How did your pension fund vote on key climate-related shareholder proposals? [post updated July 11, 2023]
Canada’s largest public pension funds claim that they need to stay invested in fossil fuels so that they can use their influence to help companies reduce greenhouse gas emissions. But an analysis of shareholder votes at recent investor meetings for big banks and fossil fuel companies shows most pension funds aren’t even doing the bare minimum. Pension funds are largely voting against climate-related shareholder proposals and allowing company directors to ignore growing climate-related financial risks. Some pension funds won’t even disclose to their members how they’re voting.
July 11, 2023 Update
Since initially posting this blog on June 1, 2023, additional reporting by pension funds has allowed us to complete our analysis of pension fund votes on key climate-related shareholder proposals. We’ve made the following changes and updates to this chart and analysis:
OMERS voted for climate-related shareholder proposals at the Suncor and Imperial Oil AGMs, and against a proposal at Enbridge’s AGM. This brings OMERS’ final vote count to 2 For and 6 Against, maintaining its status as a laggard with a notable reporting gap compared to its Canadian peers.
PSP appears to have posted in early July all proxy votes made between April 1 and June 30, 2023, representing a significant gap in the time it takes to report its votes compared to peer funds. PSP voted against six of eight climate-related shareholder proposals covered in this analysis, making it a laggard compared to peers. Notably, PSP also voted for the re-election of Miranda Hubbs to the Board of Directors of Imperial Oil, which appears to ignore the pension manager’s own Corporate Governance and Proxy Voting Principles for managing climate-related financial risks. Ms. Hubbs is concurrently a Director of PSP.
The UPP informed Shift in July that due to a data entry error, the fund erroneously voted for shareholder proposal #1 at RBC “when (its) intent was to vote against it. (UPP’s) rationale for voting against the proposal, as stated previously, remains the same: Although UPP generally supports proposals calling for initiatives and/or targets aligned with the goals of the Paris Agreement, (UPP) did not support this proposal because it is overly prescriptive and seeks actions that are outside of the company's control.” This means that UPP laudably voted for seven of eight climate-related shareholder proposals covered in this analysis. UPP also demonstrated leadership and a commitment to transparency and continuous improvement by launching a real-time searchable database of its proxy votes this spring.
An updated analysis chart appears below, followed by the original blog post from June 1, 2023.
Original Post (June 1, 2023)
This spring, pension plan members from across Canada sent letters to their investment managers asking them to vote for key climate-related shareholder proposals at Canada’s biggest banks and fossil fuel companies. This included proposals at the Annual General Meetings (AGM) of Royal Bank of Canada (RBC) and TD Bank and Enbridge and Suncor. Shift also tracked a proposal submitted by the British Columbia Investment Management Corporation (BCI) at Imperial Oil’s AGM.
Canadian pension funds voted on various climate-related proposals, including for:
RBC to stop financing fossil fuel expansion, set absolute emissions reduction targets for financing oil and gas and power generation companies, and ensure clients obtain the free, prior and informed consent of Indigenous peoples;
TD Bank to disclose a credible 2030 climate transition plan;
Enbridge to annually disclose its scope 3 emissions using credible internationally-accepted definitions;
Suncor to provide greater disclosure regarding its commitment to devote 10% of its capital expenditures to investments that advance its low-carbon offerings.
Imperial Oil to provide an audited report on the impact of the International Energy Agency's Net Zero by 2050 emissions pathway on the company’s asset retirement obligations.
(A list of the shareholder proposals covered in this analysis can be found at the bottom of this webpage).
Canadian pension funds claim to care about investing our retirement savings in a safe climate future. They claim that their ownership of shares in banks and fossil fuel companies enables them to manage climate risks, reduce carbon emissions, and improve corporate behaviour. And they claim to use voting at AGMs as a way to encourage companies to take action on the climate crisis.
With the 2023 AGM season coming to a close, we’ve analyzed how Canada’s largest pension plans voted on eight key climate-related shareholder proposals. Here’s the leaders, the laggards and the non-transparent.
