Sustainable Governance

The convergence between more traditional concerns about how companies are governed and social and environmental topics continues. This interest is expressed in proxy season in resolutions about how companies make their social and environmental policy decisions—and who is on the board to do so—as well as in proposals about how companies make themselves accountable to their investors on strategic sustainability issues. This section examines these issues, looking at board diversity, board oversight and sustainability disclosure, links to compensation and proxy voting policies at mutual funds.

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Board Oversight

Resolutions about board oversight fall into two functional categories—suggesting specific types of committees are needed to properly oversee complicated sustainability issues (13, up from seven last year at this time) or asking for the nomination of specific types of experts to sit on the board (three this year).

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Specific Issues

Human rights: Proponents raise concerns about a range of human rights issues in five resolutions. At Citigroup, Harrington Investments has withdrawn a proposal that asked it to amend a board committee charter “to explicitly require fiduciary oversight by the committee on matters affecting human rights.” Harrington reports there will be further dialogue with the company. Citigroup had lodged a challenge at the SEC, arguing it was moot given current oversight and would cause it to violate the law in its call for a connection between fiduciary duty and human rights.

Harrington Investments also proposed that Goldman Sachs amend its bylaws to add a new section connecting the board’s fiduciary responsibility to “policies or activities of our company affecting issues of human and indigenous peoples’ rights.” Last year, a slightly different proposal along the same lines was omitted on the grounds that it was moot. Goldman Sachs challenged the 2019 proposal at the SEC, as well, and Harrington withdrew. The 2019 proposal was a binding bylaw amendment.


Harrington wants Bank of America to do the same thing and amend its bylaws “to expressly extend the fiduciary duties of directors to oversight of the Human and Indigenous Peoples’ Rights policy.” The company has challenged the proposal at the SEC, arguing it is moot, illegal, cannot be implemented by the company and is false and misleading, and Harrington withdrew. The proposal was a binding bylaw amendment and Harrington last year withdrew a proposal seeking a more specific policy on indigenous peoples and human rights after the company challenged it on the grounds it was moot.

SomeOfUs says Mastercard processes transaction for white supremacist groups and suggests this poses reputational risks. It therefore asks for “a standing committee to oversee the Company’s responses to domestic and international developments in human rights that affect Mastercard’s business.

The United Church Funds also raises a key current controversy at SunTrust Banks, noting that the bank provides funding to U.S. government contractors that help to carry out “zero tolerance” immigration policies, and also underwrites debt for private prison companies that have been involved in detaining immigrants. The proposal asks SunTrust to set up a board level human rights commit “to create company policies and review existing policies...on the human rights of individuals in the US and worldwide, including adopting and assessing criteria for evaluating potential clients’ corporate social responsibility record and human rights performance.” The parties reached an agreement, which provides for proponent input on the company's materiality assessment for sustainability reporting; SunTrust also will change the charter of its Enterprise Business Practices Committee.

Drug pricing: Proponents want AbbVie and Pfizer to “take the steps necessary to strengthen Board oversight of prescription drug pricing risk by formalizing oversight responsibility, which could take the form of creating a new Board committee or assigning responsibility to an existing committee, and by adding drug pricing risk expertise to the director qualifications skills matrix.” The resolution is new in 2019 and the Sisters of St. Francis of Philadelphia withdrew after discussions at AbbVie, which agreed to additional proxy statement disclosures. AbbVie also had challenged the proposal at the SEC, arguing it consisted of multiple proposals, concerned ordinary business and was moot because of current board oversight and disclosure practices. A challenge has yet to surface at Pfizer.

The proposal contends that given growing problems with drug affordability and legislative and regulatory scrutiny, more oversight at the board level about the pricing of company products is warranted. Further, it says that these companies are particularly vulnerable to risks connected with rising prices given their product mix. (See p. 72 for related proposals suggesting links to executive pay incentives and p. 49 for a proposal about pharmaceutical pricing.)

Climate change: Arjuna Capital is asking Chevron and ExxonMobil each to set up a new board committee on climate change “to evaluate Chevron’s strategic vision and responses to climate change. The charter should require the committee to engage in formal review and oversight of corporate strategy, above and beyond matters of legal compliance, to assess the company’s responses to climate related risks and opportunities, including the potential impacts of climate change on business, strategy, financial planning, and the environment.” ExxonMobil has challenged the proposal at the SEC, arguing it is moot because its Public Issues and Contributions Committee is already charged with climate change oversight.

