Mutual Funds and Climate Change: Growing Support for Shareholder Resolutions Rob Berridge Jackie Cook May 2009
A Ceres Report
About the Authors Rob Berridge is Program Manager in the investor team at Ceres, where he assists investors and companies in addressing the risks and opportunities posed by climate change. He also coordinates various projects of Ceres’ Investor Network on Climate Risk. Prior to working at Ceres, Rob served as Vice President of Green Century Capital Management and as a staff member of U.S. EPA’s Green Lights and Energy Star programs. He has also worked in commercial lending and as an environmental consultant. Rob has a degree in Environmental Studies from Brown University and a Masters in Business Administration from the Kellogg School of Management at Northwestern University. Jackie Cook is founder of Fund Votes (www.fundvotes.com), an independent project established in 2004 and based in Vancouver, Canada. Fund Votes tracks mutual fund proxy voting in the US and Canada. Data drawn from the database of over 13.5 million decisions spanning five years of mutual fund proxy voting in the U.S. and three years in Canada have been used in a number of industry reports and news articles. Over the past 11 years Jackie has worked in various research positions, both in the UK and the USA, focusing on corporate governance and corporate social responsibility, most recently as a Senior Research Associate at The Corporate Library.
About Ceres Ceres is a national coalition of investors, environmental groups, and other public interest organizations working with companies to address sustainability challenges such as climate change. Ceres also directs the Investor Network on Climate Risk, a group of more than 80 institutional investors from the U.S. and Europe managing over $7 trillion of assets. Launched at the Institutional Investor Summit on Climate Risk at United Nations Headquarters in 2003, INCR promotes better understanding of the risks of climate change among institutional investors. For more information, visit www.ceres.org and www.incr.com.
Mutual Funds and Climate Change: Growing Support for Shareholder Resolutions
Table of Contents Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 1. T he Business Case for Supporting Climate Change Shareholder Resolutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 2. General Trends in Mutual Fund Voting on Climate Resolutions . . . . . . . . . . . . . 4 3. Stronger Support . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 4. Highest Support . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 5. Most Improved . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 6. Poor Performers in Climate Resolution Voting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 7. Voting Records of Leaders on Climate Investment Research . . . . . . . . . . . . . . . . 8 8. Abstentions Up . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 9. Voting Pattern to Watch: Inconsistent Voting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 10. Shareholders are Skeptical of Climate Skeptics’ Case . . . . . . . . . . . . . . . . . . . . 12 11. S ocially Responsible Investment (SRI) Funds’ Votes on Climate Change Resolutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 12. G eneral Shareholder Support for Climate Change Resolutions is at Record Levels . . . . . . . . . . . . . . . . . . . . . . . . . 13 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Appendix 1: Support for Climate Resolutions by Fund Family . . . . . . . . . . . . . . . . 15 Appendix 2: Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Appendix 3: 2008 Climate Resolution Resolved Clauses . . . . . . . . . . . . . . . . . . . . . 19 Appendix 4: Review of Select Proxy Voting Guidelines . . . . . . . . . . . . . . . . . . . . . . . 24
Mutual Funds and Climate Change: Growing Support for Shareholder Resolutions
Executive Summary Mainstream Mutual Fund Support for Climate Change Resolutions Reaches an All-Time High Mutual fund support for climate change-related shareholder resolutions involving U.S. companies reached new highs in 2008, but there is still much room for improvement. Mainstream mutual fund families supported an average of 23.6 percent of the climate change resolutions they faced in 2008 – a significant increase over their 14.7 percent average support in 2007 and 10.3 percent higher than their support just four years ago. The increased support mirrors rising overall investor support for climate change resolutions in recent years. It comes as the business case for supporting climate-related resolutions is increasingly clear, as regulation of greenhouse gas emissions is now a reality in many regions of the U.S. and federal regulations are a strong possibility. When fund companies vote against climate resolutions it raises serious questions about whether they are violating their fiduciary duty by not representing their customers’ long-term financial interests. That’s because climate change can pose major financial risks to the companies the funds invest in. Key findings of the study include: ◆
he notable increase in average resolution support by mainstream mutual fund families, T combined with an increase in abstentions by certain fund groups, produced a significant decrease in opposition to climate resolutions by mutual funds compared to previous years;
◆
L eaders among mainstream mutual fund companies on proxy voting in 2008 include: TIAA-CREF, Charles Schwab and Credit Suisse;
◆
welve mainstream fund companies supported more than 50 percent of climate T resolutions in 2008, up from an average of five fund companies over the previous four proxy seasons;
◆
oor performers in 2008 include the largest mutual fund companies – American Funds, P Fidelity, Vanguard and State Street Global Advisors – each of which failed to support even a single climate resolution;
◆
ome well-known fund companies continued 2007’s inconsistent behavior by voting S against most (or all) climate resolutions even after having issued research reports and/or products addressing climate risks and opportunities. These include State Street Global Advisors and JPMorgan Chase;
◆
he investment community as a whole (mutual funds, plus all other investors) is T supporting climate resolutions at record levels, as described in Section 12.
Recommendations for mainstream mutual fund companies include: 1) update proxy voting guidelines to stipulate support for climate resolutions that address material risks; 2) move from abstentions and opposition on climate resolutions to voting in support; 3) align voting with investment research on climate risks and opportunities.
1
2
Mutual Funds and Climate Change: Growing Support for Shareholder Resolutions
The study analyzes 74 mutual fund families’ proxy votes on shareholder-sponsored climate change resolutions over the past five proxy seasons (2004–2008) and incorporates a total of 13,200 votes on 76 resolutions. It is important to note, however, that since 13 of those 74 fund families are prominent socially responsible investment (SRI) companies, in this report we focus primarily on the improved results from the remaining 61 ‘mainstream’ fund families. We do this because the SRI funds are almost universally supportive of climate resolutions. Mainstream mutual funds hold considerable sway over the outcome of shareholder votes given that they collectively hold a significant proportion of U.S. securities – 23 percent of all publicly traded U.S. stocks at the end of 2005, according to the Investment Company Institute.1 Fund groups were chosen for analysis based on their size, brand power, and the availability of data spanning five years. Collectively, these organizations manage approximately $3.8 trillion. The shareholder resolutions analyzed typically request corporate disclosure of risks and opportunities from climate change and/or strategies to respond to those risks and opportunities (see Appendix 3). The report also evaluates (only in Section 12, page 13) 5,551 votes on 20 resolutions sponsored by climate skeptics over the three proxy seasons in which these resolutions have been filed (2006–2008). (These votes are not included in the main body of the analysis.) For more details on the methodology, see Appendix 2.
