Guide for asset managers
Companies may voluntarily agree to provide an annual vote, file resolutions where they fail to do so
There are two basic routes to securing an annual shareholder vote on a company’s climate transition action plan and amending the company’s byelaws accordingly:
1 Voluntary route
- Companies should be encouraged to publish a climate transition action plan and propose a management resolution to amend the company byelaws so that this is put to an annual vote at the AGM.
- Shareholders should write to the CEO to persuade them this is a good idea. As this is a reasonable request that can help position the company as a credible climate leader, many are likely to agree.
- Where companies refuse to proceed voluntarily, a shareholder resolution will be necessary.
2 Shareholder resolution route:
- Companies with bad or no plans are likely to resist adopting this practice voluntarily because they are afraid of failing the test of an AGM, and the pressure this would put on them to improve their ESG performance.
- In this case, shareholders with sufficient votes should post a resolution at the AGM. The template resolution for the US here can be easily adapted.
- A shareholder resolution is likely to succeed given that the proxy advisers ISS and Glass Lewis have already agreed this is a reasonable approach.