July 21, 2021

Shareholder Proposals: The “Say on Climate” Scorecard

Efforts to have public companies’ adopt “Say on Climate” (SoC) proposals that would require an annual shareholder vote on their climate strategies have been a big issue during the 2021 proxy season – in fact, according to Glass Lewis, SoC proposals were arguably the “most dominant” issue this year. A recent Squarewell Partners study took a close look at SoC proposals and how they fared globally during this year’s proxy season. Here are some of the study’s key findings:

– As of June 2021, SquareWell is aware of 32 companies that have submitted (or will submit) a SoC proposal, either management- or shareholder sponsored. 23 companies have adopted, either voluntarily or following shareholder
pressure, the principle of a SoC vote and are subjecting their climate action plans to shareholder scrutiny.

– The approaches taken by companies that have adopted SoC vary to a great extent, with some companies putting their climate action plans as a one-off shareholder vote. The content of climate action plans are also heterogeneous
– some more in line with the objectives of the Paris Agreement than others. Unilever’s climate action plan was the most robust in terms of disclosure.

– Management-sponsored SoC proposals have been supported, on average, by more than 90% of shareholders. Only Glencore (UK), Atos (France), S&P (US), Total (France), and Royal Dutch Shell (US) have received over 10% dissent (including abstentions) on their climate action plans as of June 2021. Shareholder-sponsored SoC proposals have been less successful, except at Aena and Canadian Pacific Railway. TCI was the proponent in both cases.

The study notes that Institutional Shareholder Services (ISS) has been more supportive of both management- and shareholder-sponsored SoC votes than Glass Lewis, and that although the vote results suggest that shareholders are broadly supportive of the SoC concept, several asset managers and asset owners have voiced concerns with the campaign.

John Jenkins