1. The Business Case for Supporting Climate Change Shareholder Resolutions Institutional investors deciding how to vote on climate change shareholder resolutions have to answer the following questions: 1) Do these resolutions address risks that are material to the companies receiving the resolutions? 2) Are those companies adequately disclosing and managing these material risks? The purpose of these questions is to determine if a vote in favor generally contributes to long-term portfolio-wide shareholder value. Fund managers have a fiduciary duty to take actions that serve the financial interests of their customers. While each resolution needs to be judged on its merits, the economic and public policy context that form the backdrop for these voting decisions could hardly be clearer in pointing to the growing financial risks and opportunities associated with climate change. Consider the following trends:
Regulatory risks: U.S. companies in many regions are now able to emit greenhouse gases (GHGs) for free, but this is likely to change through nationwide cap and trade legislation or a carbon tax. President Barack Obama entered the White House vowing to 1. Investment Company Institute web site, About Investing page: http://www.ici.org/funds/abt/ faqs_mf_stock_funds.html
Mutual Funds and Climate Change: Growing Support for Shareholder Resolutions
3
curb GHG emissions and make clean energy a driver of future job creation and economic growth. 17 states representing 45 percent of the U.S. population have committed to GHG emissions targets. And more than 700 cities have pledged to cut emissions and called for the federal government to do the same.
Physical risks: Scientific evidence is stronger than ever that human-induced global warming is profoundly altering our global environment. Extreme weather events are becoming more frequent, increasing the risks of drought, floods, storm damage and extreme temperatures.2 These changes can have profound impacts on certain companies’ operations and supply chains.
Legal risks: Electric utility companies Xcel Energy and Dynegy reached legal settlements with the New York Attorney General in 2008, agreeing to voluntarily disclose to investors the climate-related financial risks of developing new power plants that emit CO2. These settlements help to define what is expected of companies disclosing climate risk.3
Competitive and reputation risks: As climate change is widely accepted as a reality, companies that are viewed as impeding progress to reduce global emissions may damage their brands. Institutional investors from Wall Street to Silicon Valley are acting on these trends. The current Goldman Sachs Environmental Policy Statement states: “Goldman Sachs is very concerned by the threat to our natural environment, to humans and to the economy presented by climate change and believes that it requires the urgent attention of and action by governments, business, consumers and civil society to curb greenhouse gas emissions.”4 And legendary venture capitalist John Doerr of Kleiner Perkins believes going green “is the biggest economic opportunity of the 21st Century,” and is investing accordingly.5 The Carbon Disclosure Project (CDP) has 385 members around the globe who manage $57 trillion in assets. And the Investor Network on Climate Risk (INCR) has 81 members who manage over $7 trillion. Investors who join these groups send a strong signal that they want the businesses in which they invest to improve their disclosure and management of climate risks and opportunities. 2. IPCC Fourth Assessment Report, Summary for Policy Makers, p10. http://www.ipcc.ch/ipccreports/ar4-syr.htm 3. Climate risk litigation appears to be following a similar trajectory to tobacco litigation, which increased gradually until it became a significant threat to the industry. Around 100 climate-related lawsuits were filed in the U.S. through August 2008, with a significant annual upward trend (from 6 in 2004 to 38 in 2007). Litigation has so far focused on companies responsible for high emissions. See: Gronewold, N. 2008. “Lawyers see ‘growing legal storm’ over emissions trading.” ClimateWire. August 12, 2008. http://www.eenews.net/climatewire/2008/08/12/2/ 4. Goldman Sachs Environmental Policy Statement, Pg. 1. http://www2.goldmansachs.com/ideas/ environment-and-energy/goldman-sachs/env-policy.html 5. John Doerr: Seeking salvation and profit in greentech, speech at TED Conference, March 2007 http://www.ted.com/index.php/talks/john_doerr_sees_salvation_and_profit_in_greentech.html
The current Goldman Sachs Environmental Policy Statement states: “Goldman Sachs is very concerned by the threat to our natural environment, to humans and to the economy presented by climate change and believes that it requires the urgent attention of and action by governments, business, consumers and civil society to curb greenhouse gas emissions.”
4
Mutual Funds and Climate Change: Growing Support for Shareholder Resolutions
Yet, despite this growing attention to the financial implications of climate change, some mutual fund managers continue to vote against every single climate resolution they face. Even certain fund companies that issue research reports and/or products addressing climate risk and opportunities vote against all resolutions asking for disclosure and/or mitigation of climate risk (see Section 7). We believe these firms’ managers are not acting in the financial interest of their customers when they fail to support most climate-related resolutions. When the same asset management firm points to the important bottom line implications of climate change for client portfolios and simultaneously votes against every single resolution asking for climate risk disclosure and mitigation, there is an obvious inconsistency. The risks are either financially material for a particular company or they are not. In the case of most climate resolutions at most companies, they are clearly material for all the reasons described above. Perhaps mutual fund trustees responsible for setting voting policies view climate change as a social and environmental issue (which, in their mind, does not necessitate voting support), rather than a financial issue, which clearly does need voting support. The fact is that climate change meets all three thresholds – it is a profoundly important social, environmental and financial issue.
2. General Trends in Mainstream Mutual Fund Voting on Climate Resolutions Graph 1, below, shows that the most significant changes in mainstream mutual fund proxy voting on climate resolutions are: a strong increase in average support from 2007 to 2008, a trend in increasing abstentions and, as a combined result of these two factors, significantly reduced opposition in 2008. Mainstream mutual fund groups’ average opposition to climate resolutions has dropped by more than 15 percent since 2004 – from an average of 78.5 percent opposition in 2004 to 63.3 percent in 2008. (This graph excludes resolutions filed by socially responsible mutual funds and by climate skeptics.)
Graph 1: Breakdown of Mutual Fund Votes on Climate Resolutions
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Mutual Funds and Climate Change: Growing Support for Shareholder Resolutions
5
3. Stronger Support Graph 2, below, shows mainstream mutual fund support for climate change resolutions is at an all-time high in 2008.
Graph 2: Mainstream Mutual Fund Support for Climate Resolutions
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Across the 61 mainstream fund families surveyed, an average of 23.6 percent of climate change votes faced by fund families were cast in support of the 26 resolutions brought to a vote in the 2008 proxy season. Here is an example of what is meant by ‘support by a mutual fund family’: if a fund family faced 100 climate resolutions, and its managers voted in support of 55 of the resolutions, then the fund family supported 55 percent of the resolutions it faced. The reason it is possible to vote on 100 resolutions when only 26 went to vote during 2008 is that a fund family is usually comprised of multiple mutual funds, and therefore may vote on the same resolution (filed at the same company) multiple times. If they hold Southern Company shares in 10 of their mutual funds, for example, then they would vote 10 times on the climate resolution filed at Southern Company. Twelve of the 61 mainstream fund groups supported more than 50 percent of the climate resolutions they faced in 2008.6 In 2007, only three fund families supported more than 50 percent of the resolutions they faced, as shown in Graph 2. The number of fund groups casting at least one vote in support of a climate resolution increased to 38 this year, a record high for the survey period. Over the survey period the number of fund families with not one vote in support of a climate resolution dropped from 30 in 2004 to 21 in 2008.
4. Highest Support The most supportive mainstream mutual fund families in 2008 were: TIAA-CREF, which cast 161 votes in support, none against, and abstained on 25 votes; Credit Suisse, which cast 42 of 63 votes ‘for’; and Schwab, which cast 17 of 24 votes ‘for’. For TIAA-CREF, one 6. Of these, First Eagle and Longleaf faced only one and four votes, respectively, and have therefore been omitted from Table 2 below.
The number of fund groups casting at least one vote in support of a climate resolution increased to 38 this year, a record high for the survey period.
