A record number of ESG shareholder resolutions were voted on at Russell 3000 companies last year, with 82 passing. And although implementing these takes time, some changes are already in motion.
Apple
Last year a resolution at Apple, led by the Service Employees International Union, passed with 53.55% votes. It called for a civil rights audit amid concerns that its treatment of workers suggested an imbalance between its public image and its actions. Similar resolutions were also passed at Johnson & Johnson, Altria Group, Stericycle and McDonalds while J Sainsbury faced calls to become an accredited Living Wage Employer.
In January, an Apple Securities and Exchange Commission (SEC) filing revealed that the company plans to conduct an audit in connection to its human rights policy and worker rights this year. It stated: “We plan to conduct an assessment on Apple’s efforts to comply with its Human Rights Policy as it relates to workers’ freedom of association and collective bargaining rights in the United States by the end of calendar year 2023.”
A second ESG proposal passed at Apple requests that the company’s board of directors oversee the preparation of a public report assessing the potential risks to the company associated with its use of concealment clauses in the context of harassment, discrimination and other unlawful acts.
The filing to the SEC stated: “Concealment clauses are defined as any employment or post-employment agreement, such as arbitration, non-disclosure or non-disparagement agreements, that Apple asks employees or contractors to sign which would limit their ability to discuss unlawful acts in the workplace, including harassment and discrimination.”
These gagging clauses do not omit workers’ rights to speak openly about harassment, discrimination and other unlawful acts.
Apple moved fairly swiftly to address this concern, lifting employee gags around how they are being treated in the workplace. This was outlined in December when it issued guidance entitled Our Commitment to an Open and Collaborative Workplace, approved by the nominating and corporate governance committee of Apple’s board of directors in November 2022.
It stated: “Our policies are clear that employees have the right to speak freely about their workplace conditions, including harassment and discrimination.
“You are permitted to speak freely about your wages, hours, and working conditions, including information about harassment, discrimination, or any other conduct you have reason to believe is unlawful, and nothing in this policy, or any Apple policy, should be interpreted as being restrictive of your right to do so.”
McDonald’s
Last proxy season shareholders at McDonald’s demanded a third-party civil rights audit and a week later the food giant announced it would deliver a civil rights “assessment”. Shareholders want an independent audit into the company’s “policies and practices to address possible adverse impact on its stakeholders — specifically its franchisees, workers at corporate and franchise stores, and consumers,” said shareholder SOC Investment Group, which led the action supported by others including Tapiola Asset Management.
Tapiola said: “A vote for this resolution is warranted, as an independent civil rights audit would help shareholders better assess the effectiveness of McDonald’s‘ efforts to address the issue of any inequality in its workforce and its management of related risks.”
In efforts to improve diversity, McDonald’s has linked executive incentive bonuses to hiring benchmarks for women and diverse employees and committed that a quarter of supply chain spend will to go towards diverse businesses within the next three years.
But, it seems, there remains much work to be done. This year shareholders formed a coalition and demanded a human rights investigation after it was found that hundreds of children had been working in franchises across the states. In a letter to the board of the fast food giant in June, the coalition, which includes more than 30 signatories, including public worker pension funds, has asked McDonald’s to release the results of a third-party audit into child labor publicly by the end of 2023.
Chubb
At Chubb more than three quarters – some 72%– of shareholders voted in favor of a proposal led by As You Sow seeking disclosure about the insurer’s plans to reach net-zero greenhouse gas (GHG) emissions in relation to its underwriting and other financial activities.
Chubb has been tasked with releasing a report ‘addressing whether and how it intends to measure, disclose and reduce the GHG emissions associated with its underwriting, insuring and investment activities in alignment with the Paris Agreement’s 1.5°C goal, requiring net-zero emissions’.
The company – and its shareholders – have remained adamant that “a blanket prohibition on supporting ‘new fossil fuel supplies’ would preclude Chubb from continuing to consider the complexities of an orderly transition and the reality that there are insufficient alternative energy sources to replace fossil fuels”.
However, it has made changes to address concerns around underwriting fossil fuel companies.
Earlier this year, it said it would only underwrite oil and gas extraction projects with “evidence-based” methane reduction plans. It also said it would help clients plan for reductions that needed to include plans for leak detection and repair, the adoption of proven measures to reduce flaring, and the abolition of nonemergency venting of wells.
“Our new underwriting criteria, along with our other substantive actions, are grounded in our commitment to lead the industry in the transition while balancing the need for energy security,” Chubb Chairman and CEO Evan Greenberg said in a statement at the time.
However, As You Sow argues that while Chubb has set Scope 1 and 2 emissions reduction targets for its energy use and operational emissions and has certain coal related policies, it has not adopted targets aligned with the Paris Agreement’s 1.5C goal for its underwriting, insuring, and investment activities instead relying on governments to develop and implement climate change solutions.
Standard Chartered
Despite a resolution led by Friends Provident Foundation and Market Forces asking Standard Chartered to align fossil fuel financing with the IEA’s net zero by 2050 pathway failing to secure a majority of votes last year, the bank has announced it will change its revenue-based target to reduce emissions associated with its loans to oil and gas companies to one it claims will produce a 29% reduction in absolute terms by the end of the decade. Shareholders have argued its revenue-based model allowed emissions to rise whereas the bank has said its new target is in line with the IEA’s pathway.
