Letter from the Publisher

Andrew Behar

As critical environmental and social systems reach breaking points, investors once again are using shareholder resolutions as a means to flag key risks for companies and markets around the world. However, this year has a different tone—an increased intensity. Time seems to be running out.

Proposals highlight three levels of systemic impact—the individual, society and the planet. For individuals, there are increasing links between disease and long-term exposure to chemicals and pesticides. For society, systemic racism, discrimination and the privileges of the very few are exacerbating old,

persistent rifts. For the planet, corporate dumping in the commons is pressing us past the point of no return—changing the climate, killing the ocean and collapsing ecosystems.

Interconnected systems are all at risk. Now, more than ever, corporate leaders must listen carefully to shareholders who offer collaboration and ideas to create a safe, just and sustainable future. Employees want to see their personal values reflected in corporate contracts and policies. Customers want companies to explain how they are solving social and environmental problems—and voting with their wallets when they don’t. Companies can’t afford to write off ideas for managing these risks.

As this 15th edition of Proxy Preview shows, shareholder proponents’ tenacity, passion and wide range of interests persists. As always, resolutions capture the zeitgeist. They address fair pay and working conditions, immigration and the penal system, board and workplace diversity, toxic media platforms, the opioid epidemic, high drug prices, ethical finance, corporate political influence, animal testing, toxic food, deforestation, plastic pollution, water and climate change. They also ask hard questions about how companies govern themselves to address these issues—and what they tell us about mitigating negative impacts and uncovering new value propositions.

The 2019 shareholder resolutions demand urgent attention from many stakeholders, from all shareholders and especially from the largest asset owners who control so much of the market. While big mutual funds have begun to weigh in on critical global market risks raised in resolutions, with bold public statements from some, most remain reluctant to exercise their proxy voting power. This abdication of responsibility needs to change; those that allow these trends to continue are complicit in the outcomes.

Many corporate leaders and large asset owners seem bound by stereotypes about shareholder advocates who file resolutions. The overwhelming majority of resolutions are filed by long-term investors who contend that profit and good corporate citizenship go hand in hand. Shareholder resolutions have an extraordinary 40-year track record of often being the first to identify risk and offer recommendations regarding critical environmental, social and governance issues that affect society and the bottom line. Resolutions are not intrinsically adversarial, although many companies view them that way, yet more and more companies are working cooperatively with proponents and seeing the benefits that can bring.

As shareOwners we strive to work together with management to find solutions that help create a livable world that will allow both businesses and future generations to thrive.


Andrew Behar
CEO, As You Sow

Full Executive Summary

Proponents have filed at least 386 shareholder resolutions on environmental, social and sustainability issues for the 2019 proxy season, with 303 still pending as of February 15. Securities and Exchange Commission (SEC) staff have allowed the omission of only six proposals so far in the face of company challenges, far fewer than the 27 omitted at this point last year because the SEC was included in the recent six-week government shutdown. Companies have lodged objections to at least 54 more proposals that have yet to be decided.

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Overview and New Issues in 2019

This section provides a look at the main issues raised in each of the topics covered in this report, giving special attention to new issues and continuing points of contention about the Security and Exchange Commission’s shift in interpretation of its Shareholder Proposal Rule, set out in two Staff Legal Bulletins issued in the last two years. (See Update on Shareholder Proposal Rule Reform for more.)

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Update on Shareholder Proposal Rule Reform

The SEC, shareholder rights advocates and companies have been jockeying for position about possible changes to the Shareholder Proposal Rule over the last two years, as noted above. New interpretations about proposals have come out in two new legal bulletins from the commission—issued in 2017 and 2018, a formal roundtable has aired opposing views about the need for reform in November, and a Senate hearing considered possible new requirements for proxy advisory firms in December.

SEC Staff Legal Bulletins: Proponents are grappling with the fallout from recent interpretive guidance issued by the SEC’s Division of Corporation Finance, the referee which determines if proposals challenged by companies meet the requirements of the Shareholder Proposal Rule (see Appendix for a listing of substantive and technical grounds for omission). SEC Staff Legal Bulletin 14I in November 2017 articulated the staff’s current view about what constitutes “ordinary business” and what is “significantly related” to a company, two of the rule’s provisions. The bulletin also called for more deliberation by boards of directors on these issues to help shape SEC assessments of what should be in included. In October 2018, Staff Legal Bulletin 14J clarified the earlier guidance.

