Climate Change Proposals to Gain Momentum at 2021 AGMs

‘Say-on-climate’ proposals are among emerging trends, according to Institutional Shareholder Services.

Large investors have indicated their intention to support more shareholder proposals on climate change, ISS has stated in its annual global governance outlook.

“Such shareholder proposals address a mix of concerns including greenhouse gas emission (GHG) goal-setting, net-zero strategies and climate related lobbying expenditures,” the proxy advisory firm wrote.

A new trend is the emergence of ‘say-on-climate’ proposals, which ask companies to publish their climate action plans and progress.

The effectiveness of these proposals has been questioned, but ISS said their success may set the future course of direction on the topic.

Some have argued that, as shareholders approve a company’s climate strategy with these proposals, individual directors will no longer be directly hold accountable for poor climate performance.

The proposal has been introduced at a handful of US companies so far this year and was withdrawn at Moody’s because the company agreed to implement the proposal, ISS said.

Another growing trend is reporting-related shareholder proposals.

In 2020, several large banks received shareholder proposals asking them to publish a report outlining how they intend to reduce the GHG emissions associated with their lending. A similar shareholder proposal was filed at HSBC in January.

Among six environmental proposals which received more than 50% support in 2020, three asked companies to report on climate change (US oil and gas producer Ovintiv, US transportation and logistic company JB Hunt Transport Services, US oil and gas producer Chevron), according to ISS voting data.

Shareholder proposals asking companies to disclose their climate-related lobbying activities is another trend that is expected to grow in 2021.


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