Food: Last year, Harrington asked McDonald’s about its charitable contributions and their impact on public debate over healthy food. It is following up with the same theme in a new proposal this year at the company, expressing a wide variety of concerns about the types of food offered by the company and food safety. It wants to see

a special Board Committee on Food Integrity to restore public confidence in our Company’s reputation for food quality and integrity. The committee should assess the recent company breaches of safety and security of McDonald’s restaurants’ food service as well as long term concerns and criticism regarding food quality, recommending any necessary improvements in governance, sanitation and safety systems necessary to instill in our Company’s culture the highest standards of food quality and security.

The company has challenged the resolution at the SEC, arguing it relates to ordinary business since it concerns food preparation methods, which it says are quintessentially routine matters for a restauranteur.

Public policy and social risk: The Sustainability Group wants to set up a “Social Risk Oversight Committee” that could

provide an ongoing review of corporate policies and procedures, above and beyond legal and regulatory matters, to assess the potential societal consequences of the Company’s products and services, and should offer guidance on strategic decisions. As with the other Committees of the Board, a formal charter for the Committee and a summary of its functions should be made publicly available.

The company has challenged the proposal at the SEC, arguing it can be excluded because it relates to ordinary business, since it concerns the company’s product offerings and policies, relates to business practices and operations, and relates to Amazon’s choice of technologies.

Jing Zhao wants Applied Materials to set up a committee “to oversee the Company’s policies including human rights, governmental regulations and international relations affecting the Company’s business.” But the company successfully challenged the proposal at the SEC, which agreed the resolution was moot – since the board as a whole current oversees public policy issues. In its challenge, the company said its audit committee attends to risk management and Applied Materials already has robust policies about human rights and governmental relations.

Marco Segal suggests that Verizon Communications needs a dedicated committee at the board level given the wide range of environmental and social challenges it faces that have the potential to damage its reputation. It notes problems in the last year connect to allegations of mistreatment of pregnant women, allegations of sexual harassment and discrimination, the “throttling” of firefighters’ access to its communications network during the California fires, and privacy protections being tightened in Europe and potentially the United States. It points out that competitor AT&T has a dedicated public policy committee but these issues are only one of 14 responsibilities for Verizon’s Corporate Governance and Policy Committee. It asserts, “The fact that Verizon finds itself enmeshed in needless controversies suggests that public policy issues are getting short shrift at the board level and that a standalone committee is warranted to avoid reputational damage and other risks on a wide range of issues.”


Only three resolutions in 2019 ask companies about requiring specific types of board experts, but one raises the issue of human capital management, which is new to proxy season. The AFL-CIO is proposing that amend its Guidelines on Significant Corporate Governance Issues and “add human capital management to the types of business and professional experience included in the qualifications and skills of a director candidate considered important by its nominating committee. The proposal argues that companies should pay close attention to managing human capital, as it is critical to “value creation and a source of potential risk”—to which boards should attend. It points to BlackRock’s focus on the subject as one of its 2018 engagement priorities and the new Human Capital Management Coalition that submitted a petition to the SEC in July 2017, as investors backed by $2.8 trillion in assets under management, seeking more disclosure about corporate policies and practices. In Amazon’s case, the proposal says, the company has come under fire for alleged poor treatment of employees in its fulfillment centers, and an “exhausting environment of ‘purposeful Darwinism.’”

The other two proposals reprise past concerns. At Motorola Solutions, the Episcopal Church asks that the nominating committee choose “at least one [independent] candidate who: has a high level of human rights expertise and experience in human rights matters relevant to Company production and supply chain, related risks, and is widely recognized in business and human rights communities as such.” It is a resubmission that earned 10.4 percent in 2018. It also earned 4.9 percent in 2018 at Caterpillar.

Individual investor Robert Andrew Davis proposes that PNM Resources proffer an independent board candidate who “has a high level of expertise and experience in environmental and climate change related matters relevant to electric generation and transmission and is widely recognized in the business and environmental communities as an authority in such fields.” Davis points to recent UN assessments that point out community risks posed by climate change and “growing losses to American infrastructure and property and impede the rate of economic growth over this century,” to which electric utilities are particularly exposed. He notes that Chevron and ExxonMobil have added climate experts to their boards and assert that PNM would benefit from such a board member.