The LEADERS
BCI distinguished itself as being particularly active during this year’s AGM season, becoming the first Canadian pension manager to file a climate-related shareholder proposal, with its public call for increased climate risk disclosure from Imperial Oil. BCI also voted for seven of the eight proposals we analyzed and provided rationales for all of its votes. Staying true to its updated proxy voting guidelines, BCI voted against the Chair of Imperial Oil’s Board for what BCI called “a lack of oversight that led to major controversies related to insufficient engagement with Indigenous communities”-- a reference to Imperial Oil leaking toxic chemicals into Alberta waterways for months and hiding it from regulators and downstream Indigenous communities. BCI also voted against the Chair of Imperial Oil’s community collaboration and engagement committee for the same reason. This Imperial Oil Director, Miranda Hubbs, is also a Director of PSP Investments.
The Investment Management Corporation of Ontario (IMCO) mostly demonstrated a consistent position on climate-related shareholder proposals, voting for six of eight proposals and abstaining from another, while providing detailed rationale for most votes. Notably, IMCO voted against Miranda Hubbs’ re-election as a Director of Imperial Oil as an “incumbent member of the committee responsible for climate risk oversight… because the company is not aligned with investor expectations on Net Zero by 2050 targets and commitments.” IMCO voted against the re-election of Suncor Director Lorraine Mitchelmore for the same reason. Ms. Mitchelmore is also a Director of the Alberta Investment Management Corporation (AIMCo).
The Caisse de dépôt et placement du Québec (CDPQ) wisely divested its shares in risky oil producers like Suncor and Imperial Oil and therefore cannot vote at their AGMs. But the Quebec pension manager voted for four of five shareholder proposals at big bank AGMs as well as a key climate proposal at Enbridge’s AGM, referring to key clauses in its Policy Governing the Exercise of Voting Rights of Public Companies as rationale for its votes.
Ontario’s University Pension Plan (UPP) voted for four of five key proposals for which we have information to date. The UPP publicly reports its shareholder votes on a quarterly basis, so our analysis of its votes in spring 2023 is incomplete. But the UPP demonstrated a commitment to transparency by directly following up with members to share how it voted on key climate-related proposals, along with reasons why. The UPP could improve transparency by publicly disclosing its shareholder votes more promptly.
The LAGGARDS
The Alberta Investment Management Corporation (AIMCo) stands out as a laggard, voting against all but one climate-related shareholder proposals and largely claiming that it’s “satisfied” with how banks and fossil fuel companies are managing climate risks. AIMCo also voted against a proposal asking RBC to respect Indigenous rights.
The Canada Pension Plan Investment Board (CPPIB) voted against six of eight climate-related shareholder proposals and provided no rationale for any of its votes.The CPPIB voted for the re-election of all fossil fuel company directors, despite public claims that it would vote against directors failing to take climate risks seriously. Like AIMCo, the CPPIB voted against a proposal asking RBC to respect Indigenous rights.
As of June 1, 2023, the Ontario Municipal Employees Retirement System (OMERS) has only reported its votes on shareholder proposals up to April 30th, a notable reporting gap compared to the majority of other Canadian pension funds. However, OMERS voted against all climate-related proposals at bank AGMs included in this analysis in April 2023, as well as an Indigenous rights proposal at the RBC AGM.
The Ontario Teachers’ Pension Plan (OTPP) had a mediocre voting record for a pension fund that prides itself on its climate leadership. While the OTPP has no shares in TD Bank, Enbridge and Suncor, it voted against three climate-related proposals at RBC, calling them “duplicative” or “overly prescriptive.” Some of the OTPP’s votes appear to be misaligned with the fund’s own Proxy Voting Guidelines. The OTPP’s disappointing voting record in 2023 is consistent with a recent study by Investors for Paris Compliance that showed that the OTPP voted for less than one-third of climate-related shareholder resolutions in 2022.
The NON-TRANSPARENT
The Healthcare of Ontario Pension Plan (HOOPP) stands out as the only Maple Eight pension fund that does not report its votes on individual shareholder resolutions to its members or the public. The fund’s Proxy Voting Guidelines go as far as to say that “HOOPP believes that the way HOOPP votes on proxy issues should be confidential unless HOOPP decides to make its votes public.” Even as the pension fund’s CIO publicly insists that engagement is key for pensions and climate policy, HOOPP provides virtually no examples of how its engagement efforts are encouraging companies to decarbonize.
