Climate Risk and Reporting

In 2020, we elevated our focus on climate risks. In our engagements with investee companies we found that progress is being made but not at a pace that is commensurate with the risk.

We enhanced our reporting by launching our new Annual Climate Stewardship Review and web hub dedicated to climate stewardship. During the year we became a signatory to Climate Action 100+ and continued our extensive climate-risk engagement program.

Engagement Topics

  • Climate-Change Strategy
  • Board Governance and Oversight of Climate
  • Change-Related Risks
  • Quality of Climate-Related Reporting and Discussion
  • Emissions Management Strategies
  • Investment in Technology
  • Public Policy Engagement
  • Climate Risk Disclosure
  • Climate-Related Lobbying Activities

Number of Engagements


Figure 1: Number of Annual Climate Engagements

Engagement Statistics

During the year we engaged with 148 companies across multiple industries to understand their approaches to mitigating and managing the physical and transitional impacts of climate change.

We have been engaging with companies on climate change related matters since 2014. In that time, we have had over 630 climate-related engagements across a range of industries and markets.

More Board Fluency Needed     In our engagements we found that while progress is being made to manage climate risk, it is not happening at a pace commensurate with the challenge. We believe more fluency is needed on boards in order to adequately manage climate risks and opportunities.

Our Continued Focus

Climate change will remain a core campaign until we are confident that portfolio companies are effectively addressing this issue. In 2021, we will focus on specific companies especially vulnerable to the transition risks of climate change. Furthermore, we will continue our ongoing engagement with companies in other sectors that, while not carbon intensive, also face risks such as the physical impact of climate change.

We believe that the Covid-19 crisis accelerates the need for
transformative change to address climate change. It shows the
importance of being prepared and the huge cost of slow action.

New Reporting and Climate Stewardship Hub     In 2020, we launched our Annual Climate Stewardship Review which will be a part of our regular reporting cycle, and will provide context around our climate-stewardship approach, share insights into our climate-focused engagements and identify emerging climate-related trends.

We have also launched a dedicated climate stewardship webpage that provides the most up-to-date information on our climate related thought leadership, and views.

Climate 100+ Initiative     We also became a signatory to Climate Action 100+ and look forward to sharing our experience and insights on climate
stewardship with other members.

Overview of Climate Proposal Voting     On the voting front, there was a significant increase in the number of climate-related shareholder proposals submitted at our investee companies during 2020 (58 in total in 2020, compared to 47 in 2019). A breakdown of our votes per category of climate-related shareholder proposals is provided below in Figure 2.

In line with our views on climate-related disclosure set out above, in 2020 we supported 50% of shareholder proposals requesting that companies report on the financial and physical risks of climate change to their business and their plans to reduce greenhouse gas emissions. We also supported 66% of the climate-related lobbying proposals.

We found that most of the companies targeted with proposals to establish greenhouse gas (GHG) reduction targets already had ambitious GHG reductions goals, which explains the decrease in our support for such proposals — from 45% in 2018 and 20% in 2019 to 33% in 2020.

As Figure 2 illustrates, we were not generally supportive of resolutions that require companies to make specific operational changes such as a transition to renewable energy within a defined timeframe or a phase out of a project, business or product. We found the actions requested by many of these shareholder proposals to be overly prescriptive.

While we give investee companies discretion to decide what climate-related goals are appropriate for them, we will continue to monitor the rigor of such goals and engage with them to ensure that climate is meaningfully integrated into their long-term strategy.

Figure 2: 2020 Support on Climate Proposals

High-impact Sectors: Companies Respond to Our Call for Climate Risk Disclosure

In recent years, the number of companies receiving shareholder proposals that require them to ‘Assess Portfolio Impacts of Policies to Meet 2-Degree Scenario’ has been in steady decline. Such proposals ask companies in high-impact sectors to report to investors on how a transition to a low-carbon economy could impact their strategy, business and assets. The 2020 proxy season was the first time in five years that there were no 2-Degree scenario proposals submitted to our investee companies, dropping from a high of 15 in 2017.

State Street Global Advisors was one of the first large institutional investors to support such proposals in 2016. Since then, we have been actively voting and engaging to improve climate disclosure with our issuers across all industries, including the oil and gas, mining and utilities sectors, which are typically targeted by 2-Degree proposals.

As a result of voting action, engagement and thought leadership from long-term investors, including State Street Global Advisors, climate risk disclosure under the 2-Degree scenario has become standard market practice and therefore the need for 2-Degree shareholder resolutions at companies has diminished.

Following the 2019 proxy season, we explored how such disclosures have evolved over time and what still needs to be improved. Our findings are outlined in our publication Climate-Related Disclosures in Oil and Gas, Mining, and Utilities: The Current State and Opportunities for Improvement.

