March 22, 2022

Climate Change: Biggest Single Topic For Shareholder Proposals

While big institutional investors push the SEC for climate disclosure rules that would make it easier to compare corporate info, the grassroots effort among smaller shareholder proponents also shows no signs of stopping. Climate proposals are proliferating in both number & type, according to the 112-page “Proxy Preview” issued last week by As You Sow, Si2 and Proxy Impact. Here’s an excerpt (also see the resources in our “Proxy Season” and “Shareholder Proposals” Practice Areas):

Climate change has jumped to the top of the proxy season agenda this year and is the biggest single topic. Climate-related concerns undergird a growing number of proposals that seek consistency between corporate policy and political influence, too. Resolutions about environmental management also implicitly address the climate, but so do new human rights resolutions about environmental justice. In all, there are 145 proposals about the environment, up substantially from 91 last year.

The report also shares these stats:

– The number of proposals specifically on climate change has nearly doubled to 110, up from 79 last year.

– A striking change is the near-total focus on greenhouse gas (GHG) emissions targets, with most proposals asking for a transition to net-zero status by 2050. Only eight ask about deforestation and water. Sixty-eight of the 101 resolutions about carbon asset risk address emissions (up from 29 at
this point last year).

– Proponents are starting from a position of strength established last year when average support for climate proposals topped 50 percent for the first time.

– New proposals are targeting use of carbon offsets, accounting & reporting controls for emissions, cryptocurrency carbon footprint, financing of fossil fuels, and social inequities relating to a “just transition”

– After gradually diminishing from a high of nearly 50 proposals 10 years ago, the number of environmental management proposals has risen again, to 35, with more likely. These include proposals about plastics, repairing products to reduce waste, chemical footprints, agricultural practices, and mining.

These trends don’t just create headaches for management and securities lawyers – they’re affecting director support. That’s one reason why creating, maintaining & disclosing a viable net-zero transition plan is becoming so important.

Liz Dunshee