Investors face an array of social and environmental shareholder resolutions in upcoming annual meetings, according to Proxy Review 2013, which was issued on Thursday.
Climate change, energy and related risks, as well as corporate sustainability and transparency, account for almost 40% of the 365 resolutions filed to date. More than 120 resolutions target corporate political spending before and after elections, which together make up about one-third of the resolutions filed. Human rights and diversity on boards also are focus.
“This proxy season will be extremely dynamic as investors ask companies to respond to super storms and the most expensive election ever,” said As You Sow CEO Andrew Behar. His firm has published the proxy review since 2005. “Some shareholders are heartened by increased votes in recent years, while others want divestment because they believe companies have not done enough. Endowments, foundations and pension trustees are grappling with this tension as they try to act as responsible fiduciaries and ensure they stay true to their values.
Resolutions on climate change and environmental issues have been filed with 92 companies to date.
Shareholder proxy resolutions have been hit or miss. Last year a shareholder revolt turned out most of Chesapeake Energy Corp.’s board and overhauled its accountability practices; CEO Aubrey McClendon is retiring April 1 (see Daily GPI, June 11, 2012). This year SandRidge Energy Inc. and Hess Corp. face similar proxy fights over how their companies are managed (see Daily GPI, March 5; Feb. 21).
Many independents, on their own and in response to the shareholder requests, have agreed to more disclosures regarding drilling risks — and there are resolutions with similar requests this year (see Daily GPI, Feb. 7). However, ExxonMobil Corp. last year attempted to block the resolution on its proxy statement, which the Securities and Exchange Commission (SEC) denied (see Daily GPI, April 5, 2012). At their 2012 annual meetings, the resolution was rejected by 70.4% of ExxonMobil’s shareholders, while only 27% of Chevron’s shareholders affirmed it. Two years ago about 29% of ExxonMobil shareholders supported the resolution, while 41% of Chevron’s were in support (see Daily GPI, May 27, 2011; May 26, 2011).
“Shareholder resolutions are canaries in the coal mine, highlighting problems companies must face, sooner or later,” said the report’s co-author Michael Passoff, who is CEO of Proxy Impact, a proxy voting service. “The energy sector is a key target this year. Hydraulic fracturing continues to be a hot topic with new resolutions asking for quantitative data on reducing health and environmental impacts and on greenhouse gas intensive methane emissions.
“Investors are also concerned about a ‘carbon bubble’ from over-leveraged fossil fuel reserves as scientists say only 20% of reserves can be burned without causing climate chaos.”
On energy and environmental issues, some shareholders are asking for climate change risk assessments, adaptation strategies, and more action on energy efficiency and target setting. Other environmental resolutions focus on promoting sustainable palm oil production, recycling and product responsibility, toxic materials, and water and forest management.
“The 92 environmental and sustainability resolutions increasingly look to company supply chains, not just direct operations,” said the report.
The SEC has reversed an earlier precedent and now will allow queries about accounting for greenhouse emissions in the lending portfolios of banks. PNC Financial and JPMorgan Chase have pending resolutions, the report said.
In addition, “resolutions on political spending show no sign of letting up even though the presidential election is behind us,” said co-author Heidi Welsh, executive director of the Sustainable Investments Institute. About 120 political spending proposals have been filed in each of the last two years, which is twice the level of 2010.
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