As discussed above (p. 8), the decision last year at EOG Resources reversed longstanding precedent when it said a greenhouse goals proposal would “micromanage” the company, an ordinary business matter, and allowed the proposal’s omission. The fate of additional similar proposals about setting greenhouse gas emissions goals this year remains uncertain. In 2018, the overall proportion of omitted proposals did not jump much despite proponents’ concerns, but its impact was clearly felt on climate change proposals, where omissions rose significantly (graph, p. 8). In their SEC challenges about 2019 resolutions, companies are arguing that many other issues also seek to micromanage and therefore address ordinary business and can be excluded, citing both bulletins and the EOG letter. No decision has yet emerged.

The question of boards’ analysis of a resolution’s significance came up in the political activity proposal challenges last year, and in a few others, but did not seem to affect SEC decisions. It was addressed further in the 2018 bulletin, however, and 2019 challenges are providing more information than last year about the nature of board deliberations, which could affect decisions this year.

Sanford Lewis, an attorney working for many of the proponents discussed in this report, penned a legal analysis of the 2017 bulletin in July 2018. He argued it threatens “market-wide” impacts on issues “that could affect corporate risk management and financial and ESG performance.” Gibson Dunn, a law firm companies often hire to lodge their challenges, concluded in July that while initial attempts to use the 2017 bulletin to exclude proposals were “generally unsuccessful,” they may be going forward.

SEC roundtable: SEC chair Jay Clayton said last July, “Shareholder engagement is a hallmark of our public capital markets, and the proxy process is a fundamental component of that engagement.” But he said the commission should review the process because more companies are reporting shareholder engagement, on more issues, and the commission needs to determine if current rules are effective. As a result, the commission hosted a roundtable on November 15 to consider proxy voting mechanics and technology, shareholder proposals and “effective shareholder engagement and the role played by proxy advisory firms. (The commission is continuing to invite comments, which can be seen on its website.)

Legislative developments: As noted in the executive summary, some business groups, including the National Association of Manufacturers (NAM), are working to make it more difficult for shareholder resolutions to be filed and reconsidered, and to restrict the activities of proxy advisory firms. But so far they have been unable to pass a law that would affect the process. The House did pass H.R. 4015 in December 2017, regarding proxy advisors; the Senate Banking Committee held a hearing on Dec. 6, 2018, which saw some comments similar to those from the November roundtable. It did not proceed further.

NAM is supporting these efforts with a new entity called the Main Street Investors Coalition (MSIC), asserting shareholder proponents are playing politics to the detriment of good financial returns. The proponents counter they are raising key issues that threaten long-term corporate financial health, alongside harms to the environment and society. Mainstream investment firms and corporate governance experts continue to excoriate Main Street Investors, in acidic terms such as the August blog post from the mutual fund behemoth Morningstar entitled “Attacks on ESG from the Swamp.”

While battle lines in Washington are clear, the outcome is uncertain—largely because longtime proponents of shareholder resolutions now count as allies major players on Wall Street who routinely use environmental and social metrics to make decisions about investments. Investors signed up to the UN Principles for Responsible Investment manage $70 trillion.

The 2019 Proxy Season

This section of the report presents information on the 386 shareholder proposals investors have filed as of February 15, 2019 for the 2019 proxy season. Additional proposals for spring votes will show up as the season progresses and a dozen or so more are likely to be filed for meetings that occur after June.

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Environmental Issues

Climate change continues to be central to most of shareholder proponents’ concerns on the environment. The climate conversation in the proxy process remains focused on greenhouse gas emissions management, Paris-compliant transition planning and carbon asset risk, with these subjects accounting for three-quarters of the 58 proposals filed.

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Climate Change

As average global temperatures continue to rise and the disasterous effects threaten major population centers and significant geographical regions, investors are continuing their efforts to enlist companies in the fight to lessen the worst effects. In the United States, political barriers to climate action continue to abound. President Trump not only denies climate science, but also has openly mocked those who take it seriously.

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Greenhouse Gas Emissions Management

Shareholder resolutions about tracking, managing and reducing GHG emissions—a critical step if companies are to effectively address climate risks and seize related opportunities—remain under threat by a key no-action letter the SEC staff issued Feb. 28, 2018, at EOG Resources, which came too late to affect last year’s proposals. Companies earlier had been successful in knocking out relatively new requests to set net-zero emissions goals, but the EOG decision was much broader, suggesting that proposals about GHG goals in general amounted to “micromanagement,” a long-established matter of ordinary business that companies can cite to exclude a resolution from the proxy statement. This year, proponents are trying several new approaches in the hopes they will thread the SEC’s needle of acceptability.

Greenhouse Gas Emissions Management

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Michael Garland
Assistant Comptroller, Corporate Governance and Responsible Investment Office of New York City Comptroller

New York City Comptroller Scott Stringer, on behalf of the New York City pension funds (the “NYC Funds”), submitted a shareowner proposal to TransDigm Group on September 19, 2019, requesting that the company adopt a policy with time-bound, quantitative, company-wide goals for managing greenhouse gas (GHG) emissions, taking into account the objectives of the Paris Climate Agreement, and report on its plans to achieve these targets.