OPTrust also does not report its votes on shareholder resolutions to its members or the public. However, OPTrust has been open to sharing data about investments in individual companies upon request and disclosed that it does not hold shares in any of the companies included in this analysis.
As of June 1, 2023, PSP Investments had only reported its votes on shareholder resolutions up to March 31, a notable reporting gap that lags its peers in the Maple Eight pensions. PSP could improve transparency by promptly disclosing its shareholder votes.
cONCLUSION
Submitting and voting for shareholder proposals is one way for our pension funds to show that they are meaningfully engaging companies on climate-related financial risks, but it’s only one small piece of a meaningful engagement strategy. The willingness of pensions to support climate-related shareholder proposals is revealing. If a pension votes against a resolution calling for a credible climate plan or greater transparency on climate risks, it’s hard to imagine they will apply more pressure behind closed doors. Voting for climate-related resolutions is the least our pensions can do to demonstrate that they take their active ownership responsibilities seriously.
The next time your pension fund tells you they need to stay invested in fossil fuels so they can help climate-wrecking oil and gas companies reduce emissions, you might want to ask them about their voting record on climate-related shareholder proposals.
SHAREHOLDER PROPOSALS COVERED IN THIS ANALYSIS
RBC #1 - The British Columbia General Employees Union (BCGEU) submitted a proposal requesting that RBC amend its policy guidelines to require companies that spin off polluting assets to private companies to disclose climate-related risks consistent with the Task Force on Climate-Related Financial Disclosures, including ensuring that companies ensure board oversight of climate-related risks, disclose scope 1 and 2 greenhouse gas emissions from the acquired assets, and require companies to set GHG emissions reduction targets.
RBC #2 - The BCGEU, in partnership with the Union of British Columbia Indian Chiefs (UBCIC), also submitted a resolution calling on RBC to operationalize within its corporate policies and activities the United Nations Declaration on the Rights of lndigenous Peoples (UNDRIP), which requires obtaining the free, prior and informed consent (FPIC) of Indigenous peoples before implementing measures that may affect them.
Note: At the RBC AGM in Saskatoon in April, RBC prevented Indigenous leaders and climate-concerned shareholders from entering the main room of the AGM and segregated them into a secondary room to watch a livestream and ask questions remotely. Wet’suwet’en Hereditary Chief Na’Moks called the segregation a “racist act,” while Louisiana-based climate justice advocate Roishetta Ozane described the AGM’s main room as “full of white, wealthier people who did not look like us” and called called RBC’s actions “some 19th-century, Jim Crow law, segregation-type stuff… This is some back-of-the-bus, you-don't-belong-here, get-on-your-side-of-the-street, drink-from-the-Black-only-water-fountain type of stuff. Like, what even is this?”
RBC #4 - The Comptroller of the City of New York, who oversees the New York City Retirement System (which includes the pension funds of New York City’s public employees, teachers and Board of Education staff) announced a shareholder proposal calling for RBC to disclose an absolute greenhouse gas (GHG) emissions target, aligned with a science-based net zero emissions pathway for 2030.
RBC #5 - An RBC shareholder represented by Stand.Earth submitted a proposal requesting that RBC adopt a time-bound phase-out of RBC’s lending and underwriting to projects and companies engaging in new fossil fuel exploration, development and transportation.
TD #6 - Vancity Bank and Investors for Paris Compliance submitted a resolution calling on TD to disclose a transition plan that describes how it intends to align its financing activities with its 2030 sectoral emissions reduction targets, including the specific measures and policies to be implemented, reductions to be achieved by such planned measures and policies, and timelines for implementation and associated emission reductions.
Enbridge #2 - Investors for Paris Compliance submitted a proposal requesting that Enbridge annually disclose all of its scope 3 emissions using accepted definitions and in absolute terms.
Suncor #1 - Investors for Paris Compliance submitted a proposal requesting that Suncor produce a report, at reasonable cost and omitting proprietary information, outlining how its capital expenditure plans align with its 2030 emissions reductions target and its 2050 net zero pledge.
Imperial Oil #2 - The British Columbia Investment Management Corporation (BCI) filed a shareholder resolution at Imperial Oil requesting an audited report on the impact of International Energy Agency's Net Zero by 2050 pathway on Imperial's asset retirement obligations.