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Heidi Welsh
Executive Director, Sustainable Investments Institute (Si2)

Requests for sustainability reports are evergreen in proxy season; investors have filed more than 300 proposals since 2010. These requests for companies to provide quantified, comparable metrics about their performance on key environmental and social impacts earn substantial, sustained support from investors, with eight majority votes this decade. Most companies are responding in some fashion, providing the metrics mainstream Wall Street analysts want to assess performance.

Although sustainability reporting resolutions in 2018 varied quite a bit, in 2019 proponents have stuck to very similar scripts, with two main variants—one that asks about material or “the most important” sustainability metrics, and another that in addition seeks information on climate change data. To date, companies do not appear to have lodged any SEC challenges on these resolutions.

But companies are challenging new proposals that make requests specifically invoking the standards put forth by the Sustainability Accounting Standards Board, as noted below. Other non-standard reporting proposals also seem unlikely to pass muster at the SEC.

Standard reporting requests: The Illinois State Treasurer starting filing shareholder resolutions on behalf of his state’s $30 billion investment portfolio last year, and has expanded these efforts in 2019, including five proposals that ask companies to “issue an annual sustainability report describing the company’s policies, strategies, performance, and improvement targets on material environmental, social, and governance (ESG) issues,” to be issued “within a reasonable timeframe.” The proposal is pending at Activision Blizzard, Intuitive Surgical and O’Reilly Automotive for the first time. The Treasurer withdrew following commitments from Crown Castle International, where it was filed for the first time, and Host Hotels & Resorts, where a more detailed resolution last year earned 31.1 percent support.

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Luan Jenifer
Chief Operating Officer, Miller/Howard Investments

Think back to 2014: At the 20th annual United Nations Climate Change Conference of the Parties (COP 20) in Lima, Peru, political action seemed more achievable than, perhaps, it does today. And think back to last October: Despite the COP 21 global agreement reached in Paris in 2015, the United States had declared its intention to withdraw and political action on the climate front seemed stalled. However, also in those years and around those times, other parties were at the table, advocating for responsible stewardship and disclosure:

NYSCRF resubmitted a resolution to American Financial Group that earned 48.4 percent in 2018. It asks the company to issue by December “an annual sustainability report describing the company’s analysis of, and short- and long-term responses to the ESG-related issues that are most important to the company.” The fund has filed this proposal at Papa John’s International, as well, noting that the company does not issue a sustainability report and has little ESG information on its website, in contrast to competitors.

Trillium Asset Management has taken up the baton at Tesla Motors, where NYSCRF last year withdrew a somewhat more detailed proposal seeking sustainability information after the company agreed to report. This year, Trillium is asking the company to “issue an annual corporate sustainability report describing the Company’s Environmental, Social, and Governance (ESG) policies, management strategies, quantitative performance metrics, and improvement targets.” The proposal suggests Tesla should consider reporting using frameworks and standards articulated by the Global Reporting Initiative, CDP, the Sustainability Accounting Standards Board and the Taskforce on Climate-related Financial Disclosure, on a wide range of issues. It notes the company has faced criticism for its health and safety performance while providing little disclosure.

Climate change: A mix of investors have filed the same resolution at six companies, asking them to annually “issue a report describing the company’s environmental, social, and governance (ESG) policies, quantitative performance metrics, and improvement targets, including a discussion of greenhouse gas (GHG) emissions management strategies and metrics.” The proposal is new and still pending at Charter Communications, Mid- America Apartment Communities and SBA Communications, but withdrawn at Quanta Services after the company agreed to publish a report covering its policies, practices, metrics and targets on key ESG issues. The proposal was a resubmission at Acuity Brands, where a reporting request received 49.8 percent support in 2018— which appears to have brought the company to the table this year and prompted a withdrawal. Another resubmission is at Middleby, where the vote last year was 57.2 percent, up from 44.6 percent in 2017.

Other ESG reporting: Additional proposals raise several different issues but few votes seem likely:

  • Domini Social Investments is asking Amazon . com for annual reports on the company’s “analysis of the community impacts of Amazon’s operations, considering near- and long-term local economic and social outcomes, including risks, and the mitigation of those risks, and opportunities arising from its presence in communities.”

