Are US Investors Warming up to Climate Resolutions?

By Toby Belsom, Head of Investor Research & Analytics, ShareAction

Until very recently, institutional shareholders have been reluctant to vote in favour of resolutions at companies’ AGMs on environmental and social issues. Generally, a vote for the resolution would have been a vote against management’s recommendations – upsetting a cosy relationship. The principle of ‘management knows best’ seemed to stand. However, the last couple of years have a seen a series of high profile standoffs relating to pay and board structure on both sides of the Atlantic – WPP and Sports Direct being a couple of high profile UK examples.


ShareAction’s “Warming Up” report analyses the voting patterns by the top 30 shareholders at seven US quoted utilities and integrated oil businesses including Exxon Mobil, Occidental Petroleum and Southern Energy. These broadly similar resolutions requested more information on climate-related risk under certain climate and regulatory scenarios.


This report indicates that global institutional investors are becoming more comfortable about supporting climate related resolutions. Management in all these businesses recommended shareholders voted against these resolutions, and yet, a large proportion of the shareholder base defied that advice – with three gaining majority support. Our data from Proxy Insight indicates that climate related resolutions requiring more transparency around scenario planning have joined pay and board structure as an areas of where blue chip global investment firms are now willing to defy of executive management.

Specifically, this report reviewed seven resolutions filed at AGMs of integrated oil and utility businesses which requiring more information on the businesses strategies on aligning their operations to The Paris Agreement’s stated aim of keeping temperatures rise under 2°C. The increasing support for these resolutions since 2016 indicates that leading investors increasingly view this as a financially material issue. An increasing number of global investors clearly see how these companies plan to operate competitively in a carbon-constrained future as important in protecting long-term shareholder value.

Graph showing voting patterns

In the seven resolutions the report reviews, all showed increasing absolute levels of support from 2016 to 2017. Despite increasing overall support, there are clear differences in the way institutional investors approached these resolutions. Where they appeared in the top 30 shareholders, there is a core group that included Northern Trust, Morgan Stanley, Deutsche AM, LGIM, Norges, UBS and TIAA who consistently supported all resolutions examined in this study.

The two largest asset managers in the world, Blackrock and Vanguard, supported these types of resolution for the first time in 2017, while other asset managers such as Fidelity Management & Research Co and Goldman Sachs Asset Management changed their voting positions significantly in favour of the seven climate resolutions from 2016 to 2017.

This show of support from institutional investors is particularly pertinent against the political backdrop of President Trump triggering the get-out clause for US membership of the Paris Agreement on climate change.

Despite these changes, some institutional investors still support management based on default policies to vote with management across any environmental or social resolution – whatever the content or purpose. Other institutions seemed to vote inconsistently across the similar resolutions reviewed in this report.  Some investors report that supporting management is justifiable if a process of engagement is going on ‘behind the scenes’. ShareAction thinks this response is inadequate. Asset managers need to be clear and transparent about this engagement process; how it is being managed, identifying targets and what happens if companies are unresponsive. Asset owners need to challenge their managers to explain voting patterns, inconsistencies and outline what happens next if engagement stalls. We think this is particularly relevant where the asset manager has taken a different position from the major proxy advisers. In these seven resolutions (with one exception), we understand ISS and Glass Lewis advised clients to support the resolutions and vote against management.

For executive management of these businesses (and others) the message is increasingly clear – institutional investors want management teams to outline the impact of various climate scenarios. In line with an increasingly large group of institutional shareholders, we would welcome clear plans to deliver on shareholder requests on these resolutions.


The key conclusions are: Increasing support from a range of institutional investors in defiance of executive management; Some institutions have inconsistent voting patterns on similar resolutions with low levels of transparency around the rationales; This is not going away. Executive management need to provide clear action plans to meet new information demands from a growing group of investors.


Following a surge in support for climate-related resolutions, ShareAction is pleased to see that fund managers who consistently support management (and vote against these resolutions) with their proxies are becoming the minority. We are keen to see executive management step up to the plate with a stratergy to meet this growing call for further transparency on climate-related risk.

Thanks Toby! To read the full report, click here. To see our other latest reports, click here.

Beau O'SullivanAre US Investors Warming up to Climate Resolutions?