Proxy season 2024 stock take: what shareholder votes tell us about stewardship

Each year, the proxy season is watched closely by investors, regulators, shareholders, activists and the general public. This annual festival of shareholder capitalism has become a critical focus point for climate stewardship.

Over the past few years, the number and types of climate-related shareholder resolutions that investors file and support has risen steadily. Slowly but surely, the annual gala of corporate democracy has given a stage for investors to push companies on their energy transition and for companies to demonstrate that they’re up to the task.

The results of the annual general meetings are no doubt important. They present a useful snapshot of how the decarbonisation agenda is playing out in the boardroom. Climate Action 100+, an investor coalition, flags several shareholder proposals each year. These are proposals that the coalition believes its signatories should pay close attention to. 

The results of these flagged proposals in 2024 have a story to tell.

Climate lobbying

In an era of industrial policy renaissance, its intention is sometimes unclear. While there are reasons to believe that this new era of state support is inspired by the IRA, fossil fuel subsidies reached a record high of $7 tn last year. Green or not, policies seem to matter to investors.

This year, resolutions made it clear that corporate lobbying is a material risk to the energy transition. A proposal co-filed by Calvert Research and Management and the Comptroller of the City of New York at PACCAR, a truck manufacturer, cited another factor: reputational risk.

“Companies face increasing reputational risks from consumers, investors, and other stakeholders, if they appear to delay or block effective climate policy”, the proposal says. 29.3% of shareholders supported this resolution.

Elsewhere, Japan recorded its highest ever vote in favour of lobbying disclosures at Nippon Steel. 27.8% of shareholders backed the proposal filed by Legal & General Investment Management and the Australasian Centre for Corporate Responsibility.

This season’s most supported climate-related shareholder proposal was a climate lobbying proposal at NextEra Energy – an American renewable energy company. Over 30% of shareholders backed it at the AGM in May.

Management accountability

Oil and gas major Chevron calls itself the “human energy company”. It raises an important point – energy companies are after all, human. This proxy season, investors put the humans who run these companies, under pressure for their climate transition plans.

By voting against the reappointment of certain directors, investors signaled their discontent with company strategy. While all flagged reappointments ultimately succeeded, some shareholders backing the filers.

For instance, Wespath Benefits and Investments voted against two directors at Chevron.

“Investors have repeatedly engaged Chevron without meaningful observable progress. Accordingly, we must publicly state our intention to vote against directors Austin and Hernandez, Jr. to underscore the materiality and urgency of action to address this issue”, the pension fund said in a statement.

The graph below shows other examples of votes against company management.

Upstream pressure

The two most common targets of the proposals flagged by CA100+ were upstream. 36% of these were filed at oil and gas majors while 29% targeted mining companies such as Rio Tinto and Glencore.

In both cases, proposals demanded clarity over how climate ambition was being backed up by action.

A case in point is Equinor, an oil and gas company majority-owned by the Norwegian government. Railpen, an asset owner, supported a resolution seeking clarity over the company’s capital expenditure plan.

The statement of support reads:

“We [also] believe that Equinor’s current strategy and capital expenditure plans pose significant risks to capital for investors such as Railpen. In turn, therefore, we believe this is an important resolution which is looking to help support the company in realising its long-term commitments”.

30% of non-government affiliated shareholders agreed with Railpen’s view.

Stewardship through the season extended beyond the AGM. The CA100+ flagged resolutions are a subset of the bigger picture. The results of the 2024 season signaled what the future of climate-related proxy voting could look like – climate lobbying is in the spotlight, director elections will reflect investor confidence in the transition strategy and upstream ambition not backed up by strategy is unlikely to win investor confidence.