As 2023 proxy season begins, investors seek to deepen corporate engagement on GHG targets, governance, lobbying and just transition

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:

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.  

“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.  

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.  

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