More investors are pushing companies to adopt climate-related resolutions, but NEI’s overall support for such proposals dropped compared to last year.
This proxy season continued the trend of investors pushing companies to adopt climate-related resolutions, as we voted on 51 climate resolutions filed at 33 companies. Financial institutions were the most targeted (42% of resolutions) followed by energy companies (21%), consumer companies (20%) and other sectors. The vast majority of resolutions were at North American companies.
While the number of climate resolutions we voted on nearly doubled relative to the previous year, our overall support dropped. This reflected the challenge we had supporting resolutions that we deemed to be overly prescriptive or potentially counter-productive to the goal of addressing climate risks. We expect future resolutions will address these shortcomings and investor support will continue to grow.
Companies are under mounting pressure to improve disclosure on their greenhouse gas emissions not only from their direct operations but also from their value chain; to enhance transparency on their climate lobbying; and to demonstrate how they will navigate the transition to a low-carbon economy and achieve net zero. This topic represented over half of the total climate-related resolutions we voted on.
Several resolutions filed at U.S. and Canadian banks had an explicit focus on the IEA’s Net Zero Emissions by 2050 scenario. While we agree that financing activities should align with a net-zero pathway, we abstained in five out of nine cases. We felt some resolutions were overly prescriptive about how the scenario should be used, leaving little room for management to use their judgement. Proposals received average investor support of 10%.
We believe that setting robust GHG emissions reduction targets is a foundational step in developing a credible transition plan. We supported 80% of the proposals that encouraged increased rigor in planned or existing targets and alignment of net-zero strategies with the Paris Agreement. Targeted companies included Sysco Corporation, Dollar Tree, JPMorgan Chase, UPS, Enbridge, and Costco.
Canada’s six largest banks were targeted by a proposal asking them to adopt an annual advisory vote policy on their environmental and climate change plan. We voted against all the proposals, as we do not believe such a vote would be helpful given the banks’ commitment to transparency and receptiveness to shareholder engagement. We think engagement is a more effective way to understand the quality of the plans while providing useful feedback. Proposals received shareholder support of between 15% and 27%.
*Shares of companies named were held as of the date of the respective 2022 annual general meeting; holdings are subject to change without notice.
