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Jan 08, 2024

Europe sees fewer say-on-climate plans put to vote

France, Spain and UK lead on climate plan proposals, while Portugal sees first company put climate strategy to its shareholder base

Just 17 European companies put their climate plans to a vote in 2023, a drop from 36 the previous year, according to new research.

The idea of putting a climate strategy up for shareholder approval – so called say-on-climate votes – emerged in 2020, with a number of companies offering investors the opportunity to vote on their forward-looking climate strategies across the following years.

But it appears the trend receded last year, with just 17 such resolutions recorded in Europe, despite the region being typically more supportive of the idea. France, Spain and the UK saw the highest levels of activity, according to Morrow Sodali’s latest analysis.

A note from Linklaters ahead of last year’s proxy season highlighted divided opinions over such resolutions. Although the law firm pointed to calls from specific investor groups for more say-on-climate proposals, it added: ‘Companies should bear in mind that not all investors support the need for such resolutions and would prefer that companies invest time and effort in developing their climate governance and reporting.’

Outside of those three countries continuing to drive the trend forward, Portugal saw one company put its climate plans up for a vote – the first firm in the country to do so. Energy company EDP, an IR Magazine Award winner, asked its shareholders to vote on its 2023 climate change objectives, which aim to achieve net-zero by 2040.

The response was overwhelming, with nearly 100 percent of votes in favor, according to Morrow Sodali.

Miguel Stilwell d’Andrade, EDP CEO, has been vocal around the challenges the energy sector faces as it transitions to a sustainable future. In October, he signed an open letter along with more than 100 global company leaders ahead of COP28, pointing to the potential of energy transition to create 51 mn jobs by 2030.

The companies urged policymakers to increase investment in renewables and electricity grids, improving public procurement practices, accelerating carbon reductions and simplifying and harmonizing climate disclosure and measurement standards.

Proxy vote

View from the boardroom

The 2023 edition of the Morrow Sodali report analyzes the past proxy season across nine countries in Europe: France, Germany, Ireland, Italy, Portugal, Spain, Switzerland and the UK. It looks at issues such as AGM formats and attendance, board composition and gender diversity, elections and remuneration. It also gives European corporates – and their boards – an insight into the challenges ahead.

In 2024, European corporate boards are expected to grapple with a dynamic landscape, necessitating proactive, adaptable and transparent approaches, the report states. Continuing challenges stemming from increased capital costs, geopolitical uncertainties and technological disruptions will likely persist, it continues. 

Morrow Sodali also points to the need for greater board diversity. ‘Adapting to stay relevant and effective means embracing diversity in board composition, fostering a culture of continuous learning and incorporating a wide range of perspectives to enhance decision-making,’ writes David Risser, the firm’s managing director for board and governance. ‘The bottom line is clear: the intricate interplay of these factors necessitates a holistic, informed and agile governance model.’

In 2012, the European Parliament adopted a resolution on women and business leadership, a move that started a countdown for companies to meet a 30 percent threshold of female membership on their boards. Then in 2022 the EU took it a step further by requiring all listed companies in the region to have at least 40 percent female non-executive directors or a minimum of 33 percent female representation of executive and non-executive directors by 2026.

Morrow Sodali finds that Greece and Portugal remain significantly behind the threshold with less than three years until the deadline.

In the case of Greece, although gender balance on the boards of Athex 25 companies is getting better and it meets the minimum threshold established by Greece (25 percent), it still lags compared with the rest of Europe, where companies average between 30 percent and 40 percent.

Portugal fares slightly better with an average of 35.4 percent female directors occupying a seat on the boards of the country’s listed entities. This, however, marks a slight decrease on 2022 (36 percent).

‘Although board gender diversity is reaching relatively acceptable levels across European boards, it is still highly unbalanced in the leadership roles,’ notes Jana Jevcakova, managing director and head of ESG international at Morrow Sodali.

‘The posts of board chair and first executive remain far from gender diversity targets.’