By Kia Kokalitcheva, Axios Pro Rata, May 7, 2022
A billionaire tech entrepreneur recently acquired a sizable stake in a public company it wants to push in a different direction — but it’s not Elon Musk and Twitter.
This week, Atlassian co-founder Mike Cannon-Brookes revealed an 11% stake in Australian energy company AGL Energy, in a bid to lessen its reliance on coal.
Why it matters: More than ever before, shareholders are tapping into their powers to influence companies on climate and sustainability.
The big picture: It’s not just activist investors like Cannon-Brookes — mainstream shareholders are also increasingly pushing companies on these issues.
Investors have filed a record 215 climate-related shareholder resolutions this year, per data from Ceres, a sustainable investment advocacy group.
Even major investment management companies like BlackRock and Vanguard are backing more climate-related proposals than they have previously.
And stakeholders are getting more aggressive: For example, a year ago, Exxon shareholders defied management and installed two climate-conscious members on its board.
What they’re saying: “It’s a systemic risk, which means that you can’t deal with just one company — you gotta take it with all the companies across the portfolio,” Rev. Kirsten Spalding, senior director of Ceres' investor network, tells Axios.
“They also recognize that it’s a governance issue… we’re seeing a look at whether boards are taking it seriously, not just management,” she adds.
Between the lines: Shareholders are also now asking for concrete progress reports, not just for information disclosures, says Spalding.
She attributed the shift to climate science, as major organizations make more urgent appeals to drastically curb carbon emissions.
The intrigue: In addition to asking for concrete progress reports and transition plans, European shareholders are now even voting against those plans, simply because they're not good enough, says Spalding.
What's next: The pressure goes both ways. Investors will also be under pressure to show plans to transition away from fossil fuels, and they know it.
In a recent BCG survey of 250 institutional investors, 57% said they feel pressure to divest from fossil fuels, 65% said they feel pressure to reduce those fuels' weighting in their portfolios, and 75% said they feel pressure to invest in "green" funds and companies.
The bottom line: With new regulations poised to help standardize climate-related disclosures, shareholders will be even better equipped to compare companies and push laggards to catch up.
https://www.axios.com/newsletters/axios-pro-rata-193773ba-37b6-4b98-ba69-43be74da9f5d.html