6
Mutual Funds and Climate Change: Growing Support for Shareholder Resolutions
of the main factors leading to high votes in support is their Policy Statement on Corporate Governance, which reads: “TIAA-CREF will generally support reasonable shareholder resolutions seeking disclosure of greenhouse gas emissions and the impact of climate change on a company’s business activities.”7 It should be noted that the two fund families with the highest support for climate resolutions (TIAA-CREF and Schwab) are the only two (amongst those reviewed for Appendix 4) who have explicit mention of climate change in their proxy voting guidelines.
Table 1: Mainstream Fund Companies Casting a Majority of Votes in Support of 2008 Climate Resolutions8 Percentage Support
Total Votes Faced
TIAA-CREF
82.1 %
161
Schwab
70.8 %
24
Credit Suisse
66.7 %
63
Ameritas
65.5 %
29
Fifth Third
60.3 %
63
Wells Fargo
59.0 %
78
Coventry
57.1 %
10
Delaware
56.3 %
16
Liberty
55.6 %
9
Schroder
50.0 %
11
5. Most Improved A large number of fund groups showed a significant increase in levels of support for climate change resolutions in 2008 compared with previous years. This is likely due to the increasingly strong business case for the resolutions as described above. Those highlighted in green in Table 2 below exceeded a 30 percent improvement in 2008 over their average level of support for the period 2004-2007. Of these, Wells Fargo, Schwab and Ameritas qualify as the most improved out of the 61 mainstream fund groups analyzed for this study. Ameritas has increased its support from an average of 5.3 percent (from 2004-2007) to 65.5 percent in 2008. Wells Fargo has increased its support from an average of 4.5 percent to 59 percent in 2008. Schwab averaged support of 39.6 percent from 2004 to 2007 and reached 70.8 percent support for resolutions faced in 2008.
7. TIAA-CREF Policy Statement On Corporate Governance, p. 36. http://www.tiaa-cref.org/about/governance/ portfolio/topics/proxy_voting_policies.html 8. Table 1 excludes First Eagle and Longleaf. Both of these fund groups supported 100 percent of the climate resolutions they faced in 2008, but they only faced 4 and 1 resolutions respectively.
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Mutual Funds and Climate Change: Growing Support for Shareholder Resolutions
Table 2: Fund Groups Showing Significant Increase in Percentage Support for Climate Resolutions in 2008 FUND FAMILY
2004
2005
2006 0.0%
4.5%
2008
Ameritas
0.0%
Blackrock
0.0
0.0
0.0
22.2
35.5
25.0
36.4
0.0
11.1
56.3
Delaware
16.7%
2007
65.5%
Fifth Third
28.0
25.0
42.9
42.9
60.3
Goldman Sachs
19.2
32.0
40.0
45.5
47.0
Legg Mason
0.0
25.0
13.3
17.0
37.2
Morgan Stanley
3.8
6.8
4.3
0.0
18.0
Nationwide (Gartmore)
13.3
29.4
29.4
32.8
45.7
Phoenix
14.3
10.3
35.7
27.5
46.6
Schwab
30.0
12.5
57.1
58.8
70.8
Van Kampen
0.0
0.0
0.0
0.0
15.3
Wells Fargo
0.0
0.0
7.1
1.9
59.0
11.1
16.2
19.2
22.0
46.4
Average
6. Poor Performers in Climate Resolution Voting While mainstream mutual fund support for climate change resolutions is growing, some fund groups continue to either oppose all climate resolutions or abstain on the issue. Fund families that have failed to support even a single climate change resolution over the five years of the survey (with at least 50 votes faced) include: idelity (514 votes) F ◆ ING (1,036 votes) ◆ Oppenheimer (96 votes) ◆ Pioneer (107 votes) ◆ Riversource (AXP) (356 votes) ◆
ussell (Frank Russell) (308 votes) R ◆ State Street (76 votes) ◆ Steward (76 votes) ◆ Vanguard (775 votes) ◆
Twenty fund groups failed to support a single climate resolution faced in 2008. Amongst these (in addition to those mentioned above) are a number of additional large fund groups: AllianceBernstein (75 votes in 2008), American Funds (105 votes in 2008), American Century (250 votes in 2008), Lord Abbett (83 votes in 2008) and Putnam (228 votes in 2008). The managers responsible for proxy voting at these fund companies may feel that addressing climate risk will not have material impact on long-term shareholder returns. Many view climate change as a social and environmental problem that has no place on the proxy ballot.9 They disagree with firms such as Goldman Sachs and TIAA-CREF that have clearly expressed the investment risks and opportunities associated with climate change, as described above.
9. Based on dialogue between some of the laggard companies and this paper’s authors.
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Mutual Funds and Climate Change: Growing Support for Shareholder Resolutions
7. Voting Records of Leaders on Climate Investment Research
Wells Fargo mutual funds supported nearly 60 percent of climate resolutions they faced in 2008.
Last year’s Ceres report on mutual fund proxy voting identified five large financial institutions that were taking action on climate change by, for example, issuing research reports or products with climate change as an important investment theme: Wells Fargo, Goldman Sachs, Morgan Stanley, JPMorgan Chase, and State Street Global Advisors (SSgA). Last year’s analysis found that in all but one case these companies did not vote in accordance with their other actions on climate. Goldman Sachs was the only one of the five institutions that cast a convincing number of votes in favor of climate resolutions in 2007. In this year’s report, Goldman Sachs has been overtaken by Wells Fargo, which is demonstrating the strongest leadership of the five in voting on climate resolutions. State Street is the clearest poor performer. Here we review this year’s results by these five companies ordered by percentage support. Wells Fargo mutual funds supported nearly 60 percent of climate resolutions they faced in 2008. No abstentions were cast, and there was no inconsistency amongst constituent funds in how individual resolutions were voted. While Wells Fargo’s summary of proxy policies and voting guidelines does not mention the environment or climate (see Appendix 4), there appears nevertheless to be clarity in its voting on climate change. Wells Fargo recently adopted the Carbon Principles,10 which are guidelines for banks to evaluate and address climate change risks in the financing of electric power projects and companies, and also joined the U.S. Environmental Protection Agency’s (EPA) Climate Leaders11 program, which requires member companies to commit to a companywide inventory of emissions and a strategic plan for emission reduction according to specific goals. In addition, Wells Fargo’s investments in green business reached $3 billion, according to an environmental sustainability progress report12 released in December 2008. Goldman Sachs’ 2008 climate change voting record showed a slight improvement over previous years’ support – voting in favor of 47 percent of resolutions faced. Across the Goldman funds there was some inconsistency, with votes being cast both ‘for’ and ‘against’ four separate climate-change resolutions (see Table 5 below for a ranking of fund families’ inconsistency in voting on climate change). Morgan Stanley voted for approximately 18 percent of the 232 climate resolutions it faced in 2008. Previously Morgan Stanley had failed to support a single climate resolution, with the exception of Morgan Stanley KLD Social Index Fund votes. This marks an important turning point in Morgan’s handling of climate change resolutions – from blanket opposition to some support. 10. http://www.carbonprinciples.com/ 11. http://www.epa.gov/climateleaders/ 12. http://74.125.93.104/search?q=cache:KJDPSMbl4TwJ:https://www.wellsfargo.com/downloads
Mutual Funds and Climate Change: Growing Support for Shareholder Resolutions
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JPMorgan, where support for climate change resolutions had reached 63 percent of 48 resolutions tallied in 2006, supported only 10 percent of 344 resolutions in 2008. As with Goldman Sachs, a closer look at JPMorgan’s 2008 voting record shows that some of the resolutions on which some of its funds recorded a vote ‘for’, were voted ‘against’ by other funds operated by the company. State Street opposed every climate resolution it voted on in 2008, just as it did the previous 4 years. Both State Street and JPMorgan have recently cut their dedicated environmental, social and governance (ESG) research teams with the onset of the global financial crisis. The view of many in both the SRI and mainstream investing communities is that ESG issues have material financial implications. JPMorgan and State Street have produced investment research and/or products supporting this position (see last year’s report).13 It is hoped that the cutting of dedicated ESG staff will not impede these organizations’ ability to vote their proxies in accordance with their fiduciary duties.
