Voting at Centene Corporation’s recent AGM has shown significant investor support for a proposal asking the Fortune 500 healthcare company to set science-based goals for tackling climate change and adopt a transition plan.
The proposal, filed by John Chevedden, secured 36.1 percent of the votes cast at the May 14 meeting – short of a majority but a level of support governance professionals widely view as significant.
The resolution asks Centene to ‘issue near and long-term science-based greenhouse gas (GHG) reduction targets aligned with the Paris Agreement’s ambition of limiting global temperature rise to 1.5°C and summarize plans to achieve them.’ The proponent recommends that the company, in setting targets:
- Considers the approaches used by groups such as the Science Based Targets initiative (SBTi)
- Creates a transition plan that shows how Centene intends to meet its goals, taking into account criteria used by groups such as the TCFD, CDP and Climate Action 100+
- Considers ‘supporting targets’ for renewable energy, energy efficiency, supply-chain engagement and ‘other measures deemed appropriate by management’.
Chevedden writes in a filing: ‘The health sector accounts for an estimated 8.5 percent of US carbon emissions. Climate change is expected to increase the cost of healthcare services, making it more expensive for healthcare organizations to operate due to damage to infrastructure, supply-chain disruptions and increased complexity of care. Climate-related health conditions are also expected to increase and drive up the total cost of care, affecting profits for both healthcare systems and plans.’
The proponent writes that although Centene admits this risk, its mitigation strategy ‘falls short of what is needed to shield the company and its investors from climate-related risks. While Centene currently reports Scope 1 and Scope 2 and some categories of Scope 3 emissions, [it] has not published GHG targets or issued a climate transition plan.’ Chevedden writes that this is in contrast with some peer companies that have pledged to set science-based targets with the SBTi.
‘Centene must take additional action to comprehensively address its climate impact and mitigate both the physical risks to its operations and the transition risks associated with new regulation and a global shift to a clean-energy economy,’ he adds.
Board opposition
Centene’s board had urged shareholder to vote against the proposal, writing in the company’s proxy statement: ‘Environmental sustainability is an important part of Centene’s operations. As a healthcare service company with employees either working remotely or in offices across the [US], our company is continually focused on 1) minimizing our environmental impact through responsible consumption of resources, 2) pursuing projects that generate beneficial climate and environmental impacts beyond the Centene enterprise and 3) measuring and disclosing our company’s environmental performance.’
The board states that Centene has expanded its disclosures around climate change through an annual sustainability report, TCFD report and SASB report.
‘Included in the 2023 TCFD report are the results of our 2023 climate risk assessment, which updated the assessment of our climate change task force, and the company’s risk assessment and mitigation plans for a variety of environmental, climate and natural disaster risks. The sustainability and TCFD reports include the company’s annual Scope 1, [Scope] 2 and [Scope] 3 GHG emissions,’ the board writes.
In addition, it states that Centene:
- Has engaged in environment-related activities, such as reducing the company’s real estate footprint
- Engages with investors about their climate-related priorities
- Believes ‘a collaborative, risk-based approach will best assist the company in determining the targets and methods by which we can further [its] sustainability efforts’
- Believes ‘a thoughtful, risk-based approach to setting GHG reduction targets is in the best interest of all stakeholders’
- Is ‘assessing changes in the legal and regulatory requirements and their impact on our company as we continue to develop our sustainability plans.’
A request for comment from the company was not returned immediately.
