Insights from Three Years of Say-on-Climate Resolutions
Unlocking the Complexity of Say-on-Climate Resolutions: A Deep Dive into Voting Trends
As the world grapples with the urgent need to address climate change, companies are increasingly under pressure to demonstrate their commitment to sustainability. One way shareholders are holding companies accountable is through say-on-climate resolutions, which allow them to express their views on a company’s climate strategy. In the past three years, we have seen a significant increase in the number of these resolutions being proposed, with European companies leading the charge.
European Dominance in Say-on-Climate Resolutions
European companies have been at the forefront of the say-on-climate movement, accounting for a staggering 83% of the 87 resolutions reviewed in the past three years. This demonstrates a strong commitment to addressing climate change among European businesses. However, the trend has been slower to catch on in other regions, such as North America, where shareholder resolutions on climate strategy are more common.
Changing Tides: Managers’ Evolving Stance on Climate Strategy
While shareholder support for say-on-climate resolutions has been relatively high, averaging 89% over three years, there has been a noticeable shift in asset managers’ voting patterns. The support from 25 asset managers we reviewed declined significantly from 92% in 2021 to around 70% in 2022 and 2023. This decline could indicate a growing demand for more ambitious climate strategies from companies.
Interpreting the Results: A Complex Landscape
As managers’ views on climate risk diverge, interpreting the voting results of say-on-climate resolutions has become increasingly challenging. Different asset managers have varying criteria for evaluating a company’s climate strategy, leading to a wide range of voting decisions. For example, while BlackRock focuses on disclosure and oversight of climate strategy, State Street and Vanguard prioritize disclosure. This diversity in voting rationales makes it difficult to draw clear conclusions from the aggregate results.
Overall, the rise of say-on-climate resolutions reflects a growing awareness of the importance of climate action among shareholders and companies alike. As the conversation around climate change continues to evolve, it will be crucial for companies to engage with shareholders and asset managers to ensure alignment on climate strategies and goals.