It may be that the courts will decide, however. In December, the New York City Comptroller’s office sued TransDigm in federal court, in the Southern District of New York, seeking a preliminary injunction to force the company to include a proposal asking it to adopt GHG reduction targets. Ultimately, the company agreed to include the proposal before a court decision so no legal precedent has been set, but the comptroller has set down a clear marker that the city pension funds will sue again if a company excludes a similar proposal— possibly preemptively, before any SEC no-action letter. Whether a company will take up this gauntlet remains to be seen, but several challenges to the proposals using arguments similar to those employed by TransDigm are pending at the SEC, as noted below.

Time-bound quantitative targets: Eleven of the resolutions reiterate previous GHG goals proposals, with slightly different language, all invoking the 2015 Paris Climate Treaty.

Managing—Resolutions at Amazon.com, Home Depot, TransDigm and Vertex Pharmaceuticals ask each to “adopt a policy with quantitative, company-wide goals for managing greenhouse gas (GHG) emissions, considering the objectives and timelines of the Paris Climate Agreement, and report...on its plans to achieve these targets.” Amazon.com investors last voted on a climate-related proposal in 2012, giving 21.1 percent support to a report request about climate change impacts.

Reducing—Similar proposals include requests for a report at C.H. Robinson (where a similar resolution earned 37.8 percent last year), Emerson Electric (39 percent) and Flowserve (22.1 percent) and asks for “the adoption of time-bound, quantitative, company-wide, science-based targets for reducing total greenhouse gas (GHG) emissions, taking into account the goals of the Paris Climate Agreement” and report on “plans to achieve these goals.” This is very close to the proposal from New York State Common Retirement Fund (NYSCRF) pending at Fluor (in its fourth year, with 41.6 percent last year) and Vistra Energy (new) which specifies the report should be by December 2019.

Trillium Asset Management is slightly more prescriptive, asking Illinois Tool Works (24.6 percent last year) and J.B. Hunt Transport Services (21.4 percent last year) to adopt “quantitative, company-wide targets for reducing greenhouse gas (GHG) emissions, consistent with the goals of the Paris Climate Agreement,” with annual reports on “plans and progress towards achieving these targets.”

Reporting on targets: A reformulated proposal at Chevron, Devon Energy and ExxonMobil seeks

annual reporting from 2020, include disclosure of short-, medium- and long-term greenhouse gas targets aligned with the greenhouse gas reduction goals established by the Paris Climate Agreement to keep the increase in global average temperature to well below 2 Degrees C and to pursue efforts to limit the increase to 1.5 Degrees C.

Devon investors have not seen a GHG goals proposal before but gave a request for a climate change scenario report 41 percent support in 2017; in 2018, proponents withdrew there after Devon agreed to produce the report. Earlier proposals at ExxonMobil asking it to adopt GHG goals earned in the 20-percent range each year from 2010 to 2014, then missed the resubmission threshold in 2015 with a vote of only 9.6 percent. Proponents shifted tactics and asked for a climate change scenario analysis and received unprecedented 62 percent support in 2017, prompting further disclosures from the company but still no pledge to set reduction targets.

At Ross Stores, the request is for “a climate change report...by November...that describes how the Company is aligning its long-term business strategy with the projected long-term constraints posed by climate change, and describing medium- and long- term goals for GHG reduction.”

Paris-compliant transition—In new variants on GHG emissions reporting, As You Sow is asking five energy companies about any plans to lighten their carbon footprints. At Anadarko Petroleum, the request is for a report “describing if, and how, it plans to reduce its total contribution to climate change and align its operations and investments with the Paris Agreement’s goal of maintaining global temperatures well below 2 degrees Celsius.” It suggests the requested report should explain the pros and cons of low-carbon energy investments, reduced investment in high-carbon resource development and operational diversification to cut carbon emissions. In similar language, at Chevron, ExxonMobil (both of which also have quantitative goals resolutions, as discussed above), as well as at Hess, the proposal seeks a report “on how the company can reduce its carbon footprint in alignment with greenhouse gas reductions necessary to achieve the Paris Agreement’s goal of maintaining global warming well below 2 degrees Celsius.” The proposal at Cooper Cos. says the report should evaluate “the feasibility of the Company achieving greenhouse gas emissions reductions in line with Paris climate change goals for those parts of the business directly owned and operated by the Company.”


Danielle Fugere
President, As You Sow

Climate change poses growing risk to the
individual companies in which shareholders invest and, significantly, to shareholders’ broader portfolios. As climate-related harm accelerates, economy-wide losses are increasing and hurting portfolios. A 2018 analysis in Nature suggests that keeping global temperature rise below 1.5 degrees instead of 2 degrees can prevent over $30 trillion in economic damage.

