General Electric Co. got a thumbs-up last month from groups pushing for management support for so-called ESG issues at big, publicly traded companies.
ESG is shorthand for environmental/social/governance – non-financial criteria that prospective investors may weigh for a company’s position on, say, climate change, racial justice and executive pay.
Cited in a report on ESG votes during annual meetings this spring was a shareholder proposal calling on GE to report on how it plans to achieve net-zero greenhouse gas emissions by 2050, not just across its own businesses but by purchasers of its products, too.
Net-zero is tied to the 2015 Paris Agreement that bound countries to turn the tide on global warming by mid-century.
The GE resolution was supported by a “resounding” 98 percent of shareholders, according to As You Sow, a nonprofit that promotes environmental and social corporate responsibility through investor advocacy. It offered the resolution that went before the GE annual meeting in May.
The resolution also received support from GE’s board of directors – “a commendable and unusual move,” As You Sow noted. Indeed, public company boards often recommend a “no” vote on shareholder proposals, seeing them as intrusive.
But in materials sent to owners of GE stock ahead of the annual meeting, the board explained its endorsement: Not only does GE believe climate change “is an urgent priority,” but the company is “helping solve” the needed transition to a decarbonized electrical grid through products such as wind turbines, hydrogen-fueled gas turbines, and small, modular nuclear reactors.
“We recognize shareholders’ interest in companies’ actions and reporting related to climate change,” the board stated.
Last fall, GE announced a goal of carbon neutrality by 2030 at its 1,000 factories, offices and warehouses worldwide – what are known as Scope 1 and Scope 2 emissions in the net-zero scenario. Scope 3 is tougher to address because it involves “emissions across a company’s entire value chain,” including those from customers using the company’s products.
A Scope 3 accounting is the goal of the shareholder proposal passed at the GE annual meeting.
GE said it plans to publish a sustainability report later this year on reducing greenhouse gas emissions, and now will include a discussion on whether and how it might tackle Scope 3.
As You Sow, along with two other groups, Sustainable Investment Institute and Proxy Impact, reported in late June that 2021 was shaping up as a “record-breaking year” for ESG shareholder proposals, with nearly three dozen hitting the majority vote benchmark at annual meetings held so far, up from 21 in 2020.
What’s more, six proposals saw more than 90 percent support from shareholders, including the vote at GE’s meeting, the groups said.
In addition to climate change, they cited political spending, diversity, sexual harassment and COVID-19 as other top vote-getting ESG proposals, the last seeking an accounting of supply chain worker safety during the pandemic.
Marlene Kennedy is a freelance columnist. Opinions expressed in her column are her own and not necessarily the newspaper’s. Reach her at [email protected]
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