Climate Shareholder Resolution at Royal Dutch Shell

Resolution at 2017 AGM of Royal Dutch Shell plc (“Shell”), coordinated by Follow This

Shareholders support Shell to take leadership in the energy transition to a net-zero-emission energy system. Therefore, shareholders request Shell to set and publish targets for reducing greenhouse gas (GHG) emissions that are aligned with the goal of the Paris Climate Agreement to limit global warming to well below 2°C.

These GHG emission reduction targets need to cover Shell’s operations as well as the usage of its products (scope 1, 2, and 3), they need to include medium-term (2030) and long-term (2050) deadlines, and they need to be company-wide, quantitative, and reviewed regularly.

Shareholders request that annual reporting include further information about plans and progress to achieve these targets.

This shareholder resolution is intended to express shareholder support for a course towards a net-zero-emission energy system. The why of a course towards a net-zero-emission energy system is clear: increasing costs of the extraction of fossil fuels, decreasing costs of generating renewable energy, and the global political pledge to stop global warming. The how and the what are up to the management of Shell. It is up to them to set GHG emission reduction targets and to develop activities to attain these targets.This supporting statement serves to offer rationale, elaborate on transparency, and recommend metrics to align these targets with the Paris Climate Agreement.

In Paris, in December 2015, during the twenty-first Conference of the Parties (COP21), representatives of 195 countries reaffirmed the goal of limiting global temperature increase to well below 2°C above pre-industrial levels and agreed to pursue efforts to limit the temperature increase to 1.5°C above pre-industrial levels. COP21 also agreed to aim for a global net-zero-emission energy system.In May 2015, by means of a shareholder resolution submitted by the Aiming for A investor coalition, shareholders directed that annual reporting will include information relating to climate change, such as emissions management, asset portfolio resilience, and investment strategies. Setting further targets on scopes 1, 2, and 3 is the next step.Major institutional investors have announced that they will drastically cut the carbon footprint of their investment portfolios with the aim of reducing the climate risks in them.

We the shareholders request that the company publish company-wide greenhouse gas (GHG) emission reduction targets according to the following 3 scopes:

Scope 1: direct emissions from the facilities under Shell’s operational control or the equity boundary,

Scope 2: indirect emissions from the facilities of others that provide electricity or heat and steam to Shell’s operations,

Scope 3: emissions that Shell estimates come from the use of Shell’s refinery products and natural gas products.

In order to align its emission reduction targets with a well-below-2°C pathway, we request the company to base these targets on tangible metrics such as the Intended Nationally Determined Contributions (INDCs), or to use any other metrics the company finds practical to align its targets with a well-below-2°C pathway. For example, the INDC of Europe calls for 40% emission reduction by 2030 and 80-95% by 2050, relative to 1990 levels. While the combined INDCs are not enough to get on a well-below-2°C pathway, these commitments may be ratcheted up. The company could use metrics of the Intergovernmental Panel on Climate Change (IPCC) as well. For example, to limit global warming to well below 2°C, the IPCC estimates that 40-70% reduction in GHG emissions globally is needed by 2050, relative to 2010 levels. In the light of changing technological drive, scientific progress, and incrementally rising policy commitments, Shell should review its GHG emission reduction targets regularly.

Risks: If actions to get on a well-below-2°C pathway are taken too slowly, this may lead to abrupt adjustments, resulting in costly shocks. An orderly transition should start with the expression of clear medium- and long-term targets. We fully realize that these targets will be just dots on the horizon and that the road leading there has to be discovered, but the longer the company waits, the harder it will be to attain the well-below-2°C pathway and the more disruptive the transition will be.

The political pledge to limit climate change to well below 2°C, the resulting future legislation, and the decreasing costs of renewable energy add to the risk that capital expenditures in fossil fuel projects will become stranded assets.Opportunities: Taking leadership in the global energy transition could increase the brand value of Shell. The company could distinguish itself from its competitors if customers knew that part of the profits from fossil fuels would be invested in energy sources that limit global warming.

Shell is accustomed to exploring for oil and gas resources. We encourage the company to explore new business models. Some investments will turn out to be profitable; some not, as is the case in the exploration for oil and gas.

