With strong shareholder votes at three of the largest U.S. banks this week supporting proxy resolutions seeking climate transition plans -- and similar resolutions filed at companies in a range of industries – institutional investors have made clear they want to know how portfolio companies are meeting their climate goals and participating in the transition to a zero emissions economy.
Shareholders at Wells Fargo voted 31.1%, at Goldman Sachs 30%, and at Bank of America 28.5% this week in support of resolutions filed by As You Sow asking the banks for detailed climate transition plans on how they will align their financing activities with their 2030 emissions targets. Shareholders at JPMorgan Chase and Morgan Stanley will vote on similar proposals in May.
A study by BlackRock shows that 75% of proposals that garnered at least 30% of votes resulted in companies taking action, while proxy advisor Glass Lewis recommends that any resolution winning 20% or more of votes should lead to engagement between investors and company boards.
Across all sectors, shareholders filed 58 resolutions seeking company climate transition plans including 30 that ask for both greenhouse gas reduction goals and transition plans for reaching them, and 28 that seek only the transition plans, according to tracking by Ceres, a sustainability nonprofit organization.
Shareholders at companies ranging from Martin Marietta Materials to Raytheon Technologies to Bloomin’ Brands to Marathon Petroleum are voting on resolutions seeking climate transition plans. At Bloomin’ Brands 42.8% of shareholders supported a proposal filed by Green Century Capital Management asking for both emissions reductions targets and a transition plan. At Canada’s TD Bank, shareholders voted 24.8% in favor of a resolution seeking emissions targets and a transition plan filed by Investors for Paris Compliance.
“The climate crisis brings huge financial risk for banks, investors, and the U.S. economy,” said Cynthia McHale, Program Director, Investor Engagement at Ceres. “Investors need banks to show them how their net zero commitments will be achieved to assure shareholders, and the public, that the bank has a financially sound path forward.”
For banks, the requests for transition plans are a new type of resolution, reflecting investors’ increasing attention to financial institutions’ role in financing high-emitting companies whose operations and supply chains are contributing to a rapidly warming planet. Ceres Ambition 2030 initiative has also brought attention to the urgency of this moment by shifting the focus to sector-wide progress in the banking sector, and other high-emitting sectors, and has called on companies to publish climate transition plans that show how they are meeting their science-based targets.
The As You Sow resolutions specifically ask the banks to include detailed measures and policies they plan to implement, the reductions to be achieved by them, and the timelines for implementation and associated emissions reductions. These proposals earned the most votes of any climate-focused proposals at the big banks thus far.
“Banks’ actions are fundamental to achieving global net zero targets,” Danielle Fugere, President of shareholder representative As You Sow, which filed the bank resolutions seeking transition plans. “Having demonstrated leadership in setting net zero 2030 targets, we now look to banks to create and publish actionable climate transition plans to ensure success.”
As the 2023 proxy season enters the second month of annual general meetings when shareholders place their votes on resolutions, investors are also seeking support for resolutions that ask companies to ensure that their climate plans include a just and equitable transition for affected workers and communities.
A resolution filed by Domini Impact Investments at BorgWarner, an automotive parts manufacturer, received 32% of shareholders’ votes this week. It asked BorgWarner to publish a report on how the company is assessing, consulting on, and addressing the impact of its climate strategies on employees, workers in its supply chains and communities in which it operates.
“What we are seeking in this proposal is an understanding of the process and strategy underway to ensure that the benefits and opportunities, as well as costs and challenges, of this transition are equitably shared. That the transition brings your workforce, communities, and suppliers along with you,” said Mary Beth Gallagher, Director of Engagement at Domini, in addressing the shareholder meeting.
Resolutions calling for reports on corporate climate lobbying are also prevalent this year. At Boeing Co., 37.2% of shareholders voted for a resolution seeking a report on how climate lobbying aligns with climate goals, filed by Seventh Generation Interfaith Coalition for Responsible Investing.
Ceres is tracking 237 climate-related shareholder resolutions filed so far this year, a near record second only to last year’s 242 climate related proposals.
Investors and companies have already reached agreement on 69 of this year’s climate-related resolutions, with companies committing to take action in exchange for the shareholders withdrawing the resolution. These agreements can result in positive outcomes, depending on the strength of the withdrawal agreement, as the goal of shareholder resolutions is to persuade companies to address the financial risks and opportunities from climate change.
See language of resolutions on Ceres’ public database of climate-related shareholder engagements 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.