Shareholder engagement has contributed to better corporate climate lobbying, according to analysis published today.
The study found improvements in the practices of firms targeted last year by Climate Action 100+ (CA100+), a major network of investors seeking to push their biggest portfolio companies to align with the goals of the Paris Agreement.
“Principally, there was a 5% reduction in the proportion of companies assessed as being ‘misaligned’ overall in their real-world climate policy engagement activities,” explained InfluenceMap, the non-governmental organisation that published the research.
“This trend appears to have been predominantly driven by improvements in companies’ indirect climate policy engagement through their industry associations.”
Out of the 165 firms on CA100+’s target list, nearly 70 now take action to identify and address inconsistencies between their own positions on climate policy and that of their trade bodies.
InfluenceMap, which is a research partner to CA100+, also assessed companies on how transparent they are on their own practices and that of their associations.
Unilever and Enel were namechecked for achieving “best practice” on lobbying, while firms in the fossil-fuel value chain were called out for making the least progress.
“Investor pressure via the CA100+ initiative has helped to secure several improvements for target companies on the topic of climate lobbying in 2024, despite significant headwinds,” said Isabella Wolday-Myers, an investor engagement specialist at InfluenceMap.
Stewardship still going strong
CA100+ and other shareholder engagement initiatives are increasingly accused of being toothless and ineffective, with little demonstrable progress being made at target companies.
However, Peter van der Werf, head of active ownership at Dutch investment house Robeco, stressed the “importance of collaboration between board and asset managers” in a LinkedIn post last week.
Van der Werf was discussing the findings of a report published recently by law firm DLA Piper and the Cambridge Institute for Sustainable Leadership, which analysed the stewardship practices of 40 of the world’s largest asset managers.
Over the past four years, they reported nearly 250,000 closed-door meetings to try and influence portfolio companies, according to the paper.
The most common topic for engagement was governance quality.
Other top requests related to increased transparency, improved corporate policies and targets, and broader strategy.
SEC clampdown
In the US, regulators are moving to make it harder for investors to pressure listed companies.
The Securities and Exchange Commission (SEC) recently published new interpretations of existing rules, that introduce more burdensome reporting requirements for shareholders with more than 5% of a firm’s voting shares.
Such investors must certify that they didn’t buy the shares “for the purpose of or with the effect of changing or influencing the control of the issuer” or face a tougher regulatory disclosure regime.
It is not entirely clear how this will be defined, but lawyers say the additional requirements are likely to apply to investors that seek to nominate directors, and those that exert pressure on management to implement specific measures or policy changes.
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