Responsible Investors Must Replace Climate Deniers on Corporate Boards

At the World’s Largest Corporations, Personnel is Policy

At the World’s Largest Corporations, Personnel is Policy

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by Jeff Conant, Senior International Forests Program Manager

The recent ouster of a key JPMorgan Chase board member and the shocking successful vote to replace multiple ExxonMobil board members spotlights a growing trend among climate activists setting their sights on corporate board members. This emerging strategy is drawing shareholder attention to the outsized influence of individuals at the helm of the world’s largest companies and making the case that, in an era of climate emergency, replacing them is a matter of urgent public concern.

It started in 2020 when New York City’s comptroller urged JPMorgan Chase shareholders to vote against the re-election of lead independent director Lee Raymond at the company’s annual meeting. The effort, which succeeded in sacking Raymond, was fueled by concerns that a man who had served as Chair and CEO of ExxonMobil, which aggressively bankrolled decades of climate denialism, should not continue to sit at the helm of the world’s largest private finance institution. 

The campaign that ousted Raymond from a position he’d held for decades recognized that people who sit on a corporation’s board are an excellent indicator of how a company will respond to environmental, social, and governance concerns. Sitting at the nexus of ExxonMobil and JPMorgan Chase, Raymond personified the intimate ties that bind Wall Street and Big Oil.

The trend took another step forward earlier this year when underdog hedge fund manager Engine No. 1 successfully replaced three ExxonMobil board members. Astonishingly, major asset managers Vanguard, BlackRock, and State Street all backed the movement, with BlackRock saying “we believe more needs to be done in Exxon’s long-term strategy” on reducing climate risk.

These moves are beckoning a new generation of activist investors — not powerful hedge fund managers that break up boards to squeeze profits out of under-performing companies, but climate justice advocates using the tools of the investment trade to force companies to reckon with a planetary emergency. 

Now, the strategy is expanding beyond fossil fuel targets to global deforestation, the second leading cause of climate change.

Shareholder attention is notably increasing on this important topic, including at Procter & Gamble (P&G), a company many might not have associated with the climate crisis. P&G, it turns out, has significant climate risk in its supply chains due to its reliance on wood pulp from the boreal forest in Canada, used in its tissue products, and on palm oil from Southeast Asia, used in its soaps and shampoos. 

At P&G’s 2020 shareholder meeting, 67 percent of P&G shareholders urged the company to do more to address the human rights and environmental violations linked to its sourcing of pulp and palm oil. It was the first time in any corporation’s history a shareholder proposal on forest loss passed.

Despite the directive from shareholders, P&G has since failed to make necessary changes to mitigate its risk, making the Board of Directors of the world’s largest consumer goods company the next target for climate-positive shareholder action. 

The chair of P&G’s Governance and Public Responsibility committee, Angela Braly, is a board member at ExxonMobil, where she served as chair of the Public Information and Contributions Committee until earlier this year. In that role, Braly sanctioned the oil and gas giant’s climate denial tactics, which led to the dramatic board upheaval spearheaded by Engine No. 1. The asset manager BlackRock even cited Braly’s ineffectiveness in addressing climate risk when it opposed her re-election to Exxon’sboard. If P&G has failed to take sufficient action to address its deforestation footprint, the responsibility sits, in part, with Braly. 

The world’s largest asset managers call the climate emergency one of the largest material risks to long-term corporate stability. The scale of the challenge requires, minimally, a renewal of leadership at Fortune 500 companies. In order to make the shift, shareholders must identify climate deniers on corporate boards and replace them with a new generation of leaders prepared to make the necessary transition to a low-carbon economy, by addressing both fossil fuel use and forest impacts.

If P&G shareholders truly grasp the monumental task laid out in front of them by the climate crisis, they will join the movement galvanized by the latest wave of activist investors ahead of the company’s October 12th  annual meeting and set their sights on Braly as the next corporate climate denier who should step aside.

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