Previous resolutions about climate scenario analysis earned majorities at Anadarko Petroleum (53 percent in 2018) and ExxonMobil (62 percent in 2017), and 30 percent at Hess in 2017. At Chevron, a proposal in 2017 asking for a report on company options for a reduced carbon asset mix received 25.6 percent. At Cooper, a proposal seeking net-zero GHG goals earned 32.8 percent in 2018. This year’s resolution is broader and Amalgamated Bank, last year’s proponent, is a co-filer.

High carbon financing: As You Sow is asking three major banks—Goldman Sachs, JPMorgan Chase and Wells Fargo—to each “adopt a policy to reduce the carbon footprint of its loan and investment portfolios in alignment with the 2015 Paris goal of maintaining global warming well below 2 degrees, and issue annual reports...describing targets, plans, and progress under this policy.” The proposal recommends the report include information on cutting the firms’ exposure to “extreme fossil fuel projects such as coal, Arctic oil and gas, and tar sands.”

Both Goldman and Wells Fargo have challenged the proposal so far at the SEC, as described below.

SEC action: Three companies contend the GHG goals resolutions are ordinary business, citing the SEC Staff Legal Bulletins of the last two years and the 2018 EOG Resources precedent discussed above:

  • Anadarko Petroleum contends that the Paris-compliant goals proposal amounts to “micromanagement,” setting out the EOG precedent and the October 2017 SEC Staff Legal Bulletin clarifying when a company can omit a proposal on ordinary business grounds of “micromanagement.” (See p. 14-15 for a fuller discussion of the bulletin.) It says the proposal is both “extremely broad and extremely particular” and fails to consider its 2018 climate risk report, which set out its approach to climate resilience and explained what it has done to reduce emissions. Further, it offers a point-by-point comparison of the current resolution with the excluded EOG Resources proposal—while also contending it is similar to SEC- excluded 2018 requests for reporting on how net-zero GHG emissions might be achieved, at Amazon.com, Deere and Apple.

    Implementing the resolution would require a reduction in its oil and gas development and an increase in renewable energy development, Anadarko asserts. The proposal would force it to change its entire business strategy to become “a completely different business,” which is impermissible.

  • J.B. Hunt also says the resolution is ordinary business. It contends “transportation equipment, cost and analysis of fuel, and system logistics directly impact GHG emissions” that it already considers because they are intrinsic to its transportation business. Like Anadarko, it cites the 2018 SEC Staff Legal Bulletin’s criteria for ordinary business, saying investors are not very worried about its emissions because votes on earlier proposals were 21.4 percent in 2017 and 16.8 percent in 2015—and that it has not received a resolution since. (In fact, the 21.4 percent vote occurred in 2018.)

    The company further says it has addressed climate-related concerns by offering intermodal transportation containers that can be carried by rail, not trucks (thus reducing emissions); by emphasizing energy efficient options for its customers; and by a long list of other initiatives to cut emissions. It notes its participation in multi-stakeholder efforts such as the Sustainability Accounting Standards Board, work with the Environmental Protection Agency and CDP reporting. Finally, the company cites the EOG Resources precedent and contends setting goals would subject it to “arbitrary emissions targets” that would interfere with complicated management decisions that depend on a multitude of factors aside from emissions reductions priorities.

  • Ross Stores, which has never received a climate change proposal before, adds another objection about “micromanagement” based on the EOG precedent. It argues that while proposals about GHG goals may transcend ordinary business for energy companies, they do not in its case as a retailer because of its more limited emissions.

    Echoing the other objections, Goldman Sachs also argues the carbon financing proposal concerns ordinary business by dint of “micromanagement,” but also says As You Sow did not offer sufficient proof of stock ownership. Wells Fargo makes the same micromanagement contention. A similar financing proposal was omitted on ordinary business grounds in 2018 at JPMorgan Chase, but no similar challenge has surfaced to the version offered this year so far.

    Two more companies argue the GHG goals resolutions are duplicative of other resolutions already filed for their annual meetings this year. (The shareholder proposal rule allows companies to omit the second of two similar proposals.) Amazon.com has told the SEC the request about emissions management is similar to one it received first that seeks a report on its plans for handling climate-related business disruptions and reducing dependence on fossil fuels. Likewise, Chevron says the GHG targets proposal from Arjuna Capital duplicates the one from As You Sow about a Paris-compliant footprint, which it received first.

Withdrawals: Proponents have withdrawn four of the goals proposals so fa rafter reaching agreements with the companies:

  • At Cooper, As You Sow and Amalgamated Bank will continue discussions with the company’s new Director of Corporate

    Sustainability to evaluate possible GHG goals, as noted in the withdrawal letter.

