Graph of the week

Graph of the week

26-02-2021 | Insight

Making shareholder votes really count with a ‘Say On Climate’

  • Sylvia van Waveren
    van Waveren
    Engagement Specialist

Decarbonization is a hot topic among investors. With the season of Annual General Meetings (AGMs) fast approaching, shareholders are preparing to cast their votes on companies’ climate change policies and energy transition plans. I expect those who don’t present a rigorous climate policy will face increasing opposition from shareholders this voting period.

Shareholders have been able to use their voting right to tackle a company's climate policy for some time. For example, by voting on shareholder resolutions that are placed – under strict conditions – on the agenda for the AGM. However, this is not always an easy or effective route, according to a recent academic paper entitled, ‘Sustainable Voting Behavior of Asset Managers: Do They Walk the Walk?’.

Authors Wilma de Groot and Jan de Koning, both from Robeco, and Sebastian van Winkel from the Erasmus School of Economics, researched the voting behavior of US asset managers over the past ten years, drawing on more than 20 million observations.

The data revealed that these asset managers had largely voted against proposals related to the ‘E’ in ESG (environment, social & governance), despite the increased focus on sustainability integration. What’s more, the number of votes in favor of such proposals was scarcely higher than ten years ago.

The graph below, whose thick line represents shareholder resolutions related to the environment or climate change, clearly shows these low percentages.

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Source: de Groot, Wilma and de Koning, Jan and van Winkel, Sebastian, ‘Sustainable Voting Behavior of Asset Managers: Do They Walk the Walk?’ (February 10, 2021). Available at SSRN:

Shareholder resolutions aren't always effective

What's going wrong? Although asset managers have displayed responsibility in their policies, in particular with respect to environmental and social issues, this is evidently not yet reflected in their voting behavior. Why is this? A highly plausible explanation is that we need to recognize not all proposals related to this area are inherently viable and that asset managers shouldn't therefore be expected to vote in favor of them. Often, they are submitted by stakeholders who are not necessarily institutional shareholders.

Viable shareholder proposals need to be aimed at supporting a company with its next steps in the climate transition. But proposals that want to ban the use of so-called transition fuels could, in fact, be counterproductive for the company and its shareholders.

So why can't shareholders themselves simply submit a viable proposal? That's virtually impossible, given the thousands of listed companies they invest in and the enormous amount of work associated with getting just one proposal on the agenda.

Taking the initiative with a ‘Say On Climate’

A unique development we’ve seen this year is companies themselves placing a ‘Say On Climate’ proposal on the AGM agenda to gain shareholder support for their climate strategy. This gives investors an annual advisory vote on a company's climate plans.

The development is a result of intensive engagement by investors, united in the Climate Action 100+ initiative, with the 100 most climate-sensitive companies. With ‘Say On Climate’ on the AGM agenda at Unilever, Royal Dutch Shell, Rio Tinto and Glencore, the current forerunners, shareholders now have a regular and ongoing influence on companies’ climate strategies.

This enables them to keep a finger on the pulse of the companies’ progress in the energy transition over the next three decades. I applaud such initiatives and hope this will become the modus operandi of many more listed companies, as it is a far more effective way for shareholders to stimulate changes to climate policy.

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