Shell’s financial results greatly depend on the price of oil. Diversification of the energy system could turn out to be an opportunity to decrease risks and create the cash engines of the future.

Support: We encourage Shell to show leadership by enhancing its capability to innovate and make use of potential opportunities in a transforming energy landscape over the coming decades. We would welcome further alignment between the company’s strategic positions vis-à-vis emerging energy technologies that stand to benefit from the energy transition. With its decades of experience and expertise as an innovator, its global reach, its financial capital, and its human capital, Shell is excellently positioned to make use of these developments by applying new technologies and setting up related business models. We encourage Shell to set targets that are inspirational for society, employees, and shareholders, allowing Shell to meet increasing demand for energy while reducing GHG emissions.

Source: Shareholder resolution 2017 – Follow this

Big corporations are trying to silence their own shareholders – The Washington Post

David H. Webber, professor at the Boston University School of Law, writes about efforts funded by corporations to reduce the number of shareholder proposals. Note that a very small number of these proposals are filed each year, at a very small percentage of companies, and that even a 100 percent vote in favor is almost never binding on management. And yet, somehow advisory votes by shareholders are so terrifying that the snowflakes in the corporate boardroom get the vapors even thinking about them.

Corporate lobbyists at the Business Roundtable — led by JPMorgan Chase chief executive Jamie Dimon — are heralding an effort to sharply limit the ability of investors to have a say in their companies through shareholder proposals. If successful, it will reduce stockholders’ ability to shape the companies they own and hold corporate managers accountable. As with political voting rights, these corporate voter-suppression efforts demonstrate that even the most basic rights need constant vigilance to protect them.Shareholder proposals — governed by the Securities and Exchange Commission — allow shareholders to suggest ideas to be voted on by their peers at the annual meeting. As with voter-suppression tactics generally, the Business Roundtable would not eliminate shareholder proposal rights. Tactically, that would be too crude. Instead, it would interpose a series of technical requirements that would have the same effect as a ban. Most notably, the Roundtable would drastically raise the ownership threshold needed to file a proposal.But shareholder proposals are effectively tools for significant corporate change, akin to ballot initiatives that have played such an important role in American democracy. In recent years, shareholder proposals have called for better assessment and disclosure of climate change risks and for improved diversity in hiring….A recent SEC study shows that New York City’s efforts [to get companies to adopt proxy access provisions] led to a total increase of $10.6 billion in shareholder value at targeted companies…Even when unsuccessful, shareholder proposals can become important mechanisms for registering discontent and helping companies adjust policy…Shareholder proposals mainstreamed diversity as an investment issue, recently pounced on by State Street — a traditional investment house with $2.5 trillion in assets under management — which adopted a new voting policy favoring women board members, symbolically underscored by the company’s commission of the “Fearless Girl” sculpture on Wall Street….None of this is to say that shareholder proposal rules are perfect. Certain revisions might be worth considering. But nothing justifies the stratospheric threshold that Dimon and the Roundtable are backing. Apparently, they’re not interested in protecting shareholders — only in protecting themselves.

Source: Big corporations are trying to silence their own shareholders – The Washington Post

The Business Roundtable’s Proposal to Silence Shareholders

The Business Roundtable, once again proving that they only like capitalism when the providers of capital are silent and powerless, has released a proposal to “improve” the shareholder proposal process. They say this is necessary because

the current shareholder proposal process is dominated by a limited number of individuals who file common proposals across a wide range of companies but own only a nominal amount of shares in the companies they target. These investors are pursuing special interests — many of which have no rational relationship to the creation of shareholder value and conflict with what an investor may view as material to making an investment decision. As a result, the current process is often used to promote the self-interest of a minority of shareholders, frequently at a significant cost to the company. 

The BRT’s claims that these “improvements” are necessary are unpersuasive, including the alleged “costs” of proposals and a completely inapposite analogy to “proxy access” eligibility. A non-binding proposal is in an entirely different category than nominating a director who may be elected to the board.