  • Walden Asset Management withdrew after Emerson Electric agreed to set GHG targets; this year’s proposal was

    a resubmission and had earned 39.0 percent in 2018, 33.9 percent in 2017, and 36.8 percent in 2016.

  • Boston Common Asset Management also withdrew after Home Depot agreed to release its 2030 and 2035 GHG emissions reduction targets early in 2019.

  • NYSCRF withdrew at Vistra Energy after a company commitment; Vistra owns TXU Energy, the largest retail electricity provider in Texas. This was its first climate-related shareholder proposal, but in 2018 it acquired Dynegy, where a GHG goals request in 2011 earned 8.5 percent support.

Methane: Investors concerned about the impact methane emissions have on climate change, an issue elevated by the boom in U.S. oil and gas production made possible by hydraulic fracturing, have achieved some success in persuading companies to work on eliminating leaks and addressing methane, although critics remain. Fewer shareholder resolutions now are raising concerns on this issue, and just three proposals filed this year address methane, two of which have been withdrawn. On February 6, Investors gave 34.8 percent support to a request asking Atmos Energy for a report on its “actions beyond regulatory requirements to reduce its greenhouse gas emissions and associated climate risk by monitoring and minimizing its methane emissions.” The proponent, As You Sow, withdrew the same proposal at UGI after the company agreed to provide information about its methane emissions.

At EOG Resources, Trillium Asset Management reached an accord and withdrew a proposal that asked it to “adopt quantitative targets for reducing methane emissions, and issue a report...discussing its plans and progress towards achieving these targets.” The company agreed to set qualitative and quantitative targets and Trillium says, “This agreement represents steady progress with EOG achieved over five years of dialogue and shareholder proposals.”

Carbon Asset Risk

Shareholder proponents withdrew many of the resolutions they filed in 2018 about 2-degree scenario reports because companies agreed to the request. But proponents are persisting with more such requests this year, bolstered by the guidelines on voluntary climate reporting from the Task Force on Climate-Related Financial Disclosures (TCFD), which is backed by financial firms that together manage more than $81.7 trillion in assets. Reports in the last year have documented more reporting but find it remains inadequate to the scale of climate challenges.

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Jim Coburn

Senior Manager, Disclosure, Ceres

The Financial Stability Board’s Task Force on Climate-related Financial Disclosures (TCFD) has raised awareness of climate risks and opportunities to new levels. As a global, industry-led initiative formed by G20 nations, it has support from over 500 corporations and has led many other companies to consider its recommendations.

As a result, the usual array of energy and utility companies, alongside a few other firms, are recipients of carbon asset risk proposals in 2019. Resolutions ask about the impact on companies of policies that would keep warming “no more than” or “well below” 2 degrees Celsius, and how they will handle the coming challenges that now are being realized. In addition to several more general proposals, the group of resolutions includes a handful of new ideas and specific resolutions. Proponents have filed 20 resolutions and 11 are still pending; eight have been withdrawn and one has been omitted so far; at least one more SEC challenge is pending.

2-degree scenario analysis: Eight resolutions seek analysis about the potential impacts on the company from a low-carbon economy.

NYSCRF has asked Concho Resources, Continental Resources, Diamondback Energy and Range Resources for “an assessment of the long-term impacts on the company of public policies and technological advances that are consistent with limiting global temperature rise to no more than 2 degrees Celsius over preindustrial levels.” None of the companies has received this proposal before, although a methane proposal at closely held Continental Resources earned 5.5 percent in 2016 and another on methane at Range Resources received 50.2 percent in 2018.

Another variant at Antero Resources and Marathon Oil asks each to “publish an assessment of the long-term impacts on the company of public policies and technological advances that are consistent with limiting global temperature rise to no more than 2 degrees Celsius over preindustrial levels.” Antero previously had a methane proposal, which was withdrawn after an agreement, in 2016, while Marathon Oil reached an agreement that led the Unitarian Universalists to withdraw a climate risk proposal in 2016, after a methane proposal received 36.3 percent in 2015.

Withdrawals—NYSCRF has withdrawn the proposal noted above after an agreement at Concho.
ICCR members also have withdrawn a proposal at two insurance companies—American International Group and Chubb—that said

Given the profound societal impacts of climate change and our company’s potentially critical role in mitigating harm to society, shareholders request that [the company] publish an assessment...of the plausible impacts of a climate change scenario consistent with a globally agreed upon target of limiting warming to well below 2 degrees Celsius, as well as additional scenarios reflecting higher global average temperatures.

The Presbyterian Church (USA) had filed a similar proposal last year at AIG and withdrew it then, too.

