Missing60A failure of forceful stewardshipThe Task Force on Climate-Related Financial Disclosure has recommended that publicly traded companies examine, quantify, and manage the risks posed to their businesses by climate change. The aim of the Task Force is more transparent and more resilient global securities markets. We share the view that climate change poses a systemic risk to markets and investors. But much more is at stake. Without a rapid transition to a low-carbon economy, we believe destruction in shareholder value and planetary viability are inevitable. Institutional investors who do not contest BAU at fossil fuel and utility companies are failing in their fiduciary duties to their clients. The risk posed by climate change is systemic in nature, meaning it is pervasive, interconnected and unpredictable. The timing and degree of climate change impacts on portfolios is unknowable, however portfolio managers cannot ignore the risks building within diversified portfolios. We call on global asset managers to use their leverage as large shareholders to practice forceful stewardship. A forceful steward:
During the 2016 AGM season—in the wake of the Paris Agreement—we had great hopes that investors would step up to demand more aggressive action on GHG emissions reductions. After a series of wins at BP, Shell, Statoil, and other European companies—where nearly 100% of proxy votes were cast in support of disclosures around 2°C scenario risk—similar measures at ExxonMobil and Chevron attracted only 40% of the votes. Exxon and Chevron management opposed the shareholder resolutions and the majority of voters sided with management. Preventable Surprises launched its Missing60 campaign to call out institutional voters who sided with management in the U.S., reversing their positions on climate change in Europe and Canada. More than 46 signatories joined on to our campaign, demanding an explanation from the Missing60. We interviewed a sample of the signatories for an article in Responsible Investor shortly before the voters’ names were made public. When the SEC released the voting results, we interviewed some of the largest investors in the Missing60, as well as investors who voted in support of climate friendly resolutions. The article not only forced the Missing60 to explain their inconsistent voting records, it also juxtaposed their positions with the views of investors who are very clear on the threats posed by climate change and the need to manage climate risk. We saw two very different views of fiduciary duty. As the 2017 AGM season approaches, we are continuing to lobby institutional investors to address systemic risk by voting in support of all shareholder resolutions that reduce emissions and promote renewable energy. We have a particular focus on the utility industry as the largest consumer of fossil fuels. |
|