United States: The Emergence of Climate-Related Lobbying Proposals

As highlighted in our Q3 2019 Stewardship Activity Report, we found that shareholder proposals related to political activities are evolving and bringing together both the issue of lobbying as well as climate change.

These climate-related lobbying proposals are asking for corporate membership and trade associations to be fully aligned with a company’s stated position on climate change. Where there are inconsistencies with a company’s position on climate and those of the company’s trade associations, the proposal asks companies to suspend their membership of such organizations.

We believe that conflicts in a company’s climate positions and the activities of its trade associations creates potential financial and reputational risks. We find that trade association disclosure is generally poor in the US and that few, if any, companies in this market currently disclose if they are performing a gap analysis of their stated positions on climate change and that of their trade associations.

As we expected, during the 2020 proxy season we saw these climate-related lobbying proposals go to vote in the US for the first time.

Figure 3: Three Companies That Received Climate Related Lobbying Proposals and Our Final Voting Decisions


We supported the climate-related lobbying proposals submitted at Delta Air Lines, Inc. and United Airlines Holdings, Inc. as we believe that additional reporting on lobbying-related practices and policies would help us better understand the relevant risks.

In contrast, Chevron Corporation provides superior disclosure on its trade group, not only compared to its oil and gas peers, but also relative to the broader US market. However, the company lacks a gap analysis on its stated position on climate and that of its trade association. Therefore, we abstained on the climate-related lobbying proposal submitted at the company’s 2020 AGM.

Europe: Oil and Gas Majors Commit to Reach Net Zero Emissions by 2050 

The first few months of 2020 saw an unprecedented wave of large European oil and gas companies voluntarily setting ambitious carbon neutrality goals; in contrast, their US peers have yet to make such commitments.

In December 2019, Spain-based Repsol SA became the first oil company to commit to becoming globally carbon neutral by 2050. Repsol not only pledged to achieve carbon neutrality on operational emissions (Scope 1 and 2) but also on indirect emissions that occur in the value chain from the use of its products (Scope 3). Following this announcement, other European oil and gas majors soon followed suit, pledging to reach net zero emissions by 2050. They included Equinor ASA, Royal Dutch Shell plc, BP plc, Total SE and Lundin Energy AB (by 2030). Most of these companies included Scope 3 emissions in their carbon neutrality ambitions.

We believe that such efforts are a fundamental component of moving toward a low-carbon economy and, through engagement, we aim to encourage other companies in the oil and gas sector to join this commitment.

However, while we welcome and applaud companies that voluntarily set and disclose Scope 3 emission targets, we recognize that this is still an evolving practice. During our engagements many oil and gas companies stated that the lack of direct control and difficulty collecting high-quality data can create challenges to setting and disclosing Scope 3 emissions targets.

For example, each of the European integrated oil and gas companies that have set a Scope 3 emissions target has developed its own metric, making it difficult for investors to draw comparisons and for the companies to benchmark against their peers. We aim to continue engaging with our investee companies on this topic in order to better understand how they are navigating these challenges.

Climate-Related Proposals at Financial Institutions 

In the last few years the majority of climate-related shareholder resolutions were aimed at energy companies that are directly responsible for emissions themselves. In the 2020 proxy season we saw the emergence of a new trend of climate related shareholder resolutions targeting financial institutions.

These climate-related shareholder proposals were not concentrated in a single region, but rather were spread out globally. This was partly due to the proponents of the proposals leveraging an analysis of the largest fossil fuel financers from the Banking on Climate Change Report first published by the Rainforest Action Network in 2018 and updated in 2020.

Figure 4: Three Financial Institutions That Received Climate-related Lobbying Proposals Were All Featured in the Report


When analyzing the proposals above, we considered how these companies were managing climate-related risks. Specifically, we considered decision making regarding financing of fossil fuel activities, as well as commitments the companies had made to address the issue of climate change.

At JPMorgan Chase & Co we supported a shareholder proposal requesting the company to report on if and how it plans to reduce GHG emissions associated with its lending activities in alignment with the Paris Agreement. As long-term investors we would welcome additional information on the company’s strategy for reducing climate-related risks and its plans to align its operational, as well as financed, GHG emissions with the Paris Agreement goals. While the resolution was defeated at the company’s AGM in May, it received the support of 49% of votes cast.

Mizuho Financial Group received a similar shareholder proposal asking the company to disclose a plan outlining their business strategy to align investments with the goals of Paris Agreement. While Mizuho Financial Group has committed to the Paris Agreement, it has not provided any disclosure around its strategy or targets for accomplishing these goals. As a result, we supported this shareholder resolution.

Barclays plc also received a climate-related shareholder resolution that sought to direct the company to phase out of the provision of financial services to companies within the energy and utilities sectors that are not aligned with the Paris Agreement. Our decision to abstain on this resolution is described in detail in the Engagement Case Studies section of our 2020 Annual Stewardship Report.