8. Abstentions Up Mutual fund abstentions have been growing since 2004, from an average of 7.7 percent of votes faced to an all time high of 12.8 percent (average) in 2008.14 This is meaningful first because abstentions aren’t votes “against,” and also because when fund managers abstain on a vote, they are saying that they have no opinion on the importance of the resolution for shareholder value. But mutual fund customers may well expect the managers they pay to have opinions and take action to address material risks, rather than to sit on the fence. Each of the following fund companies abstained on more than 80 percent of votes on climate resolutions they faced in 2008: idelity F Oppenheimer ◆ Riversource ◆
◆
◆
◆
ussell (Frank Russell) R Vanguard
A possible explanation for the growing use of abstentions shown in Graph 1 (page 4) is that some fund companies are moving toward support for climate resolutions, and abstentions are a step in the transition from opposition to support. An examination of the proxy voting guidelines found on select fund families’ web sites (summarized in Appendix 4) is not particularly helpful in distinguishing groups that routinely abstain from those that routinely oppose or support climate resolutions.
13. http://www.ceres.org/Page.aspx?pid=1047 14. Mutual fund abstentions are a subset of the general shareholder votes on climate resolutions: abstentions cast by all shareholders have also been growing as a proportion of total votes cast – up from 9 percent in 2004 to 16 percent in 2008.
A possible explanation for the growing use of abstentions shown in Graph 1 (page4) is that some fund companies are moving toward support for climate resolutions, and abstentions are a step in the transition from opposition to support.
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Mutual Funds and Climate Change: Growing Support for Shareholder Resolutions
Table 3: The Highest Abstainers on Climate Change Resolutions Over Five Years (percent abstention, total number of resolutions faced) FUND FAMILY
2004
2005
2006
2007
2008
AIM
57.1% (28)
66.7% (33)
30.0% (10)
57.4% (47)
63.8% (58)
0.0% (38)
41.3% (46)
55.0% (20)
52.0% (102)
33.6% (134)
77.8% (9)
50.0% (6)
66.7% (3)
100.0% (31)
87.2% (47)
100.0% (13)
8.3% (12)
0.0% (2)
16.7% (30)
50.0% (50)
93.1% (58)
94.9% (39)
83.3% (24)
100.0% (66)
100.0% (121)
100.0% (105)
100.0% (93)
100.0% (72)
92.4% (197)
93.2% (308)
Janus Oppenheimer Pioneer Russell (Frank Russell) Vanguard
The overall increase in abstentions is being driven in part by some large fund companies. Having voted ‘against’ every climate change resolution in the 2004, 2005 and 2006 proxy seasons, Riversource (formerly American Express Funds) and Fidelity abstained in nearly every case in 2007 and 2008. In the most recent proxy season Columbia predominantly abstained, after having cast a mix of ‘for’ and ‘against’ votes in previous proxy seasons.
Table 4: Fund Families Showing Increased Use of Abstentions on Climate Resolutions (percent abstention, total number of resolutions faced) FUND FAMILY
2004
2005
2006
2007
2008
Columbia
0.0% (5)
0.0% (1)
0.0% (17)
0.0% (110)
56.5% (69)
Coventry
0.0% (11)
0.0% (10)
0.0% (2)
16.7% (12)
28.6% (14)
Fidelity
0.0% (74)
0.0% (65)
0.0% (60)
91.6% (119)
91.3% (196)
MassMutual
0.0% (66)
3.2% (63)
3.7% (27)
13.5% (141)
18.4% (223)
Riversource (AXP)
0.0% (52)
0.0% (44)
0.0% (24)
90.3% (93)
99.3% (143)
9. Voting Pattern to Watch: Inconsistent Voting Each fund group is required to articulate, document and disseminate proxy voting guidelines that lay out general principles according to which proxy voting decisions are made. These may be updated from time to time. Proxy voting guidelines serve to communicate the principles that fund groups consider material to the long term value of their investments. It is interesting to observe that in a number of cases different votes on the same resolution are reported across the individual funds constituting a fund group. For instance, within the MassMutual fund group, the ‘MassMutual Premier Value Fund’ voted against resolution number 19 at Exxon Mobil in 2008 addressing renewable energy (see Appendix 3 for the resolved clause), whereas the ‘MassMutual Premier Main Street
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Mutual Funds and Climate Change: Growing Support for Shareholder Resolutions
Fund’ abstained and the ‘MassMutual Premier Enhanced Index Value Fund’ voted for this same resolution. This is one example of a number of similar cases that may be drawn from the voting patterns of fund groups, listed in Table 5 below, which each recorded an average of more than one vote per climate resolution for 2008.
Table 5: Inconsistent Voting Within Families of Funds Number of unique resolutions voted on
Number of alternative votes cast
Average number of alternative votes per resolution
MassMutual
24
53
2.208
Janus
20
32
1.600
MFS
15
23
1.533
Nationwide (Gartmore)
25
37
1.480
AIM
21
30
1.429
Goldman Sachs
21
30
1.429
Phoenix
22
31
1.409
Transamerica (Aegon)
19
26
1.368
Legg Mason
21
28
1.333
JPMorgan
23
30
1.304
Nuveen
21
27
1.286
Allianz (Pimco)
16
18
1.125
Schroder
10
11
1.100
Credit Suisse
15
16
1.067
Franklin Templeton
17
18
1.059
Ameritas
18
19
1.056
Wells Fargo
18
19
1.056
Columbia
23
24
1.043
Dreyfus
24
25
1.042
DWS (DWS Scudder)
24
25
1.042
T Rowe
25
26
1.040
FUND FAMILY
In all but a few cases, no clear pattern accounts for inconsistent voting on particular climate change resolutions amongst the individual funds belonging to fund families. In the case of AIM, however, all constituent funds abstained on climate change resolutions except for ‘AIM S&P 500 INDEX FUND’ and ‘AIM MID CAP CORE EQUITY FUND’, which voted predominantly ‘for’ the climate change resolutions addressed to companies in their portfolio of holdings. In the case of MFS, ‘MFS Blended Research Core Equity Fund’ voted consistently ‘for’ whereas all other funds in the group voted consistently ‘against’ climate change resolutions. In the case of JPMorgan, ‘Highbridge Statistical Market Neutral Fund’ was most likely to vote ‘for’ climate resolutions compared with other funds in the group. The most likely explanation for the observed inconsistency in votes is the degree of centralization of the proxy voting function within the fund family. In some fund companies all proxy voting is administered centrally. In others the voting function is delegated to
12
Mutual Funds and Climate Change: Growing Support for Shareholder Resolutions
individual fund managers. Where there is little or no direction from the proxy voting guidelines, there may be considerable inconsistency in voting. This inconsistency leaves mutual fund investors wondering why the fund family’s managers can’t agree on which position is best for shareholder value.
