The ‘new normal’: climate risk reporting?
Global companies heading into their season of annual general meetings are encountering a spate of shareholder resolutions around climate risk – and they are responding with support for them. The board of Glencore PLC (LON: GLEN), which holds its AGM on May 19, has become the latest to express support for such a resolution, just a week after Rio Tinto plc (LON: RIO) overwhelmingly approved one.
CalPERS, the largest public pension fund in the United States with approximately $290 billion in total assets under management (AUM), has co-filed resolutions along with a coalition of asset owners assembled by CCLA Investment Management, which is based in the U.K. and manages investments for charities, religious organizations, and the public sector. This grouping of asset owners has come to be known as the ‘Aiming for A’ coalition.
Owning approximately 33,370,000 shares in Glencore, CalPERS has made it clear it will be voting for resolution #16 at the company’s May 19 meeting of shareowners, saying. “We believe this request is of particular importance in light of the global consensus regarding climate change and emission reductions reflected in the Paris Agreement (COP21) and the efforts by the Financial Stability Board to develop efficient climate-related financial risk disclosures.”
The resolution highlights five specific areas: ongoing operational emissions management, asset portfolio resilience to the International Energy Agency’s scenarios, low-carbon energy research, and development and investment strategies, relevant strategic key performance indicators and executive incentives and public policy positions relating to climate change.
In its proxy filing, the management of Glencore stated, "The chairman and head of sustainability met with representatives of the coalition prior to the requisition being submitted and expressed their support of the resolution's purpose."
"We are very pleased that Glencore's management supports this resolution," said Anne Simpson, CalPERS Director of Global Governance. "They understand investors need environmental reporting to best understand a company's risks and opportunities."
CalPERS says it believes that “companies should provide accurate and timely disclosure of environmental risks and opportunities associated with climate change. As outlined in CalPERS Beliefs, the effective management of environmental factors, including those related to climate change risk, increases the likelihood that companies will perform well over the long-term.”
When a climate risk reporting shareowner resolution passed at the annual shareowner meeting at Rio Tinto on May 5, Ms. Simpson said, “We applaud Rio Tinto and others who are joining with shareowners to move this vitally important issue forward now that we have the Paris Agreement to limit global warming."
“Climate risk is a mainstream investment issue, and needs to be managed. You can’t manage what you can’t measure, so new risk reporting is vital,” she added.
In April, a similar resolution passed overwhelmingly at the Anglo American plc (LON: AAL) shareowners meeting. At the time, Ms. Simpson said: "This is the new normal: climate risk reporting."
The vote at Anglo American showed, she said, “that investors and management are in partnership following the Paris Agreement to address climate risk and opportunity. Companies opposing climate risk reporting should take note."
According to a report in Feb. 2016 by As You Sow, the proxy impact and sustainable investment institute, shareholders had by then filed 94 proposals tied to climate change - a 15 percent rise from the 82 proposals filed in 2015.
Dina Medland is an independent writer, editor and commentator with a strong focus on issues around corporate governance, ethics, the workings of the boardroom and sustainable business. She is on the team of contributors to @ForbesEurope and is an ex-Financial Times staff member who has been a regular contributor in recent years. Further details about her background and a portfolio of work – including her commercially sponsored blog ‘Board Talk’ are available on her website http://www.dinamedland.com