Majority Action calls on institutional investors to withhold support for directors at companies that unless they meet the Net-Zero benchmarks.
Twenty-three of the 45 US companies failed to achieve full compliance with any of the nine Net-Zero Company Benchmark indicators. Despite this failure, a majority of large Climate Action 100+ investor-signatories voted for every single director at over half of these 23 US companies at which they voted. This group included (but was not limited to) BlackRock, J.P. Morgan Asset Management, Fidelity International, Wells Fargo Asset Management, Wellington, BNY Mellon (Mellon Investments), Invesco, Northern Trust, and Nuveen.
Seven US companies failed to achieve even partial compliance with two of arguably the most basic indicators of competent climate governance: setting a “net-zero ambition” and issuing TCFD-aligned emissions disclosures. Twenty of the largest Climate Action 100+ investors voted in favor of every single director at more than half of the seven companies at which they voted.
Despite these companies’ clear failures on baseline Climate Action 100+ expectations, four Climate Action 100+ investors voted for every single director at every one of these companies at which they voted: Fidelity International, HSBC Asset Management, Janus Henderson Investors, and Lord Abbett. Four of Climate Action 100+’s six “flagged” shareholder resolutions that failed to receive majority support of voting shareholders would have done so, but for votes against the resolutions from these largest Climate Action 100+ investors.
These votes undermined necessary scenario planning, independent governance, and disclosure efforts at Chevron, Dominion Energy, Duke Energy, and Caterpillar, all companies with demonstrated track records of underperformance against the Climate Action 100+ benchmarks. BlackRock voted against all four of these flagged resolutions, and State Street voted against three of the four. Twenty-one of the 75 largest Climate Action 100+ investors failed to even disclose their firm-level proxy voting performance in a way that would allow their performance to be analyzed and evaluated.
RECOMMENDATIONS: This report urges large Climate Action 100+ investors to: Adopt and implement proxy voting policies that enable voting against directors at companies that fail to align their targets, capital expenditures, and policy influence to 1.5ºC pathways;
Leverage resources like the vote flagging process and the Climate Action 100+ Net-Zero Company Benchmark to drive proxy voting to hold directors accountable;
Announce their intention to vote in advance of annual meetings, and disclose all votes at Climate Action 100+ companies within six months of the AGM date.
Ensure that any asset managers or service providers for which an investor-signatory is a client are also voting for climate-critical shareholder proposals and against directors at misaligned companies.
Include a review of managers’ proxy voting track record on climate change in the due diligence process for all asset manager mandate renewals and RFPs.
The report further urges Climate Action 100+ as an initiative to: Flag key votes on directors at companies that demonstrably fail to achieve the Climate Action 100+ Net-Zero Benchmark, and ensure that all key climate resolutions at Climate Action 100+ companies are flagged for Climate Action 100+ members; Establish proxy voting performance expectations for investor members, and uplift best standards for proxy voting policies and practices; and Require prompt and comprehensive public disclosure of proxy voting from all Climate Action 100+ signatories.Climate Action100+ Report 2022 — majority action