Ceres seeks shareholder voting improvement on climate proposals in 2021

On the 01/04/21 at 7:07AM


Adrien Paredes-Vanheule

The non-profit organisation said that only seven of the 141 climate-related shareholder proposals made in 2020 passed.

Sustainability-focused non-profit organisation Ceres has sieved the 2020 proxy voting records of 50 of the largest asset managers globally in a bid to figure out those willing to act publicly to address climate risk. Ceres found out that over 2020, climate-related shareholder proposals had record average support and also that dialogue between shareholders and companies’ management around climate issues paid off. “Of 141 climate-related shareholder proposals that Ceres tracked, 57 were withdrawn by the filing shareholder in return for an agreement by the company to address the issue raised in the proposal. That is a withdrawal rate of 40% of all climate-related proposals filed in 2020 which, again, shows an increase in the receptivity of companies to make the commitments necessary to reach a net zero future. In 2018 and 2019, the withdrawal rates were 33.7% and 39.4%,” Ceres underlined.

The organisation added that seven of the climate-related proposals passed, drawing most shareholder votes, and 15 others “could have achieved a majority if just a handful of the largest asset managers had voted for them.” Only four asset managers – namely BNP Paribas Asset Management, Axa Investment Managers, Sun Life Financial and NN Investment Partners – have voted in favour of all climate-related proposals tracked, followed by Aviva Investors and Aegon Investment Management (98% each). According to Ceres’ research, Dodge & Cox was the sole manage to not vote in favour of any of the 2020 climate-related shareholder proposals. BlackRock (10% of the proposals voted), Manulife (8%), Capital Group (11%) and Vanguard (14%) are also ranking at the bottom.

Five recommendations for 2021

Rob Berridge, director, shareholder engagement at Ceres therefore listed five recommendations at the attention of shareholders for the 2021 annual general meeting season, the first of which is updating proxy voting policies annually. This “to ensure voting holds corporate boards and management accountable for addressing material and emerging climate change risks, via votes in support of shareholder proposals as well as other annual votes on directors and auditors, where relevant.” He recommends supporting proposals related to clean energy, deforestation, environmental justice, financed emissions, lobbying, methane emissions, sustainability reporting and water scarcity and pollution.  

Recommendations number two and three are “setting clear, time-bound milestones for engagement” and “asset owners holding asset managers accountable to vote in line with the asset owner’s support for the Climate Action 100+ initiative and the TCFD recommendations.” Berridge said. Embedding climate risk management into new and current fund management mandates should be considered by asset owners.

Furthermore, Ceres’ director for shareholder engagement fosters shareholders to disclose voting “on or before the date of each company’s annual meeting”, as a power boost to the vote. The rationale for any votes against resolutions should be also disclosed in Berridge’s view. “This can help to reduce reputational harm associated with your misalignment with these initiatives,” he said.

The last recommendation deals with engaging proxy advisors “by participating in the annual comment periods on their voting guidelines and by providing information to them supporting individual shareholder proposals your organisation has filed or supports.”