The company says the proposal is ordinary business since it relates to the location of company facilities and the SEC has yet to respond to the challenge. (The resolution discusses the company’s search for new headquarters locations and social inequities that may result from the new facilities.) Last year, persuaded the SEC that a wide- ranging proposal from the AFL-CIO that asked about “risks arising from the public debate over Amazon’s growth and societal impact and how Amazon is managing or mitigating those risks” dealt with ordinary business and SEC staff agreed, saying it related to public relations and the ways in which the company sells its products.

  • At Berkshire Hathaway, a proposal was tailored to the company’s structure as a holding company and asked only for more publicity about subsidiary company sustainability efforts. The proponent withdrew when the company agreed to present the requested information, with links, on its website.

  • A resolution at DTE Energy that asked for a report on “the impact of its environmental performance challenges on the company’s reputation and financial performance” has been omitted because it was filed too late. A similar proposal to the company last year was omitted on ordinary business grounds.

  • Another proposal was from the Sisters of St. Francis of Philadelphia, asking Walgreens Boots Alliance to report on its work to support the UN Sustainable Development Goals (SDGs), expressing concern about tobacco sales in the company’s drugstores. Walgreens prevailed at the SEC in its contention that the proposal was moot. It was a resubmission that last year was omitted on ordinary business grounds.

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Paul Rissman
Co-founder, Rights CoLab

U.S. public companies spend less time communicating with investors about ESG issues than their global peers. They also disclose less. U.S. investors, in turn, fall below the global average when incorporating ESG factors into their strategies, and have less influence over responsible business behavior. This aversion to transparency isn’t surprising, due to the treatment of “materiality” within U.S. securities law.

SASB: Five new proposals specifically invoke the new reporting framework issued last fall by SASB after multi-stakeholder consultation:

  • The resolution asks Advance Auto Parts, CarMax and Dollar Tree for a report within 180 days of the annual meeting “prepared in consideration of the SASB Multiline and Specialty Retailers & Distributors standard, describing the company’s policies, performance, and improvement targets related to material sustainability risks and opportunities.”

  • At Essex Property Trust, it seeks the same sort of report “in consideration of the SASB Real Estate standard... summarizing the company’s strategies and practices to mitigate risks, stemming from climate change, to the availability of adequate water resources.”

  • Finally, at PACCAR, it asked that the report be “prepared in consideration of the SASB Industrial Machinery and Goods standard.

SEC action and withdrawal—Advance Auto has lodged a challenge at the SEC, although the specifics of the challenge are not yet available. As You Sow withdrew at PACCAR, since the company had begun to use SASB standards in a new report and will consider expanding its future disclosures consistent with those standards. PACCAR also had lodged an SEC challenge, arguing the proposal was moot given this new report.

ESG Pay Links

The field of resolutions seeking links between sustainability issues and executive compensation continues to be broad, but is dominated by drug pricing. This year, nine proposals address the risk of drug price increases and another the opioid crisis; three address senior executive diversity and two are about cybersecurity; further issues, with one proposal each, are risky banking practices, greenhouse gas emissions goals and human rights. Last year, six different proposals sought links to several specific environmental or social issues, as well.

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Cathy Rowan
Director Of Socially Responsible Investing, Trinity Health

Prescription drug expenditures make up nearly 20 percent of all health care costs, and spending for prescription drugs is growing faster than any other part of the health care dollar. A Kaiser Health Tracking Poll in early 2018 found that one out of four patients have a difficult time affording their medicines. December 2018 POLITICO poll showed the public’s top priority for the 116th Congress is taking action to lower prescription drug prices.

Drug pricing: Proponents are doubling down on an approach they tried last year to address concerns about expensive pharmaceutical drug prices and the long-term risks high prices may pose to companies. Last year, investors gave these resolutions fairly strong support, with most votes in the 20-percent range. The resolution has the same resolved clause at each company, with supporting statements articulating concerns about specific drugs; it asks for an annual report

on the extent to which risks related to public concern over drug pricing strategies are integrated into [the company’s] incentive compensation policies, plans and programs...for senior executives. The report should include, but need not be limited to, discussion of whether incentive compensation arrangements reward, or not penalize, senior executives for (i) adopting pricing strategies, or making and honoring commitments about pricing, that incorporate public concern regarding the level or rate of increase in prescription drug prices; and (ii) considering risks related to drug pricing when setting financial targets for incentive compensation.

