Three of the largest investor signatories to Climate Action 100+ announced their plans to vote for a new slate of directors at ExxonMobil nominated by an investor, following the recent release of the Climate Action 100+ Net Zero Company Benchmark. The Benchmark showed that ExxonMobil, a focus company of the initiative, is not meeting investor expectations for long-term greenhouse gas emissions reductions.
The California Public Employees Retirement System (CalPERS) on Monday joined New York State Common Retirement Fund and the California Teachers Retirement System (CalSTRS) in saying they would vote for a slate of proposed directors nominated by Engine No. 1, an activist investment firm focused on sustainability.
“CalPERS is supporting additional board refreshment due to the long-term financial underperformance at ExxonMobil and the need for a greater depth of skill sets and experience on the board to address the significant challenges the company faces,” said Simiso Nzima, CFA, Investment Director and Head of Corporate Governance at CalPERS. “In order to effectively oversee the transition to a low-carbon economy, we believe the board would benefit from additional expertise in both its core business and in renewable energy technologies.”
The board directors are described as able to fill current expertise gaps in Exxon’s board with energy industry transformation experience and have driven performance and profitability at major energy companies. They include: Greg Goff (formerly President and CEO of Andeavor, a leading petroleum refining and marketing company), Kaisa Hietala (geophyicist who ran the renewable business at Finnish refiner Neste), Andy Karsner (former US Assistant Secretary of Energy under George Bush), Anders Runevad (former CEO of Vestas.)
CalPERS is also supporting the following ExxonMobil directors: Michael Angelakis, Susan Avery, Angela Braly, Ursula Burns, Kenneth Frazier, Joseph Hooley, Jeff Ubben, and ExxonMobil CEO and Chair, Darren Woods.
Climate Action 100+, the largest investor climate initiative in the world with 570 investors managing a combined $54 trillion in assets, is building momentum around key proxy resolutions headed for shareholder votes in coming weeks. Ceres is a co-founder of Climate Action 100+ and supports the coordination of North American engagements.
The initiative, whose size and roster of signatories make it very influential in the investment world, is flagging 14 key shareholder proposals worthy of consideration by other investors because they advance the goals of Climate Action 100+. Those goals are reducing global emissions to net zero, improving corporate climate governance and strengthening climate-related financial disclosures. The 14 flagged resolutions have been filed at Berkshire Hathaway, Bunge, Caterpillar, Chevron, Delta Airlines, Dominion Energy, Duke Energy, two at ExxonMobil, General Electric, General Motors, Imperial Oil, Phillips66 and United Airlines.
In an unusual development General Electric and Bunge Ltd each have recommended that their shareholders vote for the flagged resolutions investors filed. The General Electric resolution seeks evidence of its progress on Net Zero Company Benchmark metrics for reducing Scope 3 emissions, and at Bunge Ltd. a resolution asks management to develop a policy on reducing deforestation in its supply chain. The resolution notes Bunge was linked to at least 48,725 hectares of deforestation risk since 2015 and to 16,942 fire alerts in 2020.
Disclosure of fundamental climate-related risks is the issue sought in a resolution filed at Berkshire Hathaway which shareholders will vote on May 1. Filers Hermes Investment Management, Caisse de depot et placement du Quebec, and CalPERS, request that Berkshire’s board of directors publish an annual report on how the company manages physical and transitional climate-related risks and opportunities. Their resolution asks that the report comply with Task Force on Climate-Related Financial Disclosures (TCFD) guidelines. CalPERS has stated that it will vote against director members of Berkshire’s Audit and Governance Committee ““for failing to provide accurate and timely disclosure of environmental risks and opportunities, such as those associated with climate change.”
Flagged resolutions asking for reports on the financial risks to the company posed by the climate crisis were filed at Chevron and at ExxonMobil. “Investors are also calling for high-emitting companies to test their financial assumptions and resiliency against substantial reduced-demand climate scenarios, and to provide investors insights about the potential impact on their financial statements,” reads the resolution field at Chevron by As You Sow.
Flagged resolutions filed by the New York City Comptroller’s Office at Dominion Energy and Duke Energy seek a separation of the role of board chair from the role of CEO. “An independent Board chair can help ensure that the CEO is accountable for managing the company in alignment with the long-term interests of its shareowners. It can also help strengthen the quality of the board’s questions,” the resolutions note.
The keen investor interest in moving companies to be more aggressive on climate governance and climate action comes as more than 400 companies and investors wrote a letter to the Biden administration urging a strengthened U.S. commitment to the Paris Agreement of a 50% reduction in emissions by 2030 as a key interim step to reach net zero emissions by 2050.
On Earth Day, President Biden announced a new U.S. Nationally Determined Contribution (NDC) of a 50-to-52% reduction in emissions by 2030 from 2005 levels. He was hosting government heads of state from 40 countries at his Leaders Summit on Climate, a virtual convening at which many other countries also upped their nations’ NDC commitments as parties to the Paris Agreement.
See here for the Climate Action 100+ flagged proposals.
About Climate Action 100+
Climate Action 100+ is an investor initiative to ensure the world’s largest corporate greenhouse gas emitters take necessary action on climate change. More than 570 investors with $54 trillion in assets under management are engaging companies on improving governance, curbing emissions and strengthening climate-related financial disclosures. The companies include ‘systemically important emitters’, accounting for two-thirds of annual global industrial emissions, alongside others with significant opportunity to drive the clean energy transition. For more information, visit: www.ClimateAction100.org and follow: @ActOnClimate100.
About Ceres
Ceres is a sustainability nonprofit organization working with the most influential investors and companies to build leadership and drive solutions throughout the economy. Through powerful networks and advocacy, Ceres tackles the world’s biggest sustainability challenges, including climate change, water scarcity and pollution, and equitable workplaces. For more information, visit www.ceres.org and follow @CeresNews.