As the summer heat rises, we’re coming to the end of another season of annual general meetings (AGM) — the time of year when shareholders have the opportunity to vote on important decisions at some of the biggest companies in the world, including who sits on a company’s board of directors, resolutions calling for greater transparency and action on climate, and more.
The outcome of this latest AGM season has shown, once again, that despite all of the noise and political attacks, most investors are far more supportive of addressing the climate crisis and social inequality — and the risks those issues pose to our economy and long-term prosperity — than they are in favor of a fossil-fuel backed agenda that seeks to undermine sustainability efforts.
Ahead of this year’s AGM season, shareholders filed over 520 resolutions on environmental, social, and related sustainable governance issues, approximately half of which were climate-related resolutions filed at North American companies. Also filed were 64 “anti-ESG” resolutions, which are part of a dark-money-fueled organized backlash against global efforts to address climate change and social inequality.
The gap in support for improving corporate sustainability and social responsibility, versus backtracking on such commitments and values, is quite stark: while resolutions supporting greater disclosure on climate and human rights issues have generally attracted support from roughly a quarter to a third of shareholders, “anti-ESG” resolutions have garnered merely 2% support on average.
The results of this latest AGM season make a couple of things clear. For one, the support for climate-related resolutions from the largest institutional investors (including BlackRock, Vanguard, and State Street) has fallen in the last few years. This is due in part to a chilling effect from pushback by big polluters and their allies who are threatened by investors’ efforts to demand more transparency and action on the financial risks of climate change, biodiversity loss, inequality, and other systemic threats.
Secondly, even without adequate support from large asset managers, resolutions that call on companies to disclose climate targets or assess their human rights impacts, for example, continue to be about 10-times higher than the support for “anti-ESG” resolutions that ultimately seek to turn back the clock on environmental and social progress.
In other words, the “anti-ESG” crusade appears to consist of a lot more noise and bluster than actual support from the people and institutions trying to invest wisely. As the 2024 Proxy Preview report explains, these types of resolutions are trying to push “stands that are polar opposite to the views espoused by the main body of shareholder proponents.” Those resolutions and public attacks represent the views of a very few that are trying to advance the interests of corporate polluters, and do not seem to be indicative of any substantial or growing trend within the broader investor community.
A major takeaway from this AGM season, similar to the year before, should be that major companies and shareholders should not give in to the reckless demands of a tiny minority that show no regard for the real systemic risks facing the millions of people that are trying to save responsibly for the future. It's not enough for major companies and shareholders to refuse to support the reckless and misguided proposals of fringe anti-ESG activists. They must also refuse their demands to ignore climate change or inequality, and support common-sense resolutions to mitigate systemic risk.
While the results from this AGM season continue to demonstrate the broader investor support for better governance and transparency of climate-related issues, it also shows that most major shareholders are failing to hold companies accountable for implementation of climate strategies and real-world decarbonization. Too many investors have shied away from resolutions that call for the adoption of policies or strategies to reduce greenhouse gas emissions, opting instead for more focus on increased disclosures. Disclosures help investors assess risk, but fall short of mitigating it.
While it’s clear that there’s little support for backtracking on climate and related issues, it’s also clear that there needs to be more investor support for setting targets and implementing strategies that mitigate corporate impacts on climate, biodiversity, and inequality. Doing so is critical to accelerating the transition to net-zero and to protecting returns on investments, especially to long-term and diversified portfolios (which encompasses most retirement accounts and pension funds) that will be significantly harmed if we don’t achieve our global climate goals.
As institutional investors — from state and local pension funds to Wall Street’s largest asset managers — begin the process of preparing for the 2025 AGM season, it’s imperative that they stop kowtowing to the irresponsible climate denier fringe, and get serious about adopting investment and voting practices on issues like climate change that pose the greatest long-term risk to their clients and beneficiaries.
There are a range of strategies institutional investors can adopt to prepare accordingly, such as refusing new bond investments in fossil fuel companies, and updating their proxy voting guidelines on shareholder resolutions and board member elections at companies that are failing to provide adequate transparency and action on the climate crisis.
Public pension funds — which are obligated to provide retirement benefits to teachers, firefighters, and other state and local government workers for many decades to come — should be particularly attentive to taking steps to mitigate long-term risks like climate change. How they manage our tax dollars and retirement plans will have a real impact on millions of people’s ability to retire well, and the safety and prosperity of future generations.
(For those interested in reading more, a full list of recommendations on how pensions and their asset managers can use shareholder voting to better protect their clients’ investments from climate risks can be found in this report.)