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Unprecedented Majority Votes on Climate
By Holly Testa, Director, Shareowner Engagement

Shareholder advocates have long pressed for increased disclosure from companies on their exposure to, and management of, climate risks and opportunities. In April, shareholders won major victories at Occidental Petroleum and Exxon Mobil. Via shareholder proposals (shareholder resolutions), both companies were asked to report on the impact of global measures designed to limit global warming to two degrees Celsius, in accordance with the Paris Agreement. Fellow shareholders voted emphatically for the proposals.These votes represent "firsts" that send a clear signal to companies that their investors demand action on climate:

  • Until now, a majority vote has never been recorded for a climate proposal opposed by management. The vote at Occidental was 67% and 62.3% at Exxon.
  • A similar proposal at PPL Corporation also received a majority vote, a first for a utility.
  • At Occidental, BlackRock, the world's largest money manager, cast its first votes against management on a climate proposal and took the unprecedented step of publishing a supporting memo for the vote. Bank of New York Mellon subsequently released a similar memo explaining their support for the Exxon shareholder proposal.

A few large mutual fund companies are increasingly supporting climate proposals, with 17 voting for at least half of those presented in 2016. However, this support was not enough to break the 50% threshold. In 2017, BlackRock, Fidelity and Vanguard, representing a combined $14 trillion in assets, amended their proxy voting guidelines to shift from automatically voting with management on climate proposals (which usually means against the proposal) to voting in favor when they believe there is a threat to shareholder value. Given the added voting power of these three behemoths, we may see many more climate proposals pass with a majority vote.

Earlier this year, First Affirmative and Walden Asset Management filed a shareholder proposal—discussed in more detail in the spring issue of Advocacy and Impact—requesting disclosure on the disconnect between BlackRock's integration of environmental, social, and governance (ESG) into their investment analysis and their thought leadership on climate change, in contrast with their proxy voting policies. We are therefore particularly encouraged by BlackRock's recent votes, as they demonstrate its commitment to the enhanced proxy voting policy the company developed earlier this year in response to the proposal and subsequent discussions with First Affirmative and Walden.

Posted: August 9, 2017