ideas about engaging with climate change is clear. However, as thinking about bottom-lines increasingly aligns with concern for the planet, we are likely to see more - and more successful - shareholder activism directed towards businesses that are slow to change. Environmentalists have also criticized BlackRock's refusal to divest their holdings in fossil fuels, something Fink has called "a bad answer" to stopping global warming. Business that have already stated on the sometimes complex path of integrating sustainability into their corporate purpose will find themselves best able to engage with shareholders when the time comes. "We know that climate risk is investment risk," he wrote in his 2021 letter. Shareholder resolutions related to climate concerns have been on the rise in recent years. Your opinion can help us make it better. This has arisen in part because of a legislative vacuum in this space - which the upcoming EU and UK green taxonomies, the FCAs recent warning to ESG funds that they need to improve, and the CMAs plans, may go some way to addressing. HSBC worked with the ShareAction coalition to table a management-backed resolution committing the bank to phasing-out coal financing by 2040. ExxonMobil has seen three of its board members replaced with climate-competent board members. The plan sets minimum expectations about what a transition plan for oil and gas must include. Convened by the IIGCC and informed by the Transition Pathway Initiative (TPI), investors representing USD$10.4 trillion have taken the reins and set out a standard for net zero transition plans in the oil and gas sectors. Despite support from investors like BlackRock and Norges Bank for the vote, the Office of New York City Comptroller and CalPERS abstained from the Vinci vote. The resolution prohibits financing and underwriting of companies highly dependent on coal mining or coal power, as well as those planning new mines, plant or infrastructure for coal. Pressure is also coming from an insurance angle. It is also because these resolutions are not all the same and are presented to a range of different shareholders who all have their own distinct drivers. That is nearly double the number in 2021, according to data from Sustainalytics, the sustainability-rating arm of Morningstar.

The concern is that "Say on Climate"might fall prey to the same fate as "Say on Pay"votes a decade ago which have failed to achieve change. Key to the Engines victory is that it was able to link its environmental arguments closely to Exxons bottom line, so something that should benefit people and planet was also about protecting profit. Since then, there have been around 700 shareholder resolutions on environmental and social issues around the world, of which a little under half focussed on environmental issues. ", 2022 Deutsche Welle | In September, a coalition of 220 financial institutions whose assets amount to more than USD$29.4 trillion sent a letter to over 1,600 companies saying only science-based targets for reducing emissions will be acceptable, and that a failure to align with the climate science threatens a safe and prosperous economy. A growing number of shareholders are demanding environmental accountability from their investments. 1, it is worth noting that the resolution was filed by shareholders representing a tiny fraction of BHPs shares (less than 0.006%), underlining the impact even very small activist shareholders can have if they can mobilise support from larger institutional investors. The results are expected to be released in October and are likely to be adopted rapidly as a worldwide baseline, although it is unlikely it will be ambitious enough to satisfy the EU.

Legal notice | https://www.barrons.com/articles/esg-sustainable-climate-investing-shareholder-activism-51655249538. Rio Tintos AGM in April saw proposals brought forward relating to lobbying and setting emissions reduction targets. Support is even growing for emissions-related resolutions at oil majors. In this way he seems to enjoy the best of both worlds, walking a tightrope between corporateand environmental interests. To a large extent, the scale of change that will be required remains underestimated by many.

However, to be effective, the whole package of incentives needs to be consistent with carbon reduction and not just one small bit of it. These people use their position as shareholders of publicly traded corporations to put pressure on a company's management and influence how it is run. "Fink apparently wants to be above the political fray," Moira Birss, climate and finance director at the environmental organization Amazon Watch said in a statement responding to this year's letter. Privacy Policy | Otherwise, the climate-positive work of the one hand might be unpicked by the business-as-usual acts of the other. Businesses that fall behind will look increasingly vulnerable to both the investor engagement talked about above, as well as the shareholder campaigns of activist and more traditional shareholders. But in November, the Biden administration opened the door to more successful shareholder campaigns. But companies that dont abide by them risk losing control of their boards and the financial support of institutional investors, making them a powerful tool to alter corporate climate behavior. Now its the other way around, he said. It seems likely that standards for other sectors will follow. An error has occurred, please try again later. The influential investor ISS has given its qualified support to the plan on the basis that it is reasonable, given the state of technological innovation. Adopting the Say on Climate approach, the statement calls for detailed corporate net zero transition plans to be drawn up, disclosed, and put to routine votes, as well as identifying directors responsible for net zero transition planning. In April, we considered the different pressures driving changes in corporate behaviour towards the transition to a low carbon economy, beyond just disclosures under the Taskforce for Climate-related Financial Disclosures (TCFD) framework. Globally, the International Financial Reporting Standards Foundation (IFRS) consulted earlier this year on accommodating an International Sustainability Standards Board (ISSB) to set IFRS sustainability standards. Activist investors, also known as shareholder activists, are a growing breed. This follows targeting by Royal London Asset Management under the CA100+ campaign. In parallel, the UK is looking to develop its own green taxonomy and Sustainability Disclosure Requirements, based on the EUs green taxonomy and Corporate Sustainability Reporting Directive (CSRD), to provide a legislative underpinning that will help define what activities can be accurately labelled as green. Take a look at the beta version of dw.com. The Church Commissioners, for example, has said that they believe we can make a much greater impact in the world by staying invested in companies and changing them through direct engagement as a shareholder and have pledged to divest from all non-Paris aligned fossil fuels companies by 2023.



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