Last year the resolution was close to this wording, but the final point was “considering risks related to drug pricing when allocating capital.” It is a resubmission at four companies—AbbVie (21.8 percent in 2018), Biogen (28.2 percent), Bristol-Myers Squibb (22.7 percent) and Eli Lilly (17.8 percent), and new to five more—Celgene, Johnson & Johnson, Merck, Pfizer and Vertex Pharmaceuticals.

SEC action—Two companies have lodged SEC challenges. Bristol-Myers Squibb contends it relates to ordinary business by dint of micromanagement, invoking the 2018 SEC legal bulletin. Last year, SEC staff disagreed that a similar proposal was ordinary business and also did not think it was moot, as the company argued. Pfizer is making another try at the ordinary business rule, as well, saying it raises executive compensation issues that are applicable to the general workforce, which would make the proposal ordinary business; it also says the resolution seeks to micromanage compensation arrangements.

Executive diversity: Last year, Zevin Asset Management asked several tech companies to report about how they might integrate senior executive diversity metrics into CEO incentive pay. There were three withdrawals after agreements and two omissions; the highest vote was 13.3 percent at United Parcel Service.

This year, Zevin is back with a similar request at Alphabet, where it earned 8.8 percent last year, (last year it withdrew after the company noted its CEO receives no incentives) and Anthem, a new target. The tech company proposal asks for a report

assessing the feasibility of integrating sustainability metrics, including metrics regarding diversity among senior executives, into performance measures or vesting conditions that may apply to senior executives under the Company’s compensation plans or arrangements. For the purposes of this proposal, “sustainability” is defined as how environmental and social considerations, and related financial impacts, are integrated into long-term corporate strategy, and “diversity” refers to gender, racial, and ethnic diversity.

At Anthem, the request is shorter and asks only for a report by October “assessing the feasibility of integrating sustainability metrics into the performance quotas of senior executives of Anthem Inc. compensation plans.”

SEC action—Anthem has told the SEC the resolution should be omitted because Zevin has not provided proof of its stock ownership.

Cybersecurity: At Verizon Communications, Trillium Asset Management asks for a report “assessing the feasibility of integrating cyber security and data privacy performance measures into the Verizon executive compensation program.” This resolution earned 11.6 percent support in 2018, after an unsuccessful company challenge—in which the SEC rejected the company’s contention that this concerned ordinary business. In 2019, the company again makes this argument, reasoning that the compensation program referenced, in the proxy statement, extends to non-executive employees and therefore is a matter of ordinary business.

This resolution, filed by James McRitchie, goes to a vote on March 8 at Walt Disney.

Climate goals: As You Sow has withdrawn a proposal that asked Pinnacle West Capital for a report on the “feasibility of linking executive compensation metrics to the accomplishment of Paris-aligned greenhouse gas emission reduction objectives.” As You Sow withdrew after the company agreed to report. The proposal said the company’s carbon intensity GHG target is inconsistent with its financing of natural gas infrastructure and “artificial caps on renewables” in bidding. It also raised concerns about the company’s spending “to block renewable energy policy in Arizona.” The proposal was new in 2019.

Sustainability metrics: SustainInvest wants Dunkin’ Brands to report by October, “assessing the feasibility of integrating sustainability metrics into the performance quotas of senior executives of Dunkin Brands Group Inc. compensation plans.” The proposal suggests metrics such as workplace and executive level diversity, greenhouse gas reduction goals or “using recycled and/or compostable supply chain inputs.”

SEC action—The company has lodged an SEC challenge, arguing the proposal is moot since Dunkin’ already links the replacement of foam cups to compensation for some executives and increasing diversity for others, and concerns ordinary business since it addresses matters applicable to the workforce as a whole, not just executive compensation.

Risky banking: NYSCRF has resubmitted a resolution to Wells Fargo that earned 21.9 percent last year. The text for this year’s resolution is not yet available but last year it sought a report on:

  1. whether the Company has identified employees or positions, individually or as part of a group, who are eligible to receive incentive- based compensation that is tied to metrics that could have the ability to expose Wells Fargo to possible material losses, as determined in accordance with generally accepted accounting principles;

  2. if the Company has not made such an identification, an explanation of why it has not done so; and

  3. if the Company has made such an identification, the:

    • methodology and criteria used to make such identification;

    • number of those employees/positions, broken down by division;

    • aggregate percentage of compensation, broken down by division, paid to those employees/positions that constitutes incentive-based compensation; and

    • aggregate percentage of such incentive-based compensation that is dependent on (i) short-term, and (ii) long-term performance metrics, in each case as may be defined by Wells Fargo and with an explanation of such metrics.

