ESG battles to watch during this year’s AGM season

PepsiCo, Amazon and Citigroup have been named alongside a small group of global companies to watch during this year’s annual meeting season, as investors demand companies step up efforts on issues ranging from climate change employing a diverse workforce.

ShareAction, the charity for responsible investment, said the “13 Most Important ESG Resolutions” of 2021 included a proposal calling on General Motors to disclose its lobbying around climate change, a resolution calling on the board of directors from Walt Disney to strengthen oversight of workforce equality issues. including racial and gender pay equity, and a biodiversity vote at Amazon.

The list comes at a time of scrutiny of how asset managers vote at annual meetings, with widespread concern that large investors often proclaim their ESG credentials but fail to support resolutions on issues. such as climate change.

“Shareholder voting works. Resolutions can do everything from decarbonisation goals to healthy eating strategies, ”said Guy Opperman, UK Minister for Pensions and Financial Inclusion.

Although many big investors have warned that issues like climate change pose huge financial risks, few ESG proposals are adopted each year.

According to ShareAction Voting questions report, only 15 of the 102 ESG resolutions reviewed received majority support in 2020. BlackRock and Vanguard, the world’s largest asset managers, supported 12% and 14% of the proposals, respectively.

But the group argued that the resolutions on its list for 2021 were “high-quality, high-impact proposals” and called on asset owners and asset managers to support the proposals. The list also includes resolutions on climate change at Barclays, the UK bank, healthy eating at the Tesco supermarket group, and human rights at Wendy’s International, the fast food chain.

Citi said she was “strongly focused on tackling racial inequalities, particularly in relation to the wealth gap it creates.”

Barclays, which already had a shareholder vote on climate change last year, said it has set itself a target of net zero and provided details of its plans to get there in November. “We continue to discuss our ambition and progress with our investors.”

Tesco said it did not think the shareholders’ resolution was necessary, arguing that it had set new “ambitious health commitments” that go beyond what was called for by the proposal at its annual meeting. .

General Motors said it “believes climate change is real and we stand up for climate action.”

ShareAction said the volume of shareholder proposals around the world, which stood at over 2,000 last year, meant some pension funds and other asset owners were struggling to identify which resolutions to prioritize for. discussions with their asset manager and the companies themselves.

He called on asset owners to ask their managers to vote for the resolutions on the list, to declare their intention to vote before the meeting and to publish a justification for any discrepancy in the results of the vote.

“Too often, large asset managers have attempted to dismiss criticism of their poor voting results by making unsubstantiated statements about the quality of shareholder proposals,” said Isobel Mitchell, senior director of research and ShareAction’s commitment. “This list removes that excuse.

“We hope this will give asset owners the confidence to hold their managers to account by pushing hard-hitting resolutions that clearly deserve support.”

Opperman added: “Pension fund trustees, you have the power – ask your fund manager to support shareholder resolutions or switch to a fund manager who allows you to set your own policy. Let’s make 2021 the year of stewardship and push for positive change. “

Colin Baines, head of investment engagement at the Friends Provident Foundation, said asset owners “are paying increasing attention to how asset managers vote on ESG resolutions as an indicator of the importance of their integration and their ESG commitment ”.

He said many asset owners want their asset managers to introduce a presumption of voting in favor of ESG resolutions.

“For many new entrants to the ESG market, including some of the world’s largest asset managers with historically poor ESG voting records, this AGM season will be a test of how serious they are.

“Failure to support ESG resolutions will legitimately pave the way for accusations of greenwashing,” Baines said.

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