Investors using muscle on climate

A billionaire tech entrepreneur recently acquired a sizable stake in a public company it wants to push in a different direction — but it’s not Elon Musk and Twitter.

This week, Atlassian co-founder Mike Cannon-Brookes revealed an 11% stake in Australian energy company AGL Energy, in a bid to lessen its reliance on coal.

Why it matters: More than ever before, shareholders are tapping into their powers to influence companies on climate and sustainability.

The big picture: It’s not just activist investors like Cannon-Brookes — mainstream shareholders are also increasingly pushing companies on these issues.

  • Investors have filed a record 215 climate-related shareholder resolutions this year, per datafrom Ceres, a sustainable investment advocacy group.
  • Even major investment management companies like BlackRock and Vanguard are backing more climate-related proposals than they have previously.
  • And stakeholders are getting more aggressive: For example, a year ago, Exxon shareholders defied management and installed two climate-conscious memberson its board.

What they’re saying: “It’s a systemic risk, which means that you can’t deal with just one company — you gotta take it with all the companies across the portfolio,” Rev. Kirsten Spalding, senior director of Ceres” investor network, tells Axios.

  • “They also recognize that it’s a governance issue… we’re seeing a look at whether boards are taking it seriously, not just management,” she adds.

Between the lines: Shareholders are also now asking for concrete progress reports, not just for information disclosures, says Spalding.

  • She attributed the shift to climate science, as major organizations make more urgent appeals to drastically curb carbon emissions.

The intrigue: In addition to asking for concrete progress reports and transition plans, European shareholders are now even voting against those plans, simply because they’re not good enough, says Spalding.

What’s next: The pressure goes both ways. Investors will also be under pressure to show plans to transition away from fossil fuels, and they know it.

  • In a recent BCG surveyof 250 institutional investors, 57% said they feel pressure to divest from fossil fuels, 65% said they feel pressure to reduce those fuels” weighting in their portfolios, and 75% said they feel pressure to invest in «green» funds and companies.

The bottom line: With new regulations poised to help standardize climate-related disclosures, shareholders will be even better equipped to compare companies and push laggards to catch up.


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