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MGO survey

Climate Change ‘Biggest Issue in 2014 Proxy Season’

MGO surveyCompanies are more aware of the concerns of socially responsible investors in emerging and frontier markets, and are taking measures to address activists’ concerns, according a survey by Monitor Global Outlook.

MGO, a new research service of The Christian Science Monitor, surveyed 11 experts on socially responsible investing about their environmental, social and governance concerns. The greater level of responsiveness and cooperation has led to SRI groups withdrawing resolutions after companies agree to take action.

As of May 5, an estimated 166 resolutions had been withdrawn for this proxy season and more are likely, according to the Institutional Shareholder Services, a research and analysis firm owned by Vestar Capital Partners and one of the experts surveyed by MGO.

Despite this new level of cooperation — more than in any of the previous five years — the biggest clash between activists and corporations this year is on climate change, the survey says. Nine of the 11 experts in the MGO survey named climate change the lead issue in the 2014 proxy voting season.

Climate change and spending on political and lobbying activities account for more than half of the shareholder proposals filed this year. The two are typically related and SRI activists have filed proposals asking fossil-fuel companies to disclose their political and lobby spending on climate and energy issues, MGO says.

Stranded carbon assets has been this year’s sleeper issue that has received unexpected attention in proxy season. Stranded assets might occur to an fossil fuel company unable develop their reserves because caps or taxes on emissions make it prohibitively expensive. In some cases such as with ExxonMobil, the company’s outlook claims none of its fossil-fuel assets would be stranded. Activist investors disagree.

Last month, Harvard became the first American university to adopt a code of investment principles backed by the UN. Managers of Harvard’s $33 billion endowment are now guided by a code of responsible investment principles that take into account environmental and social factors such as water and human rights, the university announced. The move came six months after rejecting as call to divest its fossil fuels investments.

Graphic by Monitor Global Outlook

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