Investors Focus On ESG This Proxy Season

As proxy season gets into full swing, investors are holding corporate America accountable for meeting the environmental, social and governance (ESG) goals many publicly traded companies have set.

Bank of America kicked off proxy season — the period from mid-April to mid-June when shareholders get to vote on issues affecting the companies they own — with shareholders asking it to issue a report disclosing its plan for aligning its financing activities with its 2030 greenhouse gas emissions reductions targets.

Investors want the report to include specific measures and policies to be implemented, reductions to be achieved by those measures, policies and timelines for implementing them and associated emissions reductions.

“To reach its 2030 goals, Bank of America must have a plan in place that drives decision-making from the top down, starting with governance and ending with banker decision-making on new financing,” said Danielle Fugere, president of As You Sow, a shareholder advocacy nonprofit that promotes environmental and social corporate responsibility.  

The latest Intergovernmental Panel on Climate Change (IPCC) report warns that global emissions are not falling at the necessary speed to avoid irreparable impacts from a rapidly warming climate.

“This strong vote is a call to action,” Fugere said. “Bank of America has demonstrated leadership in setting 2030 targets aligned with global climate goals. Now comes the hard work of making its plan actionable.”

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Both the Nasdaq Stock Market and the Securities and Exchange Commission (SEC) have issued greenhouse gas emissions guidelines for public companies. Although neither are requirements yet, 90% of S&P 500 companies put out sustainability reports in 2019 — up from 20% in 2011.

In 2019, Nasdaq launched its ESG Reporting Guide for public and private companies. Although Nasdaq doesn’t require listed companies to issue ESG reporting, it may track their participation.

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While the SEC’s proposed climate-disclosure rule is not yet effective, many companies are beginning to behave as though it is. A survey by accounting firm PwC and reporting software company Workiva Inc. found that about 70% of companies plan to comply with the SEC rule, which would require public companies to report climate-related risks and emissions data. That includes Scope 3 emissions, which are the result of activities in the reporting organization’s supply chain.

Software company Salesforce Inc., for example, tracks emissions, including Scope 3, and Anheuser-Busch InBev SA reported that 86% of emissions associated with the company came from suppliers.

Developing carbon neutral buildings is key to solving the climate crisis. About 40% of greenhouse gas emissions comes from the built environment and investors increasing their focus on ESG strategies such as powering buildings with renewable energy.

Brookfield, for example, plans to power its One Manhattan West Building in New York City with 100% renewable energy — one of the largest renewable energy deals for a single building in the state.   

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