In October 2019, we publicly announced, prior to the AGM of BHP (the world’s largest miner), that we would be supporting a shareholder resolution. The substance of this advisory resolution asked the BHP board to suspend memberships of industry associations that they evaluated as undertaking lobbying or advocacy activities that were inconsistent with the Paris
Agreement goals and therefore not aligned with BHP’s own climate strategy.
Anti-climate change lobbying activities by corporates and industry associations is rife globally and across sectors. We have long been monitoring climate change lobbying activities because they are so insidious. They do not hit investors’ typical ESG materiality threshold because, for a literal drop in the ocean in their annual budget, corporates and industries can be extremely effective at undermining the political will needed to address climate change. For this reason, we view proper oversight of companies’ lobbying activities as a significant climate issue for investors’ stewardship efforts. Unfortunately, anti-climate change advocacy activities are getting worse globally.
Investors had been focusing on BHP’s industry group oversight for some time, due to concerns over climate lobbying activities in its home country, Australia. Engagement from investors had resulted in BHP’s initial Industry Association Review being released in January 2018. Disappointingly, as the resolution pointed out, since that time, and despite BHP’s introduced governance measures, anti-climate change lobbying activities from industry associations where BHP is a major funder arguably had deteriorated. One of many examples being the 950 press releases (420 related to coal) made by the six Australian trade bodies of which BHP is a major member. This runs counter to the promised ‘technology neutral’ approach to climate lobbying and undermines the company’s commitment to align with the Paris Agreement. Additionally, coal assets comprise less than 5% of BHP’s portfolio.
BHP is certainly not the sole culprit on lobbying activities – the practice is rife. However, it serves to undermine the integrity of BHP’s climate leadership aspirations which, as a shareholder, we have long encouraged (and often witnessed) as we believe it is in our mutual best long-term interests.
Outcomes on this engagement can be measured in a couple of ways. First, following our move to publically support a resolution, several other leading asset managers voted in favour. Despite neither of the major proxy advisors supporting this advisory resolution, it gained a significant 22.16% support from investors, with a further 7.72% abstaining, taking it close to 30% in total. This is a significant result and demonstrates that anti-climate change lobbying activities are clearly a major and growing concern for institutional investors.
The more important outcome will therefore be evidence of companies having stronger governance over their internal and external lobbying activities to ensure that they are fully aligned and integrated with their corporate climate change strategies. We will continue to engage with companies and investors to address this most stubborn obstacle in the transition to low-carbon economies.
US-201119-104109-1
Agreement goals and therefore not aligned with BHP’s own climate strategy.
Anti-climate change lobbying activities by corporates and industry associations is rife globally and across sectors. We have long been monitoring climate change lobbying activities because they are so insidious. They do not hit investors’ typical ESG materiality threshold because, for a literal drop in the ocean in their annual budget, corporates and industries can be extremely effective at undermining the political will needed to address climate change. For this reason, we view proper oversight of companies’ lobbying activities as a significant climate issue for investors’ stewardship efforts. Unfortunately, anti-climate change advocacy activities are getting worse globally.
Investors had been focusing on BHP’s industry group oversight for some time, due to concerns over climate lobbying activities in its home country, Australia. Engagement from investors had resulted in BHP’s initial Industry Association Review being released in January 2018. Disappointingly, as the resolution pointed out, since that time, and despite BHP’s introduced governance measures, anti-climate change lobbying activities from industry associations where BHP is a major funder arguably had deteriorated. One of many examples being the 950 press releases (420 related to coal) made by the six Australian trade bodies of which BHP is a major member. This runs counter to the promised ‘technology neutral’ approach to climate lobbying and undermines the company’s commitment to align with the Paris Agreement. Additionally, coal assets comprise less than 5% of BHP’s portfolio.
BHP is certainly not the sole culprit on lobbying activities – the practice is rife. However, it serves to undermine the integrity of BHP’s climate leadership aspirations which, as a shareholder, we have long encouraged (and often witnessed) as we believe it is in our mutual best long-term interests.
Outcomes on this engagement can be measured in a couple of ways. First, following our move to publically support a resolution, several other leading asset managers voted in favour. Despite neither of the major proxy advisors supporting this advisory resolution, it gained a significant 22.16% support from investors, with a further 7.72% abstaining, taking it close to 30% in total. This is a significant result and demonstrates that anti-climate change lobbying activities are clearly a major and growing concern for institutional investors.
The more important outcome will therefore be evidence of companies having stronger governance over their internal and external lobbying activities to ensure that they are fully aligned and integrated with their corporate climate change strategies. We will continue to engage with companies and investors to address this most stubborn obstacle in the transition to low-carbon economies.
US-201119-104109-1