If the BRT would pay less attention to the proponents and more attention to the level of support the proposals get from a wide range of investors, they would understand that this is what is referred to as a market test. It is an outrage that they want to limit even further the shareholder proposal process, when even a unanimous vote in favor is advisory only. The best way for corporate executives to reduce the number of proposals and votes in favor is to adopt corporate governance best practices and develop better lines of communication with investors.

Source: Responsible Shareholder Engagement and Long-Term Value Creation | Business Roundtable

Clean Yield’s Open Letter to Shareholders of Alphabet, Inc. on Political Spending

On May 26, Clean Yield Asset Management uploaded an open letter to other Alphabet, Inc. shareholders on the Securities and Exchange Commission web site. In it, we call for shareholders’ support for Proposal No. 7 on the ballot, which calls on Alphabet to fully disclose the extent of its political spending. The shareholder meeting takes place on June 8.

Specifically, Alphabet has refused calls to disclose what it contributes to so-called “dark money” nonprofits such as trade associations and 501(c)(4)s. These are entities that can receive payments from corporations but do not have to disclose the source of those contributions. In the 2012 and 2014 election cycles, dark money groups spent more than $474 million to influence electoral outcomes.

At the company’s stockholder meeting in 2014, a shareholder made a similar point to Mr. Schmidt, and he responded:

Let me summarize your request. We need to be more transparent? Is that right? We get it. We’ve heard that from a number of other shareholders, so let us come back with some ideas. We got a very clear set of messages from a number of shareholders about this transparency issue already.

But Alphabet has offered no “ideas” to date, and falls short of best practices. The company scored only 33 out of 100 possible points on the CPA-Zicklin Index, a widely-referenced benchmark of the political disclosure and accountability policies and practices of leading U.S. public companies.We’d like to know why it’s okay for Alphabet to contribute the company’s money to secretive groups that can spend it however they wish, even in ways that conflict with Alphabet’s values. Alphabet showed real spine when it quit the American Legislative Exchange Council in 2014, but it still has an expansive political footprint, supporting about 140 trade associations and other nonprofits across the political spectrum. The reputation risks are not hypothetical. Alphabet has come under heavy criticism in the media for its aggressive lobbying of the European Commission.

These activities contribute to the public’s worst suspicions that the U.S. political system is rigged in favor of large donors, which is a key factor in the political instability we are experiencing in the U.S. Alphabet can and should do better.

Source: Open Letter to Shareholders of Alphabet, Inc. – Clean Yield

Large Minority of Goldman Shareholders Urge CEO, Chairman Split – TheStreet

Institutional investors will likely be back next year with a new effort to exert more influence on Goldman Sachs (GS) board after a large minority of shareholders voted Friday to separate the role of chairman and CEO at the bank.Roughly 30% of voting shares at the mega-bank voted against CEO Lloyd Blankfein retaining both positions — not enough to convince Goldman to split the role but a substantial enough number to raise serious questions about shareholder relations at the bank in the coming months. In addition, 33% of voting shares opposed the company’s executive compensation plans, including that of Blankfein, also putting a negative spotlight on the company’s executive pay practices.

Source: Large Minority of Goldman Shareholders Urge CEO, Chairman Split – TheStreet

Amazon, amid pressure from an investor, reports virtually no gender pay gap – The Washington Post

VEA Vice Chair Nell Minow is quoted in the Washington Post story about shareholder proposals on gender pay equity. The SEC has directed Amazon to include the proposal in their proxy.

Nell Minow, vice chair of the governance consulting firm ValueEdge Advisers, says that activists "want to ask a question to which the only good answer is 'we'll fix it.' " With technology companies under increasing pressure to hire and retain more women, "you can't have a better one" than a proposal that targets the pay gap, she says.

via Amazon, amid pressure from an investor, reports virtually no gender pay gap – The Washington Post.

Starbucks Virtual Annual Meeting

We’re all for webcast annual meetings that make it possible for shareholders to attend without traveling, but the news that Starbucks is having a virtual-only annual meeting on March 23, 2016 is disappointing, especially since the notice says that they require at least ten days advance notice in order to attend — and arrangements must be made by phone call.

What is the point of having a virtual meeting if it is not to make the meeting more accessible?  What is the point of using online technology for the meeting without making it available for registering to attend?

