Switzerland’s largest pension fund, BVK, is carrying on with its plan to engage on ESG topics, with the latest actions laying bare the difficult reality at times of bringing about changes in companies´ sustainability policies and controversial projects.
BVK supported the call of non-profit organisation Majority Action to replace Chevron’s chief executive officer Michael Wirth and lead director Ronald Sugar at its annual general meeting on 25 May for failing to adequately respond to shareholder resolutions on greenhouse gas (GHG) reductions and climate lobbying, it said.
The company’s current board of directors had not adequately addressed shareholders’ concerns on climate actions, it said, adding that the company does not have ambitious targets for CO2 reductions, despite a shareholder proposal on more ambitious CO2 targets being passed at the company’s AGM in 2021.
But at the most recent AGM shareholders refused to approve a proposal on a report about the impact of a net-zero 2050 scenario, with 61% of the vote against and 38.7% in favour, according to Securities and Exchange Commission (SEC) filings.
They also voted against a proposal for a report on business with conflict-complicit governments, with 87.6% of the votes against it and 12.4% in favour, and a proposal on a report on racial equality audit (47.5% in favour and 52.5% against), according to the filings.
Last year, 61% of shareholders voted for a climate proposal that requested Chevron to reduce the GHG emissions of its energy products (Scope 3). The board responded by committing to reducing its carbon intensity by only 5% by 2028.
This year, only 32.6% of shareholders voted in favour of adopting medium and long-term GHG reduction targets, and 67.4% voted against it, according to the SEC.
In a statement released after the shareholders´ meeting, the executive director of Majority Action, Eli Kasargod-Staub, said: “It appears that large asset managers likely voted to shield the board of Chevron from accountability, potentially undermining key votes from reaching majority support.”
He added: “Concerned shareholders demonstrated extraordinary leadership leading into today’s shareholder meeting, with pension fund leaders from California to Massachusetts publicly declaring their opposition to the re-election of directors at Chevron due to inadequate responsiveness to climate concerns.”
At the AGM of Exxon Mobil on 25 May the majority of shareholders supported a resolution by the Christian Brothers Investment Services, an investment firm and adviser, urging the company to quantify the consequences of actions taken to reach net zero, based on the roadmap set by the International Energy Agency, through an audited report.
According to the shareholders resolution, ExxonMobil continues to develop fossil fuel resources without providing investors with sufficient information on stranded assets and the risk related to the energy transition.
It is precisely the integration of financial consequences into the companies’ statements that allows investors such as BVK to assess the company’s climate risks, the Swiss pension fund said in a statement.
A comparison with other companies in the sector shows that Exxon still has catching up to do on this front, leaving shareholders largely in the dark about the financial impact of the necessary corporate transformation, it added.
At last year’s AGM, BVK voted to appoint three new board members at Exxon. the fund has also engaged with Enbridge Energy Partners, which owns 27.6% in the Bakken Pipeline System, consisting of the Dakota Access Pipeline (DAPL) and the Energy Transfer Crude Oil Pipeline (ETCOP).
The Dakota Access Pipeline travels for 1,172 miles from North Dakota to Illinois through the land of native Americans opposing the project.
In its ESG goals, Enbridge has set the targets of 28% of its workforce to be from racial and ethnic groups, and to have a 20% representation of racial and ethnic groups at board level.
As investor, BVK believes that Enbridge has made a significant contribution by engaging with local communities and developing policies for best practices taking into account their rights, but the DAPL remains a controversial project, it said.