Climate transition plans: Four companies face similar questions about how they will adapt to the challenges of climate change. Proponents at Martin Marietta and MGE Energy want annual reports with “quantitative metrics” where possible or relevant “on the physical and transition risks to and opportunities for the Company associated with climate change,” which “focus on disclosures beyond existing disclosures and beyond those required by law.” NYSCRF says Martin Marietta’s disclosures fall short of TCFD recommendations; it withdrew a 2-degree scenario proposal in 2015 at the company after it reported changes in its cement making business that aim to cut emissions. MGE, a utility in the Upper Midwest, has seen eight proposals since 2015 from its shareholders about renewable energy issues, with the highest vote of 11.1 percent coming last year on a 2-degree scenario proposal.

A group of Amazon.com workers has a new resolution that lists a range of extreme weather events that have affected the company and requests a report “as soon as practicable describing how Amazon is planning for disruptions posed by climate change, and how Amazon is reducing its company-wide dependence on fossil fuels.” In a challenge to a different proposal, the company indicated it plans to include this resolution in its proxy statement. The proposal says the report could include time-bound, quantitative GHG targets. Previously, Amazon successfully challenged a 2018 resolution seeking a report on net-zero GHG goals; the SEC agreed it was too specific and therefore constituted ordinary business.

At Southern Copper, a publicly traded U.S. company with Latin American mining interests, which is a subsidiary of Mexico’s Grupo Mexico, the California Public Employees’ Retirement System (CalPERS) asked for

an annual assessment that is above and beyond existing disclosures and those required by law, which addresses how the Company is managing the physical and transition risks and opportunities associated with climate change. [The report] may cover topics such as governance, strategy, risk management, and metrics & targets.

Withdrawal—MGE produced more information and the proponents withdrew. Ceres reports that CalPERS also received a commitment from Southern Copper, persuading it to withdraw.

Extreme weather: A new resolution from As You Sow asks about potential petrochemical contamination. At DowDupont, the proposal asks for a “report on climate change-induced flooding and public health,” which will “assess the public health risks of petrochemical operations and investments in areas increasingly prone to climate change-induced storms, flooding, and sea level rise and the adequacy of measures the company is employing to prevent public health impacts from resultant chemical releases.” At ExxonMobil, it is nearly identical, seeking an assessment of “the public health risks of expanding petrochemical operations and investments in areas increasingly prone to climate change-induced storms, flooding, and sea level rise” (emphasis added). (See sidebar, p. 30.)

Stranded assets: Two proposals from individual investor Stewart Taggart will not go to votes. Taggart did not provide sufficient proof of stock ownership at Dominion Energy after he asked for a report on “the premature write down, or stranding, risk to the company’s Liquid Natural Gas assets across a range of rising carbon price scenarios,” including “the life-cycle emissions (production, transport and combustion) of the specific natural gas the company delivers as Liquid Natural Gas using various carbon price scenarios and administratively-mandated reductions to meet the 2c target.” He withdrew the same resolution at Sempra Energy after procedural problems with the filing that the company pointed out in an SEC challenge.

Coal: The perennial problem facing carbon-intensive utilities has come up again at two companies. Prompted by a 2014 coal ash spill on the Dan River and breaches of coal ash waste ponds following 2018’s Hurricane Florence in North Carolina, As You Sow wants Duke Energy to “report assessing how it will mitigate the public health risks associated with Duke’s coal operations in light of increasing vulnerability to climate change impacts such as flooding and severe storms. The report should provide a financial analysis of the cost to the Company of coal-related public health harms, including potential liability and reputational damage.” The resolution also suggests the report should discuss how its coal ash disposal affects poor and minority communities. Proponents withdrew a similar 2018 proposal after the company agreed to more disclosure, after a 2017 coal risk reporting resolution earned 27.1 percent.

The Edith P. Homans Trust wants PNM Resources to “identify and reduce environmental and health hazards associated with past, present and future handling of coal combustion residuals and how those efforts may reduce legal, reputational and financial risks to the company,” in a report by January 2020. Several climate change proposals have gone to votes previously at the company, with the highest vote of 49.9 percent coming in 2017 for a request to provide a 2-degree climate change scenario analysis. This is the first coal-specific proposal there.

Gas plant acquisition impact: At MGE Energy, shareholders are concerned about methane emissions from a planned natural gas plant acquisition. They are asking for “a public report within 6 months of the 2019 annual meeting disclosing its strategy regarding their option to acquire 50MW of the 700MW Riverside natural gas plant (Beloit, WI) as it relates to greenhouse gas emission reduction goals, overall environmental policy, and shareholder value.” The company challenged the proposal at the SEC, arguing it concerns ordinary business and the proponents have withdrawn but it is not clear they reached an accord.

