Companies are warming up to climate activists

Corporate leadership is proving more receptive to climate activists at shareholder meetings.

    Data on climate proposals filed at annual shareholder meetings show that firms are more receptive to adopting policies sought by climate activists [File: Eric Gaillard /Reuters]
    Data on climate proposals filed at annual shareholder meetings show that firms are more receptive to adopting policies sought by climate activists [File: Eric Gaillard /Reuters]

    Climate activists found companies more receptive to steps like cutting emissions and buying clean power this year, a new tally of shareholder resolutions shows.

    Proponents say the trend undercuts the case for rule changes sought by business groups to make it more difficult to file proxy resolutions at annual shareholder meetings.

    Of the 145 climate-related proposals filed for this year's springtime annual shareholder meeting season, 39 percent led to deals for greener policies being struck with corporate top brass, and the proposals were withdrawn, according to Ceres, a nonprofit Boston-based advocacy group that coordinates and tracks such resolutions. Last year, the rate was 36 percent. It was 21 percent in 2015. With subsequent years, more climate-friendly deals were made - negating the need to bring the resolutions to a shareholder vote.

    An example of the trend is the April agreement by Yum! Brands Inc - the parent company of Taco Bell, KFC and other fast-food restaurants - to track its emissions and to identify ways to reduce them - a move that lead activists to withdraw a shareholder proposal before a shareholder vote, a company spokeswoman confirmed.

    Executives are more inclined to compromise as extreme weather shows the impact of climate change, said Rob Berridge, Ceres's director of shareholder engagement.

    "The weather is worse, so the climate for these climate proposals is better. Companies are more receptive," he said.

    Along with climate resolutions, proposals focused on other areas such as director-nomination rules have also found traction, said John Roe, head of ISS Analytics, part of the proxy adviser Institutional Shareholder Services.

    ISS data shows that among the roughly 820 resolutions of all types filed in each of the past three years, withdrawal rates were 23 percent in 2017, 31 percent in 2018 and 30 percent so far in 2019. ISS's data does not capture how withdrawals were tied to deals. The counts by ISS and Ceres both include mainly United States companies.

    Stephen Giove, a partner at law firm Shearman & Sterling who represents large companies, said executives prefer to settle in private rather than confront shareholders at annual meetings, especially after high-profile wins for activists at several energy companies.

    Giove said that in several areas, there is "now more leverage on the side of the proponents".

    The trends match how companies have responded to other criticisms, such how some banks have pulled back from private prisons and gunmakers.

    The tallies will inform a debate over proposed rule changes sought by business groups such as the US Chamber of Commerce and the Business Roundtable to make proxy resolutions harder to file. Representatives for each group did not comment on Ceres's tally.

    A regulatory filing shows that the staff of the US Securities and Exchange Commission could recommend rule changes next April.

    Danielle Fugere, president of activist organization As You Sow, said rule changes are not needed. "It's become very clear that shareholders appropriately care about climate change," she said.

    Fugere cited resolutions by her group calling for supermarket chain Kroger Co to report on renewable energy use, winning 25 percent investor support in 2017 and 31 percent in 2018. This year, she said, As You Sow made a deal with Kroger and withdrew the proposal.

    Via email, Kroger Group Vice President Jessica Adelman said the company spoke with As You Sow about cutting energy use - and that it is getting ready to set a new carbon-reduction commitment.

    "We always engage with investors," she said.

    SOURCE: Reuters news agency