Comcast Corporation shareholders appear set to vote on a proposal about the company’s retirement plan and how it may be impacted by climate change.
The SEC has denied a request from the media and telecoms company for the green light to omit the proposal from its 2023 proxy statement. The resolution at issue, which was filed by As You Sow, requests that Comcast’s board ‘publish a report… disclosing how the company is protecting plan beneficiaries with a longer investment time horizon from climate risk in [Comcast’s] default retirement options.’
As You Sow writes that the report should include, at the board’s discretion, analysis of:
- The degree to which carbon-intensive investments in the default investment option increase beneficiary risk and reduce the plan’s performance over time
- Whether carbon-intensive investments in the default investment option mean younger beneficiaries’ savings are at greater risk than those of participants who are closer to retirement.
‘If global climate goals are not met, workers face the likelihood of significant negative impacts to their retirement portfolios,’ the shareholder advocacy group writes in its supporting materials. ‘Swiss Re estimates a 4 percent decline in global GDP by 2050 if global temperature increases are kept below 2ºC, but up to an 18 percent decline without effective mitigation.
‘Comcast has taken certain actions to address climate change, for example, by committing to reach carbon neutrality for Scope 1 and [Scope] 2 emissions, across its global operations, by 2035. Yet, while decarbonizing part of its business, Comcast’s 401(k) retirement plan… continues to invest significantly in companies that contribute to climate change, jeopardizing workers’ life savings.
‘Our company’s employee retirement funds are automatically invested in the plan’s default investment option unless employees proactively choose different investments. Thus, the majority of the Comcast plan’s $17.6 bn in assets are invested in its default option.’
As You Sow argues that by investing employees’ retirement funds in companies that make large contributions to climate change, Comcast is generating climate risk – including transition risk and long-term systemic risk – to its workers’ portfolios. ‘Comcast’s default 401(k) choice risks compromising its obligation to select retirement plan investment options in the best interests of its plan participants, including those with retirement dates more than a decade out,’ it adds.
The group says the result may be that Comcast finds it more difficult to attract and retain top talent, citing polling as indicating that companies’ environmental records are an important factor in consideration in employees choosing a job and that there is increasing demand for ‘climate-safe’ retirement plan options.
According to As You Sow, the group has also filed proposals on the topic with Amazon, FedEx and Netflix.
ORDINARY BUSINESS
Comcast asked the SEC for no-action relief if it omitted the proposal on the grounds that, per Rule 14a-8(i)(7), it relates to the company’s ‘ordinary business operations’ – the compensation and benefits it provides to employees.
It calls the proposal ‘misguided in several respects’ including that the board does not have responsibility for or control over the plans, including the investment options they offer, but that a management committee is the plans’ fiduciary and with help of outside advisers picks the plans’ investment options.
Comcast also says federal pension law imposes strict requirements on plan fiduciaries such as that they select 401(k) investment options, including the default option, based on economic factors the fiduciary ‘reasonably determines are relevant to a risk and return analysis’ for the particular investment.
‘Accordingly, the plans’ fiduciary takes into account a variety of potential economic risks, reward opportunities and goals – including, but not limited to, those related to climate change – in selecting all of the plan investment options, including the default fund,’ the company writes. ‘Further, the managers of several of the plans’ core investment options currently consider and integrate ESG factors in their stewardship or security selection processes consistent with their duties as fiduciaries to the plans.
‘Because these decisions are subject to strict fiduciary standards of conduct, with which the investment committee, its consultant and plan investment managers comply, it is not practical or appropriate to include Comcast’s shareholders, who are not subject to these requirements, in this analysis.’
In addition, the company argues that the proposal ‘does not implicate a significant social policy issue because, despite the proponents’ references to climate change, the central focus of the proposal is the default investment option under the plans and whether the investments in the default option are in the best interests of employees.’ It also argues that the proposal does not address business risks to the company associated with climate change.
The SEC declined to grant the relief, writing: ‘We are unable to concur in your view that the company may exclude the proposal under Rule 14a-8(i)(7). In our view, the proposal transcends ordinary business matters.’
Comcast’s 2022 AGM took place on June 1. A request for comment from the company was not returned immediately.
Ben Maiden
Ben Maiden is the editor-at-large of Governance Intelligence, an IR Media publication, having joined the company in December 2016. He is based in New York. Ben was previously managing editor of Compliance Reporter, covering regulatory and compliance...
