AGMs 2024 Memo: Climate Trends and Votes to Watch

Each April and May, many major corporations hold their annual general meetings (AGMs), which are an opportunity for shareholders to vote for or against board members, and on resolutions about sustainability concerns and other critical issues. 

The Sierra Club and partners delivered the signatures of over 7,000 people to their states’ pension fund staff and trustees requesting their support for the climate-related shareholder resolutions and director votes described below. The petition can be found here, and the Sierra Club’s slate of flagged votes here. 

This AGM season, shareholders are pushing financial institutions and other corporate polluters to increase climate-related disclosures and align their business strategies with pathways to reach climate goals. 

According to the International Energy Agency, in order to meet the goals set out in the Paris Agreement — net-zero emissions by 2050 and limit global temperature rise to 1.5C — development of new fossil fuel projects must end. Accordingly, financial institutions must stop enabling new fossil fuel expansion. 

In the fight for a livable planet and prosperous economy, shareholder votes are some of the most important elections that most people have never heard of. And while not everyone gets to vote, everyday people rely on asset managers and pension funds to steward their savings. Engaged investors and shareholder advocacy groups make sure that major institutional investors are held accountable and use their proxy voting power to support increased corporate transparency and climate action. 

Key climate-related themes and votes to watch during the 2024 AGM season

1. Votes against board members at financial institutions, utilities, and oil & gas companies failing to adopt 1.5-degree aligned business plans

Why it matters:

Board members play a critical role in determining a company’s direction, including how it manages and mitigates climate-related risks. Director votes happen annually, allowing investors to weigh in on critical issues, even if a shareholder resolution on the same topic hasn’t been filed. Investors have increasingly been turning to director votes as an important corporate governance tool, including at financial institutions, in recognition of the important role that banks and asset managers play in the low-carbon transition. 

Key votes to watch: 

• US banks: board directors are facing “vote no” campaigns at Goldman Sachs, JPMorgan Chase, and Bank of America, for either failing to have oil and gas exclusion policies, or failing to set absolute emissions targets for financed emissions in the oil and gas sector.
• US asset managers: investors are opposing the re-election of Amin Nasser, CEO of oil giant Saudi Aramco, to the BlackRock board. 
• US insurance companies: board directors are facing “vote no” campaigns at Chubb, The Hartford, Travelers, and W.R. Berkley for failing to disclose (scope 3) emissions connected to underwriting and investments. 
• Investors recommend voting against the entire board of directors at oil and gas companies that lack medium-term emissions reduction targets that cover at least 95% of their scope 1 and 2 emissions and relevant scope 3 emissions. Targeted companies include ExxonMobil, ConocoPhillips, and Occidental Petroleum.
• Directors at oil and gas companies and utilities that are otherwise 1.5 C misaligned, including due to poor policy engagement scores, are facing votes against relevant committee chairs at Chevron, Berkshire Hathaway, NRG Energy, Southern Company, WEC Energy Group, Dominion Energy, Duke Energy, First Energy, and PPL.

2. Resolutions supporting human rights, Indigenous rights, and environmental justice

Why it matters:

While the “E”, or environment, is often highlighted in ESG, the social side of corporate sustainability is also a key issue for company risk exposure, especially as public and private sector initiatives increasingly focus on ensuring a just transition to a decarbonized economy. Adopting policies to address social risks is a key step in corporate governance, but the implementation and impact of those policies is also important to investors. Resolutions are asking the companies to report on the efficacy of existing Free, Prior, and Informed Consent (FPIC) policies and to report on the environmental justice impacts of financing in the energy and power sectors.

Key votes to watch: 

• The Sierra Club Foundation filed an environmental justice impact reporting resolution at Goldman Sachs.
• Resolutions on respecting Indigenous people’s Free, Prior, and Informed Consent (FPIC) have been filed at JPMorgan Chase, Citigroup, Wells Fargo, and Travelers. 

3. Resolutions supporting responsible stewardship  

Why it matters:

Many financial institutions have touted stewardship and proxy voting as a central tool in hitting their net-zero commitments. In addition, an increasing number of clients are interested in ESG investments, including investment funds and services marketed as having climate impact benefits. For financial institutions to meet their commitments to shareholders and clients, they must improve stewardship efforts on climate.

Key votes to watch: 

• Resolutions requesting reporting on proxy voting (mis)alignment with client values have been filed at Goldman Sachs, State Street, JPMorgan Chase, and BlackRock; Bank of America and Citigroup face resolutions on allowing custom proxy voting options for clients.
• Resolutions requesting reporting on ESG proxy voting have been filed at JPMorgan Chase, State Street, and BlackRock.