Emerging markets investments: A new proposal at General Electric asked for a report on the “adequacy of the company’s climate change related criteria for ensuring that investments in fossil fuel projects in emerging markets are consistent with the Paris Agreement’s goal of limiting global temperature increase to ‘well below 2 degrees Celsius.’” It wanted information about risks associated with new GE investments in fossil fuel projects in Pakistan, Cambodia, Bangladesh, Vietnam, Kenya, and Mozambique. But As You Sow withdrew after a company challenge that contended the resolution concerned ordinary business. The withdrawal came before any SEC response and dialogue on the issues is expected to continue. The company already has provided details on its proposed coal plant in Lamu, Kenya already and set dates for future dialogues about its fossil-fuel related projects in developing countries.

Renewable and Efficient Energy

As in the past, most of the proposals that set out possible energy solutions to climate change challenges are about using more renewable energy, often coupled with questions about energy use and energy efficiency. Many of these resolutions have proven to be fertile ground for agreements before and four already have been withdrawn this year. In all, nine proposals have been filed to date; only one has been challenged.

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The proposals are quite similar. Investors want Archer Daniels Midland, Goodyear Tire & Rubber, Harley Davidson and Yum Brands to report

assessing the feasibility of adopting quantitative, company-wide goals for increasing the company’s use of renewable energy and any other measures deemed prudent by company management, to substantially reduce the company’s greenhouse gas emissions and climate change risks associated with the use of fossil fuel-based energy.

NYSCRF proposals to Dollar General, Keurig Dr Pepper and Under Amour similarly ask for a study on company-wide goals to increase clean or renewable energy use “to substantially reduce the company’s greenhouse gas (GHG) emissions and climate change risks associated with the use of fossil-fuel-based energy,” with a report within one year.

MGE Energy shareholders have a more precise request, seeking a report by October 2020 “describing how they can provide a secure, low cost energy future for their customers and shareholders by eliminating coal and moving to 100% renewable energy by 2050 or sooner.” The proponents are concerned about two coal plants owned by the company and the financial risks they may pose to the company given cheaper renewable energy sources and customer preferences.

Finally, Green Century asked Verizon Communications to “report assessing the feasibility of increasing the scale, rigor, and pace of Verizon’s utilization of renewable energy and other measures deemed prudent by company management to substantially reduce the Company’s greenhouse gas emissions and climate change risks associated with the use of fossil fuel-based energy.”

Withdrawals—Company commitments for action or continued dialogue have produced withdrawals so far at Archer Daniels Midland, Dollar General, Goodyear and Verizon Communications.

SEC action: MGE Energy has lodged a challenge, contending the proposal is ordinary business.


As companies consider how to reduce their emissions to comply with the goals of the Paris Climate Treaty, they can look to electric vehicles as a feasible option. Carbon emissions from vehicles contribute significantly to global warming, and the transportation sector is one of the larger contributors to greenhouse gas emissions (GHG) in the U.S. As institutional investors seek to offset and mitigate the rising levels of carbon and other GHGs, electric vehicles (EVs) are an increasingly viable solution. With sales of EVs growing faster than predicted a few short years ago, the outlook for EV production and adoption is becoming increasingly robust.

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Mary Jane Mcquillen
Head of Environmental, Social and Governance Investment, ClearBridge Investments


Robert Buesing, JR.
Research Analyst for Consumer Staples, ClearBridge Investments


Pawel Wroblewski, CFA
Director, Portfolio Manager, ClearBridge Investments



Four proposals address deforestation and its connection to climate change. All are at food companies and seek information on commodities supply chains.

Green Century asked Aramark to report on “quantitative metrics on supply chain impacts on deforestation, including progress on any time-bound goals for reducing such impacts,” seeking metrics on sustainable sourcing of palm oil, soy, beef and pulp/paper—and an assessment of related risks. It withdrew after the company agreed to develop a new deforestation policy; to transition to 100 percent sustainably sourced palm and soy oils by June 2019; to require supplier reporting on sustainable sourcing for palm, soy, beef and timber; to report on time-bound goals and participate in the CDP Forestry survey; and to formalize its supplier engagement strategy with input from stakeholders. The company is to report by May 2019 and quarterly thereafter.

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Leslie Samuelrich
President, Green Century Capital Management

As investors analyze the climate resiliency of their portfolios, they should consider risks associated with the agricultural sector and especially the conversion of forests and peatlands to crop and pasture land. The burning and razing of forests is one of the largest contributors to global greenhouse gas emissions. Deforestation contributes as much greenhouse gas emissions as the global transportation sector, with commodity-driven deforestation itself responsible for two-thirds of tropical forest loss.

