Business Daily Media

The Times Real Estate

.

Australian companies are facing more climate-focused ESG resolutions than ever before, and they are paying quiet dividends

  • Written by Ian Ramsay, Emeritus Professor, Melbourne Law School, The University of Melbourne
Australian companies are facing more climate-focused ESG resolutions than ever before, and they are paying quiet dividends

In 2020, for the first time in Australia, more than half the shareholders of a public company voted in support of a climate change resolution put forward by shareholders in the face of opposition from the company’s board of directors.

The resolution, advanced at Woodside Petroleum’s annual general meeting, called for the company to establish hard targets[1] to bring its own emissions and the emissions caused by the use of its products globally in line with the Paris Agreement to keep global warming below two degrees.

A similar resolution followed at this year’s AGL annual general meeting, gaining the support of 52%[2] of the shareholders.

Although the Woodside vote was described as a “breakthrough moment[3]”, it is part of an increase in shareholder activism around environmental, social and governance (ESG) issues that’s been building for several years.

Our analysis[4] of shareholder ESG resolutions put forward in listed Australian companies between 2002 and 2019 finds they have increased in number, prominence and impact.

Shareholder ESG Resolutions per year

Freeburn and Ramsay 2021[5] A record 36 shareholder ESG resolutions were put forward in 2020. So far in 2021 a further 20 have been put forward, with more foreshadowed. The resolutions have been concentrated in a small number of companies and industries. Four industries – energy, banking, insurance and materials – accounted for 83.5% of the resolutions, with the 139 resolutions recorded between 2002 and the first part of 2021 concentrated in only 28 companies. They were generally the companies most exposed to the risk of climate change or which provide finance to these companies. More climate resolutions are succeeding Several have been subjected to more than one campaign a year. The company with the most is Origin Energy, facing 24 resolutions in the last six years. Of the 83 shareholder ESG resolutions advanced between 2002 and 2019, 48 concerned climate change. A further 26 notionally related to governance, but the governance resolutions were often the ones needed to enable consideration of issues such as climate change. The others related to workers’ rights, human rights, obtaining the consent of Aboriginal native title holders to fracking activities, and gambling. Read more: Rio Tinto's climate resolution marks a significant shift in investor culture[6] Almost all were proposed by just two groups: the Australasian Centre for Corporate Responsibility[7] and Market Forces[8]. Until last year the level of support garnered by shareholder ESG resolutions was small, averaging 9.7%. In 2020, support jumped to 14.7%. In 2021 to date it has climbed to 28%, bolstered by two resolutions of Rio Tinto shareholders that attracted 99% after winning the support of Rio Tinto’s board. Success needn’t mean being put to a vote Our study sought input from proponents of ESG resolutions, institutional shareholders, company directors, governance professionals and the Australian Securities and Investments Commission. We found that winning votes isn’t the only objective of those who propose these resolutions. Another is to get companies to respond positively even though the resolutions will be defeated, and sometimes in return for the resolutions being withdrawn before the annual general meeting. As an example, the Australasian Centre for Corporate Responsibility submitted a resolution for this year’s Woodside annual general meeting calling on the company to prepare an annual climate report that would include Woodside’s strategy to reduce its greenhouse gas emissions and put the report to a shareholder advisory vote. It withdrew[9] the resolution after Woodside announced it would put climate reporting to an advisory vote of shareholders at its 2022[10] annual general meeting. Some of those we interviewed said shareholder ESG resolutions distracted the companies from what they should be doing. Others said they ran the risk of blurring the distinct roles of directors and shareholders. Many said the process for getting shareholder ESG resolutions on the agenda for annual general meetings is cumbersome. However, almost all of those interviewed – and not just the proponents of the resolutions – saw them as a valuable way of letting companies know what their shareholders really think about how they should respond to the challenges of climate change and other issues. References^ hard targets (www.smh.com.au)^ 52% (reneweconomy.com.au)^ breakthrough moment (www.smh.com.au)^ analysis (papers.ssrn.com)^ Freeburn and Ramsay 2021 (papers.ssrn.com)^ Rio Tinto's climate resolution marks a significant shift in investor culture (theconversation.com)^ Australasian Centre for Corporate Responsibility (www.accr.org.au)^ Market Forces (www.marketforces.org.au)^ withdrew (files.woodside)^ 2022 (www.nasdaq.com)Authors: Ian Ramsay, Emeritus Professor, Melbourne Law School, The University of Melbourne

Read more https://theconversation.com/australian-companies-are-facing-more-climate-focused-esg-resolutions-than-ever-before-and-they-are-paying-quiet-dividends-170466

Cutting edge AI technology designed for doctors to reduce patient wait times launched in NZ

New Zealand specialist doctors now have access to Artificial Intelligence technology to help reduce patient wait times and experts say it could be...

Launchd Takes Off: Former AFL Stars Lead Tech-Powered Platform Set to Disrupt Talent and Influencer Marketing

Backed by Institutional Capital, Launchd Combines Five Leading Agencies and Smart Technology to Deliver Measurable Results Influencer marketing i...

Meet the Australian fintech unlocking rewards for small businesses

Small businesses make up 98 per cent of all businesses in Australia, yet they continue to bear the brunt of economic uncertainty. According to Credi...

Teleperformance (TP) Business Insights Report Reveals Key Shifts in Consumer Behaviour

TP’s Business Insights report  into consumer behaviors and preferences, taking in more than 57,000 respondents across 19 sectors, is shedding new li...

HubSpot launches platform-wide AI tools to help businesses close the adoption gap

HubSpot today unveiled more than 200 updates across its customer platform to help businesses grow better. The release introduces smarter tools, new AI...

Why Every Leader Needs a Personal Branding Strategy in 2025

One of the best investments you can make in 2025? Your Personal Brand.In today’s competitive and digitally driven business world, authenticity and...

Sell by LayBy