An overwhelming percentage of General Electric (GE) shareholders have – with the backing of the company’s board – voted to approve a proposal seeking a report on its efforts to achieve net-zero greenhouse gas (GHG) emissions, according to the resolution’s proponent.
As You Sow, which submitted the proposal on behalf of Amalgamated Bank, says in a statement that preliminary numbers indicate the measure received 98 percent support. At the time of writing the company has not yet released formal results of voting on proposals at its AGM, which took place on May 4.
Specifically, the proposal requests that GE’s board issue a report ‘evaluating and disclosing if and how the company has met the criteria of the net zero indicator, or whether it intends to revise its policies to be fully responsive to such indicator.’
In a supporting statement, the group writes that a key indicator of a company’s alignment with the Paris climate change agreement is indicator 1, which seeks disclosure on whether the company has set an ambition to reach net zero GHG emissions by 2050 or sooner and whether any such emissions ambition statement explicitly includes scope 1, 2 and, when applicable, the most relevant scope 3 emissions. This is known as the net zero indicator.
Scope 1 emissions are direct GHG emissions from sources controlled or owned by a company. Scope 2 emissions are indirect GHG emissions arising from the purchase of electricity, steam, heat or cooling. Scope 3 emissions are all indirect emissions – not included in scope 2 – that arise from a company’s value chain, including both upstream and downstream emissions.
‘While GE has committed to achieve carbon neutrality for its facilities and operations by 2030 (scope 1 and 2), it has not reported an ambition to reduce the largest component of its GHG emissions – its scope 3 product emissions – an important gauge of whether and how it is reducing climate risk and capitalizing on low carbon opportunities,’ As You Sow writes.
BOARD SUPPORT
GE’s board recommended that shareholders vote for the proposal. It writes in the company’s proxy statement: ‘We believe that climate change is an urgent priority, and GE is actively engaged in helping solve the challenges of the global energy transition with technology that can decarbonize key sectors of the economy. This is a primary strategic focus for the company, with governance oversight by the board and an energy transition steering committee that includes our CEO, our energy business CEOs and other GE leaders.’
The board states that over the last year GE has taken steps such as announcing the new goal of achieving carbon neutrality for its own operations – scope 1 and 2 emissions – by 2030. But it adds that scope 3 is a more expansive category of other indirect emissions associated with a company’s operations.
‘We evaluate our [GHG] emissions reporting and goals on an ongoing basis, and GE has not to date set a goal that encompasses scope 3 [GHG] emissions or that meets the criteria of the ‘net zero indicator’ as defined in this proposal,’ the board writes.
‘GE has been working toward the publication of a sustainability report later this year that will include discussion of GE’s approach to [GHG] reductions, and in response to this proposal will include the requested reporting about whether the company intends to set the specific type of goal that this proposal defines and the company’s rationale. The reason why we have not set this type of goal to date is that we would want any specific goals that GE sets to be credible and well-founded.’
The exercise of setting specific GHG emissions reduction goals that include activities outside of GE’s operations ‘depends on the range of potential pathways for decarbonization, the timelines for deployment of technologies over a long time horizon, the speed of research and innovation efforts, the impacts of government policies and other factors that could significantly affect GE’s approach and are not yet known,’ the board writes.
As You Sow in a statement describes the board’s support of the proposal as ‘a commendable and unusual move, demonstrating that the company has begun to focus on its full climate impact and is willing to report on its [GHG] reduction plans.’
According to the group, the Climate Action 100+ (CA100) investor initiative, which represents investors with more than $52 tn in assets under management, flagged the resolution as a key proposal.
CA100 recently released its first benchmark assessing the ambitions and actions of the world’s largest GHG emitters and other companies it says can help propel efforts to reach the net-zero emissions target. CA100 says its net-zero company benchmark provides what it calls the first detailed, comparative evaluations of specific companies’ performance against the initiative’s three high-level commitment goals: reducing GHG emissions, improving governance and strengthening climate-related financial disclosures.
‘We congratulate the GE board for recognizing that the company and its shareholders are allies, not opponents, in reducing the systemic risk of climate change,’ Paul Rissman, co-founder of Rights Co-Lab, who has advised As You Sow on its CA100 resolutions, says in a statement. ‘Let’s continue to work together to achieve meaningful decarbonization, at both company and societal levels.’
The GE result is the latest ESG-related success for As You Sow. Shareholders in DuPont de Nemours recently voted for a shareholder proposal brought by the group asking DuPont to disclose its role in plastic pollution.
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...