The proposal is still pending at Kroger. It suggests the report could include commodity-specific goals for eliminating deforestation, the certification standards Kroger is using for major commodities, strengthened non-compliance protocols and reporting to the CDP Forests initiative. A similar proposal in 2017 earned 22.9 percent support. Earlier, proponents withdrew a 2013 resolution after Kroger agreed to source all its palm oil from sources certified by the Roundtable on Sustainable Palm Oil.

Also still pending are proposals to two more firms. SumOfUs wants Mondelez International to report by May 2020 and annually thereafter “on how the company is curtailing the impact on the Earth’s climate caused by deforestation in Mondele–z’ cocoa supply chain.” The resolution notes that subsidiary Cadbury is the world’s second biggest confectionery company and says “Cocoa is a driver of climate change caused by deforestation in Africa, Asia and South America”—a matter that has prompted substantial public notice that can damage the company’s reputation given connections to human rights abuses and biodiversity concerns. The proposal contends Mondele–z’s Cocoa Life program for sustainable cocoa lacks transparency, with no specific goals or key performance indicators, in contrast to peer firms. The resolution suggests reporting on how much cocoa is traceable, verified by third parties, certified by global entities and shade-grown.

Seventh Generation Interfaith Coalition for Responsible Investment, an ICCR member, has a more general proposal at Yum Brands. It asks for annual reports “on how the company is curtailing the impact on the Earth’s climate caused by deforestation in YUM’s supply chain,” with “quantitative metrics on supply chain impacts on deforestation and progress on goals for reducing such impacts.” The proposal suggests the company could report on the track of and goals for sustainably sourcing palm oil, soy, beef and pulp/paper.

Sustainable energy access: In one more proposal about the impacts of climate change on the developing world, the Sisters of St. Dominic of Caldwell, N.J., are asking ExxonMobil to report “on how ExxonMobil’s business activities contribute to the provision of affordable, reliable, sustainable, and modern energy to alleviate energy poverty, in alignment with the Paris Climate Agreement goal to limit global average temperature increases to well below 2 Degrees C above pre-industrial levels.” The proposal is new in 2019 and notes the “dual challenge” of sustainable energy needs for the one billion people without access to energy. Supplying energy to developing markets to enable development is a theme ExxonMobil has stressed in its annual energy assessments for many years.

The company has challenged the resolution at the SEC, arguing it relates to ordinary business because it is micromanagement, is moot given current reporting and duplicates the resolution from NYSCRF asking for GHG goals reporting. ExxonMobil says it will include the NYSCRF proposal in its proxy statement.

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Environmental Management

Proponents continue to raise concerns about corporate environmental impacts outside the direct climate and energy umbrella, although climate change permeates all of them to some extent. The greatest number (nine proposals) relate to waste, with a new set of proposals in 2019 about plastics, and several reprise concerns about recycling and food waste. Two are on water, down from five last year, and one about a nuclear plant closure has been omitted although another is pending. (Five proposals about antibiotics and pesticides appear under Industrial Agriculture, p. 32.)


Plastics: New in 2019 is a resolution from As You Sow about “nurdles.” It asks Chevron, DowDupont, ExxonMobil and Phillips 66 to produce annual report “on plastic pollution,” saying the report “should disclose trends in the amount of pellets, powder or granules released to the environment by the company annually, and concisely assess the effectiveness of the company’s policies and actions to reduce the volume of the company’s plastic materials contaminating the environment.”

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A reformulated proposal about water at Pilgrim’s Pride asks it to report by December “on how the company is responding to increasing regulatory, public and competitive pressure to significantly reduce water pollution from the company’s owned facilities; facilities under contract; and suppliers.” Proposals with the same thrust earned 6.6 percent in 2018 and 14.7 percent in 2017. The proposal makes clear its concern is about water pollution from the company’s chicken production plants; it lists a number of fines levied against the company for recent violations.

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Farming Practices

At Costco and Sanderson Farms, As You Sow withdrew at both companies after agreements. They had asks each for “an enterprise-wide policy to phase out the use of medically important antibiotics in its store brand meat and poultry supply chain, with an exception for treatment and non-routine control of diagnosed illness.” At Sanderson, which until last year challenged the idea that food animal antibiotics use presented harms to humans, the agreement came after growing investor support; a similar proposal earned 43.1 percent last year and 31.5 percent in 2017.

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Animal Products

Proposals this year about animal-derived products deal with fur and down. At Kohl’s, Harrington Investments wants the company to “adopt a vendor policy regarding oversight on preventing cruelty to animals throughout the supply chain,” pointing out that it has no policy about animal welfare in its supply chain. Previous resolutions from the Humane Society of the United States about fur products sold by Kohl’s earned about 3 percent in 2012 and 2013.

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