10. Shareholders are Skeptical of Climate Skeptics’ Case This section examines mutual fund voting on 20 climate skeptic-sponsored resolutions. Climate skeptics have been filing resolutions which mimic the language of actual climate change resolutions, yet which question the necessity of actions to reduce climate risk and call into question the scientific consensus on the causes of climate change. Notwithstanding climate skeptics’ efforts in filing a record number of these resolutions in the 2008 proxy season, shareholder support is at an all-time low, as shown in Graph 3.
Graph 3: General Shareholder Support for Climate Resolutions and Climate Skeptic Resolutions
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While average shareholder support for climate resolutions addressing real climate risks and opportunities increased by almost 10 percent over the five-year survey period, average shareholder support for resolutions filed by climate skeptics has decreased from 9.7 percent to 3.6 percent. Mutual fund voting patterns tell a similar story. Of the 59 mainstream fund families that voted on at least one of the climate skeptic resolutions in 2008, only four cast any votes in favor. In total, only 19 votes were cast in favor out of 4,229 votes cast by mainstream mutual fund families on climate skeptic resolutions during 2007 and 2008.
Mutual Funds and Climate Change: Growing Support for Shareholder Resolutions
11. S ocially Responsible Investment (SRI) Funds’ Votes on Climate Change Resolutions The SRI investment groups included in the study are: riel A Bridgeway ◆ Calvert ◆ Citizens ◆ Domini
reen Century G MMA Praxis ◆ Parnassus ◆ Pax ◆ Portfolio 21
◆
◆
◆
◆
rillium Asset T Management ◆ Walden ◆ Winslow ◆
SRI funds in the U.S. – employing a wide variety of strategies related to environmental, social and governance issues – are nearly unanimous in their support of climate change resolutions. Not counting Bridgeway, of the 189 votes cast by the other 12 SRI fund groups on climate change resolutions over the 2004-2008 period, only three were cast ‘against’ any of the 76 climate resolutions. All three were cast against the 2008 resolution at Citigroup requesting the board to “cease all financing, investment and any further involvement in activities that support mountain-top-removal coal mining or the construction of new coal-burning power plants that emit carbon dioxide”.
12. General Shareholder Support for Climate Change Resolutions is at Record Levels Shareholders are showing record levels of support for resolutions asking businesses to disclose and/or mitigate climate-related financial risk. Both the number of climate-related shareholder resolutions voted on in 2008, as well as average shareholder support, are at new highs. The trend line in Graph 4 shows that the average vote in favor of climate shareholder resolutions was over 23 percent in 2008 – a near-steady rise from less than 14 percent five years earlier. Two of the 2008 resolutions achieved the highest support ever for climate resolutions: 39.6 percent at both CONSOL Energy (a coal company) and Kroger Co. (the grocery chain).
Graph 4: Average Shareholder Support for Climate Change Resolutions
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13
14
Mutual Funds and Climate Change: Growing Support for Shareholder Resolutions
Conclusion Recommendations made in last year’s report continue to be relevant in light of this year’s voting results. Mainstream mutual fund companies are encouraged to: 1) update proxy voting guidelines to stipulate support for climate resolutions that address material risks; 2) move from abstention and opposition to voting in support; and 3) align voting with investment research on climate risks and opportunities. A trend toward greater mainstream mutual fund support for climate resolutions is emerging. And new leaders are emerging as well: in addition to the SRI funds, Wells Fargo, TIAA-CREF, Schwab, Credit Suisse and Ameritas all showed strong support for climate resolutions in 2008. Wells Fargo deserves special mention as an emerging climate leader in proxy voting as well as in other areas of its business. Funds opposing these resolutions need to explain why their lack of responsiveness on this issue is not detrimental to the financial interests of their clients. In addition to the mainstream fund families that abstain in almost every case, identified in Section 8, there are a few large mainstream fund groups that voted ‘against’ every climate resolution faced, including AllianceBernstein (75 votes), American Funds (105 votes), American Century (256 votes, of which 6 were ‘No Votes’), ING (487 votes), Lord Abbett (83 votes), and Pioneer (50 votes). Mainstream funds still voting against or abstaining on climate resolutions should consider the arguments presented in Section 1 of this report about the material and rapidly growing financial risks of climate change. They should also consider the empirical evidence of growing support for climate change resolutions from mutual funds as well as the broader shareholder vote. Finally, they should consider how ‘against’ votes in 2009 and 2010 will be perceived by customers when impending and current carbon regulations cause potentially large changes in shareholder value for the many companies impacted. How will it be possible to make a business case for defending votes that ignore the major risks climate change presents?
15
Mutual Funds and Climate Change: Growing Support for Shareholder Resolutions
Appendix 1: Support for Climate Resolutions by Fund Family (Ranked by 2008 percentage support, votes faced are in parentheses.) FUND FAMILY
2008
2007
2006
2005
2004
TIAA-CREF
82% (196)
45% (71)
78% (109)
92% (66)
87% (52)
Schwab
71% (24)
59% (17)
57% (7)
13% (8)
30% (10)
Credit Suisse
67% (63)
57% (21)
80% (5)
50% (10)
29% (7)
Ameritas
66% (29)
5% (22)
0% (5)
17% (12)
0% (13)
Fifth Third
60% (63)
43% (7)
43% (7)
25% (16)
28% (25)
Wells Fargo
59% (78)
2% (54)
7% (28)
0% (88)
0% (58)
Coventry
57% (14)
50% (12)
0% (2)
70% (10)
64% (11)
Delaware
56% (16)
11% (9)
0% (1)
36% (11)
25% (20)
Liberty
56% (9)
29% (7)
100% (2)
(0)
(0)
Schroder
50% (12)
33% (9)
50% (4)
14% (7)
33% (9)
Goldman Sachs
47% (115)
45% (66)
40% (15)
32% (25)
19% (26)
Phoenix
47% (176)
28% (109)
36% (14)
10% (39)
14% (63)
Nuveen
46% (82)
42% (33)
100% (3)
33% (9)
100% (3)
Nationwide (Gartmore)
46% (164)
33% (61)
29% (17)
29% (17)
13% (15)
Alger
44% (25)
8% (13)
(0)
50% (14)
0% (5)
Janus
39% (134)
34% (102)
30% (20)
7% (46)
16% (38)
Legg Mason
37% (129)
17% (88)
13% (15)
25% (4)
0% (4)
Blackrock
36% (107)
22% (81)
0% (2)
0% (20)
0% (15)
Lazard
35% (46)
44% (16)
(0)
43% (7)
0% (8)
MassMutual
26% (223)
30% (141)
22% (27)
14% (63)
20% (66)
Allianz (Pimco)
22% (60)
26% (34)
33% (6)
31% (16)
22% (23)
Aim
19% (58)
21% (47)
20% (10)
3% (33)
18% (28)
Morgan Stanley
18% (233)
0% (118)
4% (47)
7% (59)
