It appears that 2022 will be particularly active on the scene of shareholder activism in the face of climate change. Will he be able to shake off the dominant inertia?
At the beginning of the year, the World Economic Forum published its traditional report on the various global risks. As of 2019, the three considered most likely to materialize are environmental. However, in 2022, climate inaction dethrones extreme weather conditions, notes the Responsible Investment Group (GIR) in its 2022 analysis published last week.
This brings us back to the 10th report published by the Intergovernmental Panel on Climate Change (IPCC) at the end of February, each report always being more alarming than the next. Scientists note that global warming is going even faster than feared and that some of its impacts are now “irreversible”. To add that “any delay […] will cause us to miss the brief window of opportunity to secure a viable future for all of us and which is rapidly closing”.
Before the Paris Agreement serving as a reference, there were around fifteen international conferences, at least three Earth Summits, around ten international initiatives and at least five reports from the IPCC, which is beginning its sixth assessment cycle. . In total, nearly 35 years have passed since the creation of the IPCC and 26 years since the COP1 in Berlin in 1995, without us managing to sufficiently reduce greenhouse gas (GHG) emissions. Worse, in the energy sector, global emissions hit a record high in 2021, according to data from the International Energy Agency.
Shareholder activism
However, the GIR sees growing activity and ever-increasing engagement among investors. “Climate change remains the environmental issue of the day for responsible investors. Many proposals will be submitted in 2022, several of which relate to reduction targets and energy transition plans. »
The year 2021, which was rather fertile in results, reinforced the idea that shareholder activism and the exercise of votes “constitute a key tool for improving the transparency and environmental practices of companies”. In particular, there was an increase in the number of resolutions withdrawn, which would indicate that they resulted in action by the board of directors and management. In the United States, for the 2022 general meetings, the examination of the proxy voting guidelines formulated by the non-profit organization Interfaith Center on Corporate Responsibility shows that shareholder proposals focused on climate have increased 88% compared to last year, which makes “climate the category of deposit [de résolutions] the most active.
“Our review of climate action resolutions presented in 2021 or prepared for presentation in 2022 showed that their content varies considerably. The most basic resolution requires companies to calculate and disclose their GHG emissions. The most advanced, on the other hand, […] call for robust plans linked to international guidance that include monitoring and evaluation, and in some cases, the creation of committees within the board to study climate risks or the appointment of competent climate risk specialists to boards. »
There’s still much to do
But a lot remains to be done. According to Canadian observations, a report published in January by the accounting firm PwC based on data collected in September showed that 62% of the 150 large companies listed on the stock exchange say they recognize environmental, social and governance factors, but that only 30% have set timelines for achieving their ESG goals. Inertia is more marked in the face of global warming. Only 35% have a formal net-zero commitment, but only 17% have set a deadline.
In the United States, the contradiction between the declared values of companies and their practices of lobbying and political financing contrary to their commitments constitutes an important subject of concern for responsible investors. “In 2022, several proposals will focus more specifically on climate lobbying and alignment with the GHG emission reduction targets of the Paris Agreement. Others will look more broadly at the inconsistency between the values displayed by societies on various issues (diversity, climate protection, etc.) and the funds granted to various parties, politicians or organizations”, specifies the GIR.