The only possible conclusion is that Starbucks does not really want anyone to attend the meeting.  Perhaps the two shareholder proposals, including proxy access, are part of the reason.

Share Action on Investor Engagement on Climate Change

1. In 2016, we expect to see the companies make substantive commitments to developing a holistic
strategy for emissions reductions that gives weighting to the total lifecycle, in a way that is
consistent with limiting rises in global temperatures to 1.5 – 2°C.
2. Going forward, this strategy and its accompanying benchmarking and reduction targets should be
clearly communicated to shareholders to allow for evaluation.
To ensure portfolio resilience under scenarios that limit global temperature rises to the recently established global target of staying ‘well below’ 2°C, with an ambition for 1.5, there is a need for radical portfolio  transformation. Shareholders have an interest in understanding how companies are preparing for resilience under these scenarios; both in terms of identifying risk through portfolio stress-testing, and describing how they would adapt under such carbon-constrained conditions.

via ShareAction expectations and proposals

What Does it Mean When Shareholder Proposals are Withdrawn? – Corporate Governance

Companies constantly take full credit for corporate governance reforms, such as the addition of proxy access bylaws, when they are doing so only to avoid a vote on a more robust shareholder proposal.

Faced with a shareholder proposal that is likely to win or result in negative publicity if opposed, boards frequently negotiate for a withdrawal. The resulting agreement is often a ‘lite’ version of the shareholder proposal but frequently represents a progressive reform nonetheless.

This study, by researchers Rob Bauer, Frank Moers, and Michael Viehs, provides strong evidence that the effectiveness of shareholders cannot be adequately measured based only on pass/fail rates of shareholder proposals going to a vote.

via Who Withdraws Shareholder Proposals? – Corporate Governance.

The SEC Allows Proposals on Climate Change Proxy Votes by Funds

Zevin Asset Management made an important announcement:

Investor efforts to push companies to act on climate change have been strengthened by yesterday’s Securities and Exchange Commission (SEC) ruling that Franklin Resources, which manages the Franklin Templeton family of mutual funds, will be required to include a shareholder resolution on its 2016 ballot focusing on its poor voting record on climate change proposals. The resolution was filed by Zevin Asset Management, an independent, socially responsible investment management firm, to highlight the contradiction between Franklin’s voting practices and its policy positions regarding climate change. A similar proposal has also been filed by Zevin at T Rowe Price. The SEC’s ruling is especially timely given the upcoming United Nations climate conference (COP21) in Paris and paves the way for shareholders to push other investment companies, including big banks, on their proxy voting records.

Research conducted by Fundvotes, on behalf of Ceres, shows that Franklin Templeton mutual funds’ voting record on climate change issues is near the bottom of the pack among mutual funds. However, in its 2014 response to the Carbon Disclosure Project (CDP), the company states that “Franklin Templeton’s fundamental bottom-up approach to investing, which takes climate change-related factors into consideration, gives the company a competitive advantage by managing risk and opportunities within portfolios and attracting investors…” Franklin’s voting record is all the more striking given that Franklin Templeton Investments has been a signatory to the United Nations Principles for Responsible Investment since 2013. This commitment creates a “green” branding for the Company and signifies a willingness to be publicly accountable for its activities on environmental, social, and governance (ESG) matters.

Given that proxy voting is one of the principal ways in which investors can engage in active management of portfolio risks and opportunities related to climate change, it appears that Franklin mutual funds’ proxy voting record is inconsistent with a proactive approach to climate change. This is in stark contrast to funds managed by investment firms such as Deutsche Asset Management, Oppenheimer, and AllianceBernstein who support the majority of climate change resolutions.

“Franklin’s inconsistency on climate poses a reputational risk to the company, especially given the contrast with many of its competitors,” said Sonia Kowal, President of Zevin Asset Management. “Given the severe threats of climate change to human societies and economies, Franklin’s clients may start to wonder if their investments are in good hands. We hope that other investment companies will now become more thorough and transparent in making decisions on climate related issues.”

via Give Thanks: SEC Allows Shareholders to Hold Mutual Funds to Account – Corporate Governance.