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ESG battles to look at throughout this yr’s AGM season

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PepsiCo, Amazon and Citigroup have been named alongside a small group of worldwide corporations to look at throughout this yr’s annual assembly season, as buyers demand companies step up on points from local weather change to using various workforces.

ShareAction, the responsible-investment charity, stated the “13 most vital ESG resolutions” of 2021 included a proposal calling on Basic Motors to reveal its lobbying round local weather change, a decision calling on the board of Walt Disney to strengthen oversight of workforce equality points together with racial and gender pay fairness, and a vote on biodiversity at Amazon.

The record comes at a time of intense scrutiny over how asset managers vote at annual conferences, with widespread concern that large buyers typically proclaim their ESG credentials however fail to again resolutions on points equivalent to local weather change.

“Shareholder voting works. Resolutions can ship every little thing from decarbonisation targets to wholesome consuming methods,” stated Man Opperman, minister for pensions and monetary inclusion within the UK.

Regardless of many large buyers warning that points equivalent to local weather change pose large monetary dangers, few ESG proposals go annually.

In keeping with ShareAction’s Voting Matters report, solely 15 out of 102 ESG resolutions it examined acquired majority assist in 2020. BlackRock and Vanguard, the world’s largest asset managers, backed 12 per cent and 14 per cent of proposals, respectively.

However the group argued the resolutions on its record for 2021 have been “prime quality, high-impact proposals” and referred to as on asset house owners and asset managers to again the proposals. The record additionally consists of resolutions on local weather change at Barclays, the UK financial institution, wholesome consuming at grocery store group Tesco and on human rights at Wendy’s Worldwide, the fast-food chain.

Citi stated it was “acutely targeted on addressing racial inequity, particularly when it comes to the wealth hole it creates”.

Barclays, which already had a shareholder vote regarding local weather change final yr, stated it has set a net-zero goal and supplied particulars of its plans to realize this in November. “We proceed to debate our ambition and progress with our buyers.”

Tesco stated it didn’t consider the shareholder decision was obligatory, arguing it has set new “bold commitments on well being” that go additional than was requested by the proposal at its annual assembly.

Basic Motors stated it “believes local weather change is actual and we’re advocates for local weather motion”.

ShareAction stated the amount of shareholder proposals worldwide, which numbered greater than 2,000 final yr, meant some pension funds and different asset house owners struggled to establish which resolutions ought to be prioritised for discussions with their asset supervisor and the businesses themselves.

It referred to as on asset house owners to ask their managers to vote for the resolutions on the record, to declare their voting intention earlier than the assembly and to publish a rationale for any deviations in voting outcomes. 

“Too typically giant asset managers have tried to dismiss criticism about their poor voting information by making unsubstantiated claims in regards to the high quality of shareholder proposals,” stated Isobel Mitchell, ShareAction’s senior analysis and engagement officer. “This record removes that excuse.

“We hope it is going to give asset house owners the arrogance to carry their managers to account by highlighting impactful resolutions that clearly deserve assist.”

Opperman added: “Pension fund trustees, you will have the facility — ask your fund supervisor to assist shareholder resolutions or change to a fund supervisor who allows you to set your individual coverage. Let’s make 2021 the yr of stewardship, and push for constructive change.”

Colin Baines, funding engagement supervisor at Buddies Provident Basis, stated asset house owners have been “paying growing consideration to how asset managers vote on ESG resolutions as a proxy for the way significant their ESG integration and engagement is”.

He stated many asset house owners needed their asset managers to introduce a presumption to vote in favour of ESG resolutions.

“For a lot of new entrants to the ESG market, together with a number of the world’s largest asset managers with a poor historic ESG voting file, this AGM season will probably be a check of simply how critical they’re.

“Failure to assist ESG resolutions will legitimately open the best way to accusations of greenwashing,” Baines stated.