2016 Proxy Season Brings Opportunity to Accelerate Corporate Sustainability Progress

Concerned About Climate and other Environmental Risks?

2016 Proxy Season Brings Opportunity to Accelerate Corporate Sustainability Progress

By Stuart Dalheim

As we turn the corner into 2016, our attention turns to the upcoming elections.  No, I am not referring to the elections for public office that already dominate the airwaves (though they are important too), but the opportunity investors have to participate in shareholder democracy by voting proxies during corporate annual general meetings. Springtime marks the height of the proxy season, which means investors can use their position as owners to vote on slates of corporate directors, make their voices heard about executive compensation packages, and cast ballots on a wide range of social and environmental shareholder proposals.

Investors are becoming more and more aware of the connections between financial, ecological and social risks in their investment portfolios and many are incorporating ESG factors into their analysis and buy and hold decisions. As this awareness grows and the public understands the significant impacts that companies have on the environment and society, and asks for change, investors increasingly engage via dialogue and shareholder proposals to ask how companies manage these risks to their business and reduce their impacts on the environment and society.

In turn every shareholder is presented an opportunity to vote their proxies and help to mitigate financial and ESG risks as active investors put forward shareholder proposals addressing topics including climate change, corporate political spending and diversity. Voting proxies in a thoughtful manner is not just a right of equity investors, but should be considered an obligation of share-ownership. It is our opportunity to participate in the governance of Corporate America, a chance to steer the ship toward a more just, sustainable and prosperous future.

According to a report from the Sustainable Investments Institute (Si2), investors filed more shareholder proposals at U.S. corporations in 2015 than ever before. A major new initiative from the New York City Comptroller in 2015 sought shareholder access to the proxy, the right to nominate directors for seats on corporate boards. Also popular were proposals seeking corporate action on climate change, from reducing greenhouse gas emissions to managing carbon asset risk to increasing investments in energy efficiency and renewable energy.

How did your institution vote it’s shares on proposals calling for ExxonMobil, Southern Company and Wal-Mart to establish goals to reduce greenhouse gas emissions? What about on resolutions that challenged Chevron to report on its initiatives to manage the environmental impacts of hydraulic fracturing, or proposals asking multinational food companies McDonalds and Kraft Foods to explain how they are curtailing deforestation in their global supply chains? Unfortunately, many large asset managers routinely vote against these kinds of proposals according to a report from Ceres.

In the fast approaching 2016 proxy season investors will have the opportunity to support proposals asking fossil fuel giants to disclose their exposure to carbon asset risk, calling on utilities to say how they are helping to move electricity generation and use into the 21st century, and asking companies from across sectors to set science based greenhouse gas reduction goals or targets for using renewable energy.

Multinational companies can benefit by acting on the clear market signal provided by the Paris Climate Agreement in December. Here’s hoping that investors send a strong message of their own this proxy season by supporting proposals that support the global transition to a lower carbon economy now underway.