Foundations Can Use Their Shareholder Muscle to Fight Climate Change

For more than 20 years, ExxonMobil and other large oil companies have defeated shareholder proposals focusing on climate change. This spring, the trend continued. Not a single climate-focused proposal passed at a major American oil company.

So why did it feel so different this time?

For starters, while shareholders may not have passed proposals focusing strictly on climate change, they overwhelmingly supported proposals to allow shareholders to nominate director candidates at a number of oil and gas companies, including Exxon. These proxy-access proposals could ultimately allow investors to put climate experts on the boards of Exxon and its peers, and, as Reuters reported recently, this has them worried.

Investor backing for climate proposals has also soared. In 1999, average support for the climate proposals tracked by the Interfaith Center on Corporate Responsibility was a little over 5 percent. While it’s still too early to have a final number for 2016, multiple climate change proposals earned the support of more than 40 percent of shares voted. At Occidental Petroleum’s annual meeting in April, a record-breaking 49 percent of shares voted were cast in favor of a proposal requiring the company to assess the impact of climate change on its value — a plan submitted by Wespath, which invests for Methodist groups, and the Nathan Cummings Foundation, where I work.

Along with support levels, the sheer number of shareholder proposals focusing on climate change has also skyrocketed. An increasing number of investors have stepped up, not just to vote in favor of proposals, but to file them. The Interfaith Center database lists just five climate proposals in 1999. This year, sustainability nonprofit Ceres tracked nearly a hundred. The proponents of climate-focused proposals now regularly include some of the largest pension funds in the country.

While some have long questioned the utility of asking oil companies for reports about climate risks, Exxon is now the subject of an investigation led by New York State Attorney General Eric Schneiderman that focuses in part on statements made by the company to investors regarding the risks it faces as a result of climate change. Peabody Energy has already agreed to end misleading statements about climate change as part of a similar investigation, and the scrutiny of Exxon might unearth further evidence to discredit global-warming deniers.

Meanwhile, the recent spate of bankruptcies in the coal and natural-gas industries bolsters the contention that fossil-fuel companies without a plan for remaining relevant in a clean economy are, simply put, very bad investments.

Some of these changes have undoubtedly been buoyed by the fossil-fuel-divestment movement, which has sparked important conversations on climate issues. But without active owners willing to ask tough questions about the future of the companies they own, there’d be no proposals to vote on and no possibility of electing climate experts to boards.

As major owners of American business assets, foundations have an important role to play in encouraging publicly traded companies to do a better job of addressing the risks climate change poses to the environment, society, and their own bottom lines. At a minimum, foundations should ensure that their proxies are voted in favor of proposals that companies take action on climate change. With many climate proposals just a few percentage points away from passage, every vote really does matter.

Those invested in mutual funds can arguably have an even greater impact by working to ensure their managers are supporting shareholder proposals on climate issues. Foundations should also consider moving beyond voting to more direct engagement with the companies they own, either by writing letters or submitting their own proposals.

The Nathan Cummings Foundation will continue to use its power as both a grant maker and an investor to push for an inclusive clean economy, and to hold accountable those corporations that continue to delay action on the climate crisis. We hope to see more of our colleagues in the foundation world join us.

Laura S. Campos directs shareholder activities at the Nathan Cummings Foundation.