4% (78)
Van Kampen
15% (72)
0% (44)
0% (10)
0% (18)
0% (9)
Neuberger Berman
15% (34)
20% (30)
25% (8)
0% (3)
43% (7)
Columbia
14% (69)
3% (110)
53% (17)
0% (1)
60% (5)
T Rowe
12% (219)
5% (100)
19% (31)
0% (60)
0% (77)
JPMorgan Chase
10% (344)
43% (94)
63% (48)
23% (92)
11% (18)
Transamerica (Aegon)
10% (99)
13% (48)
17% (6)
9% (85)
1% (116)
Aston (ABN Amro)
7% (14)
44% (18)
33% (6)
8% (13)
0% (8)
MFS
7% (120)
8% (53)
0% (8)
0% (16)
0% (24)
Federated
6% (87)
2% (44)
0% (8)
0% (24)
0% (34)
Dreyfus
5% (62)
0% (40)
0% (14)
0% (22)
6% (33)
Bny Hamilton
2% (53)
44% (27)
0% (9)
0% (15)
0% (15)
(continues on following page)
16
Mutual Funds and Climate Change: Growing Support for Shareholder Resolutions
FUND FAMILY
2008
2007
2006
2005
2004
DWS (DWS Scudder)
2% (228)
0% (30)
0% (4)
0% (8)
0% (13)
Franklin Templeton
1% (101)
14% (66)
0% (20)
29% (31)
0% (18)
AllianceBernstein
0% (75)
0% (47)
0% (9)
0% (11)
19% (21)
American Funds
0% (105)
0% (75)
0% (10)
0% (47)
4% (53)
American Century
0% (256)
0% (126)
0% (32)
0% (65)
13% (84)
Capstone
0% (2)
0% (1)
0% (1)
(0)
0% (9)
Dodge & Cox
0% (12)
0% (10)
(0)
(0)
0% (4)
Fidelity
0% (196)
0% (119)
0% (60)
0% (65)
0% (74)
Harbor
0% (17)
0% (3)
0% (3)
0% (1)
(0)
ING
0% (487)
0% (254)
0% (59)
0% (110)
0% (126)
Lord Abbett
0% (83)
0% (56)
22% (9)
0% (21)
0% (19)
Mellon
0% (15)
0% (9)
(0)
0% (2)
0% (4)
Oppenheimer
0% (47)
0% (31)
0% (3)
0% (6)
0% (9)
Pioneer
0% (50)
0% (30)
0% (2)
0% (12)
0% (13)
Putnam
0% (228)
5% (20)
0% (8)
0% (25)
0% (13)
Riversource
0% (143)
0% (93)
0% (24)
0% (44)
0% (52)
Russell (Frank Russell)
0% (121)
0% (66)
0% (24)
0% (39)
0% (58)
State Street
0% (19)
0% (15)
0% (5)
0% (9)
0% (28)
Steward
0% (23)
0% (26)
0% (10)
0% (9)
0% (8)
Vanguard
0% (308)
0% (197)
0% (72)
0% (93)
0% (105)
Enterprise
(0)
(0)
0% (1)
8% (13)
25% (24)
Excelsior
(0)
0% (15)
0% (1)
0% (6)
0% (8)
17
Mutual Funds and Climate Change: Growing Support for Shareholder Resolutions
Appendix 2: Methodology Mutual funds in the U.S. are required to annually report on how they vote the proxies of companies within their portfolios. These records are filed with the U.S. Securities and Exchange Commission (SEC) in N-PX forms by the end of August each year and contain a record of votes cast on proxies for shareholder meetings dated from the beginning of July of the previous calendar year to the end of June of the respective calendar year. Fund Votes has tracked this data since it was first required in 2004 and has built up a database of over 13 million voting decisions, indexed for a variety of research purposes. For the purpose of analyzing votes on shareholder-sponsored resolutions, votes are indexed against a complete set of resolutions sponsored by shareholder activists. In total, 74 fund families’ votes were surveyed for this report, including 61 of the largest mainstream mutual fund families in the U.S. and 13 prominent socially responsible investment (SRI) funds. The data is drawn from 1,707 filings of investment companies comprising the 74 fund families. Included in this selection are the largest and most prominent funds in each fund family. To see which N-PX filings the data was drawn from see: http://www.fundvotes.com/about. The five-year survey covers 13,200 mutual fund votes on climate change resolutions voted on at shareholder meetings from 1 July 2003 to 30 June 2008.
Table 6: Number of Votes on Climate Resolutions Included in the Survey
2004
2005
2006
2007
2008
Votes by Mainstream Mutual Fund Companies
1,672
1,548
868
3,042
5,754
44
32
40
66
134
Votes by SRI Fund Companies
Resolutions included in this survey are those that are primarily aimed at addressing climate change. Most mention climate change in the resolved clause. Where climate change is not mentioned in the resolved clause, it is prominent in the motivations provided in the text of the resolution. In addition to analyzing the resolutions described above, a subsection of the survey considers 5,543 votes cast on 20 resolutions sponsored by climate skeptics over the three-year period since those resolutions first came to a vote of shareholders (2006–2008 proxy seasons). These resolutions are contrary to the spirit of resolutions supported and tracked by Ceres in that they advocate against actions to reduce climate risk.
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Mutual Funds and Climate Change: Growing Support for Shareholder Resolutions
Throughout the report, mutual fund support has been calculated as the percentage of all votes faced by mutual funds that are voted ‘for’. All votes faced includes votes cast as ‘for’, ‘against’ or ‘abstain’ as well as votes not cast (indicated as ‘no vote’). The intention of the report is to include in the calculation of mutual funds’ support for climate change resolutions all opportunities that they had to support this issue. Where funds have abstained in a large number of cases, even though this is not a clear opposition to the resolutions, it does represent a failure to support climate change resolutions. Note that the data set used for this report is slightly expanded and modified compared to the reports we issued in previous years. Additional mutual funds’ votes were added to some fund families. Furthermore, one resolution that was tracked in last year’s report covering the 2007 proxy season was not included in this report because the authors were not familiar with the motivations of the filer and feel that excluding it gives a clearer picture of results related to material risks and opportunities of climate change. These data set changes result in some changes (compared to last year’s report) in previous years’ results. These modifications do not significantly impact overall trends or conclusions.
Mutual Funds and Climate Change: Growing Support for Shareholder Resolutions
Appendix 3: 2008 Climate Resolution ResolveD Clauses Autos GENERAL MOTORS CORP (Annual General Meeting date: June 3, 2008) #7 “Greenhouse Gas Emissions” (Support: 15.0 percent) RESOLVED: Shareholders request that the Board of Directors publicly adopt quantitative goals, based on current and emerging technologies, for reducing total greenhouse gas emissions from the company’s products and operations; and that the company report to shareholders by September 30, 2008, on its plans to achieve these goals. Such a report will omit proprietary information and be prepared at reasonable cost.
Airlines SOUTHWEST AIRLINES CO (May 21, 2008) #5 “Sustainability Reporting” (Support: 25.6 percent) RESOLVED: Shareholders request that the Board of Directors prepare a sustainability report describing corporate strategies to reduce greenhouse gas emissions and addressing other environmental and social impacts such as waste management and recycling, as well as employee and product safety. The report, prepared at reasonable cost and omitting proprietary information, should be published by October 2008.
