This year a number of companies were offering shareholders a vote on their climate transition plans, including some in the oil and gas, construction, aviation, and consumer goods sectors. This came in response to various moves to improve investor scrutiny of such plans, following the rapid expansion of some companies aiming to achieve net-zero emissions.
EOS at Federated Hermes is generally supportive of the concept of a vote on transition plans, believing it will improve a company’s focus on climate change and aid transparency. It should also improve investor scrutiny and engagement, and provide a clear pathway to engagement escalation in the event of material opposition from shareholders. We sought to support proposals that demonstrated robust target-setting, were aligned to external frameworks and accreditations such as the Science-Based Targets initiative, and where we could see a clear and credible strategy in place to achieve the stated targets, including at Unilever, Aviva and Nestlé.
This year there were a significant number of racial equity audit shareholder proposals, including at US banks Goldman Sachs and JPMorgan Chase. Resolutions requesting enhanced disclosure on the effectiveness of diversity and inclusion programmes were also filed at American Express, Berkshire Hathaway, Johnson & Johnson and others. Although Federated Hermes did not always agree with every aspect of the supporting statements, they broadly agreed with their substance, believing racial equity audits would add substantial value beyond the actions the companies were already taking.
During engagement Federated Hermes explained audits can provide additional insight into the causes of complex problems companies must address in order to develop enduring solutions. They also enable more rigorous performance evaluation against underlying challenges and increase a board’s capacity to provide effective oversight. This article appears in our Q2 2021 Public Engagement Report.
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