Case study: Aena

Say On Climate resolutions at Aena

Aena adopted Say On Climate shareholder resolutions proposed by TCI requiring it to publish a multiannual comprehensive climate transition action plan and to put this to an advisory shareholder vote on an annual basis, and to amend its byelaws accordingly so a vote occurs automatically every year.

This follows a letter sent by TCI to Aena’s CEO in November 2019 which identified areas for improvement in Aena’s sustainability and climate plans [1].

Aena then produced an updated Climate Action Plan that makes several improvements on its previous plans, including a target to generate all of its energy from renewable sources by 2026. It also includes a commitment to further update the plan in 2021 to set out annual decarbonisation objectives covering scopes 1, 2 and 3 and a programme of actions to achieve those objectives [2].

Following further engagement with TCI, Aena’s Board changed its recommendation from opposing the resolutions to supporting them, and made the following statement [3]:

“the Board has decided to take the initiative that Aena not only have a solid plan to deal with climate change, but also, in the interests of transparency and the participation of its shareholders in the development of this plan, be the first Spanish company to incorporate the obligations it undertakes in this fundamental problem into its articles of association. In addition, proposes the intervention of the General Shareholders’ Meeting with consultative voting capacity on these plans.”

While there remains significant room for improvement in Aena’s updated Climate Action Plan, the accountability mechanism introduced by an annual shareholder vote will enable shareholders to ensure continued progress.

Proxy advisers supported the resolutions at Aena

The Say On Climate resolutions filed by TCI at Aena were endorsed by the main proxy voting advisers Institutional Shareholder Services (ISS) and Glass Lewis, in both their standard and sustainability advice. Corporance, the Spanish partner of the ECGS network of European proxy firms, also recommended voting for the proposals.

Based on the ISS and Glass Lewis voting guidelines and the precedent set by the recommendations at Aena, there is a good likelihood that proxy advisers will support similar proposals elsewhere.

Institutional Shareholder Services

ISS’ proxy advice on the Say On Climate resolutions at Aena noted that the resolutions would “improve Aena’s transparency on its environmental actions” and that it was “not overly burdensome for the company” [1]. ISS also noted that:

adopting this practice will showcase the company’s goodwill to undertake environment-friendly measures and be transparent on its environmental targets.”

ISS’ general recommendation in its voting guidelines for the US is to [3]:

“Generally vote for resolutions requesting that a company disclose information on the financial, physical, or regulatory risks it faces related to climate change on its operations and investments or on how the company identifies, measures, and manages such risks”

Glass Lewis

Glass Lewis’ proxy advice on the Say On Climate resolutions at Aena noted:

“We believe that shareholders would benefit from the regular presentation of the Company’s climate action plan as well as having the ability to voice support of or concern for the Company’s plan through their advisory vote on the matter at the Company’s AGMs. We believe that this could create a positive channel for engagement and dialogue between the Company and its investors on this important matter. Further, we believe enshrining the company’s commitment to climate-related reporting in its governing document would represent a best practice that clearly communicates the importance of this issue to shareholders.”

Glass Lewis’ 2020 guidelines on shareholder initiatives state that it will [2]:

“consider recommending a vote in favor of reasonably crafted proposals that request disclosure of a company’s climate change and/or greenhouse gas (“GHG”) emission strategies when … there is a strong link between climate change and its resultant regulation and shareholder value at the firm”

Virtually unanimous support from other investors

Support for the Say On Climate resolutions at Aena was almost unanimous [1]:

  • 98.15% of shareholders voted in favour of holding an annual advisory vote on Aena’s Climate Action Plan
  • 96.52% of shareholders voted in favour of amending the company’s byelaws accordingly

BlackRock voted in favour

BlackRock Investor Services released a bulletin to explain its support for the Say On Climate resolutions, which notes [2]:

“BIS determined to support the request for an annual report on progress towards the climate action plan goals because this is inherently consistent with our expectations that companies have a plan to transition their business models and to explain and justify progress against the plan in their annual reporting. We believe such a report would be beneficial at Aena given the material risk to its business model and its need to accelerate its efforts. An annual advisory shareholder vote on the company’s plans and progress would give management and the board a clear sense of the level of shareholder support for the steps necessary in the transition.”

This is a global first. It sets a precedent for other investors, proxy advisers, companies and regulators, and shows the effectiveness of an engaged shareholder willing to file resolutions on climate change.

Positive media reaction to Say On Climate at Aena

International, specialist and local Spanish media all welcomed the adoption of Say On Climate by Aena but missed the opportunity for Aena to be seen as progressive by adopting this voluntarily:

‘Spanish airports operator Aena is set to become the first company in the world to give shareholders an annual vote on its effort to tackle climate change.’ Read more here.

‘Chris Hohn’s climate win at airport infra firm Aena is a game changer in government/investor activism in Spain and internationally.’ Read more here.

‘Aena shareholders approve action plan against climate change.’ Read more here.

‘El plan climático de Aena marca una nueva era.’ Read more here.