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Apr 13, 2016

US firms face record number of climate change resolutions

Shareholder proposals concerning the environment rocket to 94 in 2016

US companies are facing increasing scrutiny from their investors over climate change-related issues, with shareholders recording a record number of board proposals addressing the issue in 2016, a report finds.

The report, Proxy Preview 2016, finds that US companies are facing 94 shareholder resolutions on the topic of climate change this year, compared with 82 in 2015. Of this year’s resolutions, 22 quiz energy firms about how climate change would affect their operations, 18 focus on risks associated with fracking for shale gas and 19 ask companies to set greenhouse gas emission targets.

The report also outlines 11 proposals brought to just two companies, all of which push the firms to change how they account for changes in energy reserves, and another that suggests executive bonuses should be linked to these accounting changes.

Andrew Behar, CEO of shareholder advocacy group As You Sow, says that in a year holding both the US presidential election and the UN climate change conference in Paris, the ‘growing integration of issues’ for shareholder advocacy is growing rapidly.

‘We see political spending intertwined with climate change and sustainability directly linked to CEO pay,’ he continues. ‘Investors want companies to take a broad, systemic look at their policies and how they affect responsible action in the broader economy.’

The report was produced by As You Sow – which recently successfully prevented oil firm ExxonMobil from dodging a shareholder proposal asking for better climate change disclosure – alongside investor engagement firm Proxy Impact and the Sustainable Investments Institute, which provides sustainability research to investors.

Shareholders are saying ‘what politician’s won’t’, says Michael Passoff, Proxy Impact’s CEO and co-author of the report. ‘Shareholders are stepping in where Congress fears to tread, demanding that companies prepare for climate change and come clean on political spending.’

Proxy Preview 2016 also finds that fewer US companies have asked the SEC to omit shareholder proposals this year – 71 compared with 113 at this point in 2013 – and that the SEC has rejected 14 already in 2016.

Though shareholder activists appear to have filed fewer resolutions this year overall (370, versus 433 in 2015 and 417 the year before), there have been an extra 72 sustainability resolutions from New York pension funds demanding proxy access at companies.

Other topics attracting less consistent investor attention include how to do business in conflict zones, human rights violations, the Israel/Palestine conflict and democratizing the board nomination process.