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Climate Change Blog

State Street Issues New Recommendations for Enhanced Climate-Related Disclosures

On August 14, 2017, State Street Global Advisors, the world’s third largest asset manager, holding over $2.4 trillion in assets under management, issued new climate change disclosure guidance targeting U.S. and international public companies primarily in the oil and gas, utilities and mining sectors. This new guidance, entitled Perspectives on Effective Climate Change Disclosure, identifies “best practices” in climate-related disclosure and prescribes detailed disclosure methods in areas it deems pertinent to investors for evaluating whether “a company’s assets and long-term business strategy are resilient to the impacts of climate change.” In particular, State Street’s guidance emphasizes disclosure of climate change scenario planning and its impact on long-term strategy, which will carry significant business and strategic implications for U.S. public companies in these targeted sectors. 

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  • 15
  • June
  • 2017

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The Ascendance of 2° Celsius Proposals in ESG Activism

The 2017 proxy season will be remembered as the first proxy season to see “2° Celsius” shareholder proposals succeed at annual meetings of U.S. public companies. Environmental shareholder proposals have quietly garnered increasing support in annual meetings of public companies in recent years, but the 2° Celsius proposal has enjoyed greater and more vocal support than others. Shareholder voting data from the 2016 proxy season pointed to the possibility that 2017 could be the first year that these proposals would receive more than 50% of shareholder votes at annual meetings. As of mid-June 2017, three 2° Celsius proposals have passed the 50% vote threshold at annual meetings. Below we summarize the groundwork laid for this type of proposal by the 2015 Paris Agreement and international meetings before it, and we present voting data from annual meetings of 2016 and 2017 to show the increasing popularity of these proposals.

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IHS Markit Challenges Recommendations of the Task Force on Climate-Related Financial Disclosures

In another chapter in the ongoing debate regarding the future of public company disclosures concerning the environment, the London-based consulting firm IHS Markit Ltd. has issued a lengthy report critiquing the Draft Recommendations published in December 2016 by the Task Force on Climate-related Financial Disclosures (TCFD). A handful of energy company supermajors provided financial support for the report, entitled Climate-Related Financial Risk and the Oil and Gas Sector.

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  • 01
  • June
  • 2017

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The Task Force on Climate-Related Financial Disclosures Calls for Never-Before-Used Scenario Analysis in Public Disclosures

In December 2016, the Task Force on Climate-Related Financial Disclosures (TCFD) published Draft Recommendations purporting to set forth “widely adoptable recommendations on climate-related financial disclosures that are applicable to organizations across sectors and jurisdictions.”  Appended to these Draft Recommendations is a Technical Supplement, explaining that the TCFD is calling for companies to analyze and disclose risks related to climate change using a “scenario” analysis. Whether the TCFD’s Draft Recommendations become, in fact, “widely adoptable” will depend in part on how the recommendations square with the current regulatory framework for public company disclosures and how ready companies and the SEC are to support the new methods of analysis and standards for disclosure advocated by the recommendations.

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Top Asset Managers That Support Environmental Shareholder Proposals

Environmental shareholder activism at publicly traded companies in the U.S. features some of the largest investors in the world supporting proposals sponsored by some of the smallest investors in the world. From 2015 to the present, most environmental shareholder proposals were brought to annual meetings of companies by relatively unknown investment groups such as As You Sow, Mercy Investment Services, The Park Foundation, Trillium Asset Management, Calvert Asset Management, The Unitarian Universalist Association of Congregations and the Presbyterian Church of the USA. Only occasionally have these proposals been co-sponsored or sponsored by significantly larger pension funds in the U.S. market known for their interests in corporate environmental policy. With these proposals, these small investors have commanded degrees of attention at corporations highly disproportionate to their usually miniscule ownership stakes. The 2017 proxy season is likely to bring continued increases in visibility for these investors, with added support from a few of the world’s leading asset managers.

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How Leading Institutional Investors Vote on Environmental Shareholder Proposals

Leading U.S. asset managers are increasingly eager to explore the proposition that environmentally conscious policies drive shareholder value, but many of the same asset managers have not frequently voted for environment-related shareholder proposals on the proxy statements of U.S. public companies. The 2017 proxy season will test the readiness of major institutional investors to back environmental shareholder proposals and will reveal whether their past reluctance to do so has eased since 2016.

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Margaret E. Peloso

Margaret E. Peloso Counsel

Eric Groten

Eric Groten Partner

George C. Hopkins

George C. Hopkins Partner

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Michael B. Wigmore Partner

Mattew T. Dobbins

Matthew Dobbins Senior Associate

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Tyler E. Robinson Senior Associate

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Theresa Romanosky Associate

Brandon M. Tuck

Brandon M. Tuck Senior Associate