U.S. AIRWAYS GROUP INC (June 11, 2008) #5 “Preparation of a Corporate Sustainability Report” (Support: 21.9 percent) RESOLVED: Shareholders request that the Board of Directors prepare a sustainability report describing corporate strategies to reduce greenhouse gas emissions and addressing other environmental and social impacts such as waste management and recycling, as well as employee and product safety. The report, prepared at reasonable cost and omitting proprietary information, should be published by October 2008.
Financial Institutions CITIGROUP INC (April 22, 2008) #9 “Amend GHG Emissions Policies” (Support: 3.9 percent) RESOLVED: Shareholders request Citigroup’s board of directors amend its GHG emissions policies to cease all financing, investment and any further involvement in activities that support MTR coal mining or the construction of new coal-burning power plants that emit carbon dioxide.
Home Builders/ Real Estate Investment Trusts/ Retail BED BATH & BEYOND INC (July 10, 2008) #3 “Address Climate Change” (Support: Not Presented at AGM) RESOLVED: The shareholders request that the Board assess how the company is responding to rising regulatory, competitive, and public pressure to address climate change and report to shareholders (at a reasonable cost and omitting proprietary information) by December 1, 2007.
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Mutual Funds and Climate Change: Growing Support for Shareholder Resolutions
KROGER CO (June 26, 2008) #4 “Develop a Climate change and reducing GHG Emissions policy” (Support: 39.6 percent) RESOLVED: The shareholders request that the company develop a comprehensive policy for addressing climate change and reducing GHG emissions and report to shareholders on its plans for doing so, at reasonable cost and omitting proprietary information, by December 31, 2008.
PULTE HOMES INC (May 15, 2008) #8 “Climate Change Report” (Support: 22.0 percent) RESOLVED: Shareholders request that by December 31, 2008 the Board of Directors provide a climate change report, prepared at reasonable cost and omitting proprietary information, on the feasibility of our company developing policies that will minimize its impact upon climate change, with a focus on reducing greenhouse gas emissions from the company’s products and operations.
RYLAND GROUP INC (April 23, 2008) #6 “Greenhouse Gas Emissions” (Support: 25.4 percent) RESOLVED: Shareholders request that the Board of Directors adopt quantitative goals, based on available technologies, for reducing total greenhouse gas emissions from the Company’s products and operations and report to shareholders by December 31, 2008, on its plans to achieve these goals. Such a report will omit proprietary information and be prepared at reasonable cost.
STANDARD PACIFIC CORP (May 14, 2008) #4 “Adoption of Quantitative Greenhouse Gas Emissions Goals” (Support: 33.7 percent) RESOLVED: Shareholders request that the Board of Directors adopt quantitative goals, based on available technologies, for reducing total greenhouse gas emissions from the Company’s products and operations and report to shareholders by December 31, 2008, on its plans to achieve these goals. Such a report will omit proprietary information and be prepared at reasonable cost.
Coal FOUNDATION COAL HOLDINGS, INC (May 22, 2008) #5 “Climate Change” (Support: 22.4 percent) RESOLVED: Shareholders request a report reviewed by a board committee of independent directors on how the company is responding to rising regulatory, competitive, and public pressure to significantly reduce carbon dioxide and other emissions from the company’s products and operations. The report should be provided by September 1, 2008 at a reasonable cost and omit proprietary information.
Mutual Funds and Climate Change: Growing Support for Shareholder Resolutions
CONSOL ENERGY INC (April 29, 2008) #4 “Climate Change” (Support: 39.6 percent) RESOLVED: Shareholders request a report [reviewed by a board committee of independent directors] on how the company is responding to rising regulatory, competitive, and public pressure to significantly reduce carbon dioxide and other emissions from the company’s products and operations. The report should be provided by September 1, 2008 at a reasonable cost and omit proprietary information.
MASSEY ENERGY CO (May 13, 2008) #4 “Climate Change Report” (Support: 30.8 percent) RESOLVED: Shareholders request a report [reviewed by a board committee of independent directors] on how the company is responding to rising regulatory, competitive, and public pressure to significantly reduce carbon dioxide and other emissions from the company’s products and operations. The report should be provided by September 1, 2008 at a reasonable cost and omit proprietary information.
Electric Power SOUTHERN CO (May 28, 2008) #5 “Environmental Report” (Support: 12.3 percent) RESOLVED: Shareholders request that the Board of Directors report to shareholders actions the company would need to take to reduce total CO2 emissions, including quantitative goals for existing and proposed plants based on current and emerging technologies, by September 30, 2008. Such report shall omit proprietary information and be prepared at reasonable cost.
Forestry/Paper INTERNATIONAL PAPER CO (May 12, 2008) #8 “Sustainable Forestry” (Support: 6.1 percent) RESOLVED: Shareholders request the Board to prepare a report, at reasonable cost and omitting proprietary information, by November 30, 2008, assessing the feasibility of phasing out our company’s use of non-FSC certified fiber and increasing the use of postconsumer recycled fiber as a means to reduce our company’s impact on greenhouse gas emissions.
RR DONNELLEY & SONS CO (May 28, 2008) #4 “Sustainable Forestry Report” (Support: 6.7 percent) RESOLVED: Shareholders request the Board to prepare a report, at reasonable cost and omitting proprietary information, by November 30, 2008, assessing the feasibility of phasing out our company’s use of non-FSC certified fiber and increasing the use of postconsumer recycled fiber as a means to reduce our company’s impact on greenhouse gas emissions.
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Mutual Funds and Climate Change: Growing Support for Shareholder Resolutions
Oil & Gas CHEVRON CORP (May 28, 2008) #6 “Report on Environmental Impact of Oil Sands Operations in Boreal Forest” (Support: 28.6 percent) RESOLVED: Shareholders request that an independent committee of the Board prepare a report, at reasonable cost and omitting proprietary information, on the environmental damage that would result from the company’s expanding oil sands operations in the Canadian boreal forest. The report should consider the implications of a policy of discontinuing these expansions and should be available to investors by the 2009 annual meeting.
CHEVRON CORP (May 28, 2008) #7 “Greenhouse Gas Emissions” (Support: 10.4 percent) RESOLVED: Shareholders request that the Board of Directors adopt quantitative goals, based on current technologies, for reducing total greenhouse gas emissions from the Company’s products and operations; and that the Company report to shareholders by September 30, 2008, on its plans to achieve these goals. Such a report will omit proprietary information and be prepared at reasonable cost.
CONOCOPHILLIPS (May 14, 2008) #8 “Greenhouse Gas Reduction” (Support: 29.4 percent) RESOLVED: Shareholders request that the Board of Directors adopt quantitative goals, based on current technologies, for reducing total greenhouse gas emissions from the Company’s products and operations; and that the Company report to shareholders by September 30, 2008, on its plan to achieve these goals. Such a report will omit proprietary information and be prepared at a reasonable cost.
