CHAPTER 08 ESG and Climate Change in the Shadow of COVID-19: “E,” “S” & G Are Here to Stay
BHP CLARIFIES EXPECTATIONS FOR RESOURCE SECTOR LOBBY GROUPS On August 14, 2020, Australian-based BHP Group Limited announced that it intends to hold industry associations that engage in advocacy activities relating to the resources sector to the same standards to which BHP adheres. 192 More specifically, BHP released its “Global Climate Policy Standards,” which outline its approach to climate change in its own advocacy activities, as well as in the advocacy activities of the industry associations to which BHP belongs globally. That approach includes support for the Paris Agreement and for policies aimed at fostering the development of low-emission technologies and the transition to a net-zero economy. 193 VANGUARD GROUP BACKS SHAREHOLDER GHG RESOLUTIONS On June 18, 2020, Vanguard Group, one of the world’s largest investment management firms with approximately $6 trillion in assets under management, announced that it had backed climate-related shareholder resolutions for United Parcel Service Inc. (UPS) (listed on the New York Stock Exchange (NYSE)), J.B. Hunt Transport Services Inc. (listed on the Nasdaq), and Ovintiv Inc. (listed on both the Toronto Stock Exchange and NYSE). Vanguard cited the fact that businesses have an obligation to take into account the risks of operating on a warmer planet. 194 More specifically, Vanguard voted in favour of individual shareholder proposals calling for UPS and J.B. Hunt to issue board reports describing whether and how the companies plan to reduce their contributions to climate change and align their operations with the goals of the Paris Agreement. Vanguard also supported a shareholder proposal calling on Ovintiv’s board to disclose the company’s Paris Agreement–aligned targets, addressing medium- and long-term climate-related risks and opportunities, and to provide annual reports on the company’s progress toward meeting those targets. Vanguard’s support for these resolutions is further evidence that institutional investors are increasingly willing to “walk the talk” (and not just “talk the talk”) on ESG and climate-related issues. We expect issuers will increasingly face similar ESG proposals and growing investor support for those proposals. This will be the case especially for those issuers that resist taking proactive steps to implement entity-specific policies and practices with respect to ESG-related risks and opportunities and fail to communicate to the market the concrete steps being taken to support the long-term sustainability of their organizations.
Vanguard’s support for climate-related resolutions is further evidence that institutional investors are increasingly willing to “walk the talk” (and not just “talk the talk”) on ESG and climate-related issues.
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