The requested report would provide shareholders with important information concerning incentive-based compensation that could lead employees to take inappropriate risks that could result in material financial loss to our company.

Opioid legal costs: The Philadelphia Public Employees’ Retirement System has a proposal that earned 11.1 percent at AmerisourceBergen on March 1. It also has been filed at AbbVie and asks that each

adopt a policy that no financial performance metric shall be adjusted to exclude Legal or Compliance Costs when evaluating performance for purposes of determining the amount or vesting of any senior executive Incentive Compensation award. “Legal or Compliance Costs” are expenses or charges associated with any investigation, litigation or enforcement action related to drug manufacturing, sales, marketing or distribution, including legal fees; amounts paid in fines, penalties or damages; and amounts paid in connection with monitoring required by any settlement or judgment of claims of the kind described above....

The proponents want the company not to exclude litigation and compliance costs from future performance metrics for executive incentive compensation because of the company’s exposure to a myriad of lawsuits from multiple jurisdictions. The company contends it needs flexibility and discretion to design and administer its compensation programs. It also believes that the exclusion of non-recurring or one-time events provide a more accurate picture of company performance.

Human rights: The SEIU Master Trust is taking up human rights and wants CoreCivic “to incorporate respect for inmate and detainee human rights into incentive compensation arrangements for senior executives.” The proposal expresses concern about lawsuits filed against the company regarding human rights violation allegations, involving both inmates and immigrant detainees—and argues this risk should be addressed in executive compensation arrangements.

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SECTION_TOC_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. Republicans controlled Congress for the first half of Trump’s administration and have largely conformed to Trump’s agenda, but the new Democratic majority in the House of Representatives plans to press for stronger climate action.  On the GOP side, a growing conservative coalition is promoting a carbon tax, opening the possibility that a bipartisan deal is possible. Recent “Green New Deal” proposals from Democratics seems likely to feature high in the 2020 presidential election, even though meaningful climate change legislation still seems uncertain and may arrive too late to force the emissions reductions we must achieve to avoid severe impacts on the economy and society at large.  This reality underscores investors’ urgency in pressing companies to act, and it explains why large, usually cautious mutual funds continue to press for disclosure and action to mitigate climate risks from companies they own.

Shareholder proposals remain evenly divided between those focused on carbon asset risk and those seeking information about greenhouse gas (GHG) emissions management, as in 2018.  Proponents remain keenly interested in how companies are assessing carbon asset risks and still want to see more oversight, management and disclosure of strategy—with 20 resolutions about this (down from 27 at this point last year).  Investors have seen significant progress in persuading companies to report—with tailwinds coming from majority votes during the last two proxy seasons at leading energy firms. But proponents also have filed 23 proposals about GHG management, seeking goals or reports on such goals.  Nine resolutions ask about renewable energy use and goals, down from 15 last year. After 11 proposals last year on unconventional fossil fuel energy production and its associated methane releases, there are just three this year. Four also address deforestation, with a final new proposal about access to sustainable energy.  (Pie chart.)  

The Ceres coalition coordinates nearly all these proposals, working with its Investor Network on Climate Risk (INCR) and a broad coalition of institutional investors, including many members of the Interfaith Center on Corporate Responsibility (ICCR) and some individuals.  Investors around the globe are focusing their efforts on key carbon emitters that account for two-thirds of global industrial emissions, through the new initiative Climate Action 100+, with backing from 310 institutions that have $32 trillion in assets under management.  Undergirding many of the resolutions, and the strategic concern of long-term investors, is the sense that regulatory regimes ultimately will favor lower-carbon fuel sources and leave stranded carbon assets that account for a large part of the market value claimed on the balance sheets of energy companies.  Proponents also contend that utilities dependent in large part on fossil-fuel powered electricity will be caught short if they do not aggressively manage a transition to lower carbon-intensive power generation. The January bankruptcy of Pacific Gas & Electric, on the hook for damages from the California wildfires, is being called one of the first climate-related casualties—underscoring these concerns and showing how much investors can lose when claimants line up in court.  The company faces $30 billion in liabilities, exceeding its assets.

(Sections below on Environmental Management, p. XX and Sustainable Governance, p. XX, cover environmental and social topics that also raise climate change issues.)