Climate Stewardship
Climate change has been a core theme of State Street Global Advisors’ stewardship activities since 2014. The prioritization of this topic in our stewardship program is informed by our firm’s view that climate change is challenging companies from both a strategic and business operations perspective.
We believe that climate change and the transition to a lower-carbon world represent a significant and long-term strategic challenge (and opportunity) for all companies across all sectors. Climate change presents challenges to companies as they balance their strategic direction and the commitments and goals they have set, as they make capital allocation decisions and investments in new technologies, and as they manage their reputation against the heightened climate consciousness of investors and consumers. Climate change also offers opportunities for portfolio companies, which may include developing new business lines, mitigating future regulatory risk, building good will with stakeholders, enhancing cost savings through efficiency efforts, and leveraging sustainability practices as a differentiator to enhance firm reputation.
Our approach to climate stewardship is centered around there pillars: voting, engagement, and thought leadership
Our Voting Record on Climate Related Shareholder Proposals for 2ºC Scenario Proposals
In 2018, we voted against management 75% of the time, compared to 80% in the previous year. The three companies where we supported the proposal were receiving it for at least the second time, and our vote for reflects the fact that we do not believe they have made sufficient progress on their disclosure and practices. At the company where we voted against, our vote reflects the quality of engagement and the clear alignment of the company’s disclosure on climate risk to the TCFD recommendations.
State Street Global Advisors' Voting on 2o C Proposals in 2016 - 2018
| 2018 | 2017 | 2016 | |
| With Management | 1 | 3 | 1 |
| Against Management | 3 | 12 | 8 |
| Total | 4 | 15 | 9 |
| % With Management | 25% | 20% | 11% |
| % Against | 75% | 80% | 89% |
Engagement Guidelines
Our Engagement Record - More than 365 engagements on climate change, since 2014
Engagement Topics include:
- Climate Change
- Environmental Strategy and Management
- Supply Chain Management
- 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
Boards are starting to see climate change as a risk that needs to be mitigated, and are responding in a short-term tactical manner to a long-term strategic challenge. While progress is being made on managing climate risk, it is not happening at the pace commensurate with the challenge. Companies are responding tactically to what is a longer term, strategic challenge. This is due partly to the mismatch between shorter term company planning cycles and the longer term nature of climate risk.
More fluency is needed on boards in order to adequately manage climate risks and opportunities.
Advocacy
We believe climate change is one of the biggest risks in investment portfolios today. These risks impact almost all segments and industries – not just the obvious polluters. However, with climate risk comes tremendous investment opportunity as the economy reworks against the impact of climate change. <<More on Climate Risk Strategies>>
Climate Related Reporting
As a signatory of the Task Force on Climate-related Financial Disclosure (TCFD) recommendations, we are engaging with companies to review the quality of their climate reporting and to understand how boards oversee climate-related risks.