4. Resolutions supporting for climate disclosures & target setting

Why it matters:

As climate risks grow, investors need relevant information to understand how companies are (or aren’t) preparing. Climate-related disclosures are therefore increasingly important and decision-useful information for responsible investors. Climate-related disclosure resolutions are not new and continue to be a foundational part of stewardship, while target-setting resolutions reflect the urgency of decarbonizing the economy.

Key votes to watch: 

• Resolutions requesting disclosure of the ratio of financing for clean to fossil energy were filed at Morgan Stanley, Bank of America, and Goldman Sachs. Similar proposals were withdrawn for commitments at Citigroup, JPMorgan Chase, and Royal Bank of Canada. 
• Chubb and Travelers were both asked to measure and disclose greenhouse gas emissions associated with underwriting and investments.
• Investors continue to request companies set medium or long-term emissions reduction targets and/or adopt transition plans. Such resolutions have been filed at AIG, DTE Energy, Southern Company, Berkshire Hathaway, and CenterPoint Energy.

5. Resolutions supporting lobbying disclosures

Why it matters:

Investors have long been asking companies for greater disclosure of corporate political spending and lobbying, as investors recognize the role that public policy plays in effectively responding to climate change. Corporate activities to influence public policy are a critical piece of information to help investors understand if companies’ political activity is in line with stated climate goals.

Key votes to watch: 

• Resolutions requesting lobbying disclosures at Edison International, Capital One, Morgan Stanley, Goldman Sachs, Wells Fargo, Bank of New York Mellon, and Bank of America. 
• Some resolutions ask for disclosure of the alignment of the company’s lobbying practices with the Paris Agreement. Such resolutions were filed at Wells Fargo and American Express.

For additional information on these resolutions and shareholder meeting dates, please see Proxy Preview. 

Big picture trends to watch this AGM season and beyond

Investor demands for disclosure and action

This year will see many resolutions calling for greater disclosure, as is often the case. Transparency on ESG issues, including climate, is critical to ensure investors have the information they need in order to make prudent investment and stewardship decisions. In recent years, investors have also increasingly filed resolutions requesting stronger policies and targets, not just disclosure. The absence of more action-oriented resolutions this year appears to be partly in response to the political environment created by the so-called “anti-ESG” movement, which has had a chilling effect on support for some of these types of resolutions. Major asset managers have thus far been less willing to support more action-oriented resolutions, and the SEC has blocked several others in response to corporate complaints. 

This should not be taken to mean that investors do not support actions that go beyond disclosure — in fact, many investors recognize that disclosure is only one part of risk management, and it is increasingly necessary for companies to adapt their business strategies to respond to growing risks like climate change. Improved disclosure should be seen as the floor, not the ceiling, of what is expected from companies. Ambitious, science-aligned emissions reduction targets, policies, and transition plans are necessary components of successful and resilient businesses.

Responding to climate change as a systemic financial risk

Companies, investors, and regulators increasingly recognize climate change poses a systemic risk to financial markets and is expected to have unprecedented impacts on the global economy. Investors have a responsibility to consider these risks in making not only investment decisions, but also decisions regarding their stewardship strategy. Investors’ responsibility on climate extends beyond capital allocation decisions — they must also be active stewards, holding portfolio companies accountable and pushing them to align with global climate goals and deliver emissions reductions in the real economy. This year, it is as critical as ever for investors to support resolutions that encourage a comprehensive approach to the management and mitigation of climate change as a systemic risk. 

A system rife with conflicts of interest

AGMs at financial institutions represent a unique instance of conflicts of interest. The largest shareholders of major banks, such as JPMorgan Chase and Goldman Sachs, are the major asset managers, like BlackRock and Vanguard. In turn, the asset management arms of these same banks own massive shares in the major asset managers. The results are thus often obvious — these companies rarely vote against each other, even when the risks of inaction are increasingly apparent. But as fiduciaries, they should prioritize their clients’ interests first, not staying in the good graces of their peers on Wall Street. 

Defining success for shareholder resolution votes 

Shareholder votes represent not just moral support for an issue — they represent investment capital and power. These are not political elections where winning is defined by getting majority support. Even a 10 or 20% vote total might not seem like a lot, but it represents a significant amount of capital pushing for change and dissent from board recommendations. Companies often act in response to shareholder resolutions that get under 50%. This is especially true with board director votes, where shareholder opposition is much less common, so even smaller portions of votes against directors is a strong signal of disapproval.

Media Interviews

Staff experts with the Sierra Club’s Fossil-Free Finance campaign are available to comment on AGM season trends and key votes. Please contact ada.recinos@sierraclub.org with any inquiries and interview requests.