CONOCOPHILLIPS (May 14, 2008) #11 “Environmental Impact” (Support: 27.5 percent) RESOLVED: Shareholders request that an independent committee of the Board prepare a report (at reasonable cost and omitting proprietary information) on the environmental damage that would result from the company’s expanding oil sands operations in the Canadian boreal forest. The report should consider the implications of a policy of discontinuing these expansions and should be available to investors by May 2009.
EXXON MOBIL CORP (May 28, 2008) #15 “Greenhouse Gas Emissions Goals” (Support: 30.9 percent) RESOLVED: Shareholders request that the Board of Directors adopt quantitative goals, based on current technologies, for reducing total greenhouse gas emissions from the Company’s products and operations; and that the Company report to shareholders by September 30, 2008, on its plans to achieve these goals. Such a report will omit proprietary information and be prepared at reasonable cost.
EXXON MOBIL CORP (May 28, 2008) #17 “Climate Change and Technology Report” (Support: 10.4 percent) RESOLVED: Shareholders ask Exxon Mobil Corporation’s (‘ExxonMobil’s’) Board of Directors to establish a task force, which should include both (a) two or more independent directors and (b) relevant company staff, to investigate and report to shareholders on the likely
Mutual Funds and Climate Change: Growing Support for Shareholder Resolutions
consequences of global climate change between now and 2030, for emerging countries, and poor communities in these countries and developed countries, and to compare these outcomes with scenarios in which ExxonMobil takes leadership in developing sustainable energy technologies that can be used by and for the benefit of those most threatened by climate change. The report should be prepared at reasonable expense, omitting proprietary information, and should be made available to shareholders by March 31, 2009.
EXXON MOBIL CORP (May 28, 2008) #18 “Energy Technology Report” (Support: 9.4 percent) RESOLVED: Shareholders request ExxonMobil’s Board of Directors to establish a Committee to study steps and report to shareholders, barring competitive information and disseminated at a reasonable expense, on how ExxonMobil can become the industry leader within a reasonable period in developing and making available the technology needed (such as sequestration and engineered geothermal) to enable the U.S.A. to become energy independent in an environmentally sustainable way.
EXXON MOBIL CORP (May 28, 2008) #19 “Renewable Energy Policy” (Support: 27.5 percent) RESOLVED: That ExxonMobil’s Board adopt a policy for renewable energy research, development and sourcing, reporting on its progress to investors in 2009.
ONEOK INC (May 15, 2008) #8 “Report on Greenhouse Gas Emissions” (Support: 35.8 percent) RESOLVED: Shareholders request that the Board of Directors prepare a report concerning the feasibility of adopting quantitative goals, based on current and emerging technologies, for reducing total greenhouse gas emissions from the company’s operations; and that the company should submit this report to shareholders by December 31, 2008. Such a report will omit proprietary information and be prepared at reasonable cost.
ULTRA PETROLEUM CORP (May 16, 2008) #3 “Climate Change Report” (Support: 36.6 percent) RESOLVED: The shareholders request that a committee of independent directors of the Board prepare a report, at reasonable cost and omitting proprietary information, on our company’s plans to address climate change by December 31, 2008.
S&P 500 DOVER CORP (May 1, 2008) #4 “Climate Change Report” (Support: 34.2 percent) RESOLVED: Shareholders request that within 6 months of the 2008 annual meeting, the Board of Directors provide a report to shareholders, prepared at reasonable cost and omitting proprietary information, describing how Dover is assessing the impact of climate change on the corporation, the corporation’s plans to disclose this assessment to shareholders, and the rationale for not disclosing such information through reporting mechanisms such as the Carbon Disclosure Project.
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Mutual Funds and Climate Change: Growing Support for Shareholder Resolutions
Appendix 4: Review of Select Proxy Voting Guidelines (as of February 9, 2009) TIAA-CREF “Global Warming and Climate Change: General Policy: TIAA-CREF will generally support reasonable shareholder resolutions seeking disclosure of greenhouse gas emissions and the impact of climate change on a company’s business activities.” http://www.tiaa-cref.org/pubs/pdf/governance_policy.pdf
Schwab Very detailed guidelines: “Climate Change: In general, vote FOR resolutions requesting that a company disclose information on the impact of climate change on the company’s operations unless: • The company already provides current, publicly available information on the perceived impact that climate change may have on the company as well as associated policies and procedures to address such risks and/or opportunities; • The company’s level of disclosure is comparable to or better than information provided by industry peers; and • There are no significant fines, penalties, or litigation associated with the company’s environmental performance. “Greenhouse Gas Emissions: Generally vote FOR proposals requesting a report on greenhouse gas emissions from company operations and/or products unless this information is already publicly disclosed or such factors are not integral to the company’s line of business. Generally vote AGAINST proposals that call for reduction in greenhouse gas emissions by specified amounts or within a restrictive time frame unless the company lags industry standards and has been the subject of recent, significant fines, or litigation resulting from greenhouse gas emissions.” http://www.schwab.com/cms/P-1026479.6/ProxyProcedures2-08.pdf?cmsid=P-1026479&cv9&
Fidelity No mention of climate change or environment http://personal.fidelity.com/myfidelity/InsideFidelity/InvestExpertise/governance.shtml.tvsr
Oppenheimer No mention of climate change. Abstains on social and environmental issues where no clear positive or negative impact on long or short-term performance. https://www.oppenheimerfunds.com/digitalAssets/ d67d7baa5d616110VgnVCM100000e82311ac____-0.pdf
Mutual Funds and Climate Change: Growing Support for Shareholder Resolutions
Riversource “In general, the Board recognizes our fund shareholders are likely to have differing views of social and environmental issues and believes that these matters are primarily the responsibility of a company’s management and its board of directors.” http://www.riversource.com/rvsc/investments/individual-investors/proxy-voting/default.asp
Russell Unable to find proxy voting guidelines.
Vanguard “V. Corporate and social policy issues “Proposals in this category, initiated primarily by shareholders, typically request that the company disclose or amend certain business practices. The Board generally believes that these are “ordinary business matters” that are primarily the responsibility of management and should be evaluated and approved solely by the corporation’s board of directors. Often, proposals may address concerns with which the Board philosophically agrees, but absent a compelling economic impact on shareholder value (e.g., proposals to require expensing of stock options), the funds will typically abstain from voting on these proposals. This reflects the belief that regardless of our philosophical perspective on the issue, these decisions should be the province of company management unless they have a significant, tangible impact on the value of a fund’s investment and management is not responsive to the matter.” https://personal.vanguard.com/us/content/Home/WhyVanguard/ AboutVanguardProxyVotingGuidelinesContent.jsp
Wells Fargo No mention of climate change or environment. http://www.wellsfargoadvantagefunds.com/wfweb/wf/wfafportal/legal/proxy.jsp (Summary of proxy policies and voting procedures).
Credit Suisse No mention of climate change or environment. http://www.aberdeen-asset.us/pdfupload.nsf/5E4724DBC48D1C3785257460004618BF/$file/ proxyvotingcreditsuisse.pdf?OpenElement
Goldman Sachs “In general, vote CASE-BY-CASE. While a wide variety of factors goes into each analysis, the overall principal guiding all vote recommendations focuses on how the proposal will enhance the economic value of the company.” http://www2.goldmansachs.com/gsam/pdfs/U.S.TPD/index/voting_proxy_policy.pdf
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