Shareholders Keep It Simple to Score Rare Climate Proxy Wins

A new shareholder advocacy group pulled off rare corporate ballot wins at Jack in the Box and Wingstop this year with proposals pushing the restaurant chains to set greenhouse gas emissions reduction targets for the first time.

The two-year-old Accountability Board—which also came just shy of a third proposal win at Denny’s—called out the fast-food giants for not providing any greenhouse gas emissions data, and pointed to competitors like McDonald’s Corp. that publish extensive disclosures on their emissions and reduction plans. The group’s resolutions secured 56.6% shareholder support at Jack in the Box Inc., 52.2% at Wingstop Inc., and 49.9% at Denny’s Corp., overcoming opposition from the companies.

There was a strategy at play: the investors deliberately asked for broad emissions reduction targets that left a lot of discretion to the board and management as to what goals they set and how they go about reducing their climate impact, said Matt Prescott, founder and president of the Accountability Board and author of a cookbook called ‘Food Is the Solution: What to Eat to Save the World.’ He launched the shareholder advocacy organization with Josh Balk, whom he worked alongside at the Humane Society of the US.

“We determined, and it turned out to be correct, that climate proposals would be likely to receive support if they were simply less prescriptive,” Prescott said. To achieve a passing proposal, “we stripped down our ask to what we viewed as a bare minimum, which is just to have some kind of target for reducing emissions.”

The Accountability Board’s two passing resolutions were among just three total shareholder proposals on environmental and social issues that reached majority support this proxy season, according to Bloomberg data tracking US-listed companies in the Russell 3000 index.

Amid a supercharged US presidential race, proposals on corporate election spending transparency secured similar gains. One passed at glucose monitoring tech company DexCom Inc. Two other political spending proposals got close to majority support at Boeing supplier Spirit AeroSystems and Crown Holdings Inc., which makes metal beverage and food cans.

The new restaurant emissions proposals mark a shifting activist approach as overall shareholder support for environmental and social resolutions has dipped in recent years. That drop might reflect shareholder proposals becoming more ambitious and prescriptive rather than investors retreating from long-term objectives, according to an analysis from Bloomberg Intelligence. In past proxy seasons, other investor bids have asked companies to align their emissions targets with the Paris Climate Agreement, for example.

Investors are likely to keep pushing companies if their climate promises are too vague, said Heidi Welsh, executive director at the Sustainable Investments Institute, a non-profit that conducts research on shareholder activism.

“Proponents have returned trying to put meat on the bones of the commitments if they seem to be falling short,” she said.

Investor Heat

Shareholder activists have pursued a wide range of climate proposals that have evolved over the past several years. Investors started out by pressing companies to provide emissions estimates, but later bids focused more on what targets companies are setting and then on specific plans to reduce their carbon output, said Witold Henisz, vice dean and faculty director of the ESG initiative at the Wharton School of the University of Pennsylvania.

“You can’t really put them all together,” he said, noting that investors might disagree on whether businesses should have a net zero emissions target by 2040 or 2050, for example.

The new proposals from the Accountability Board asked companies to disclose their greenhouse gas emissions as well as goals for reducing emissions.

Jack in the Box said in its proxy statement that emissions disclosures are premature pending resolution of legal challenges to a climate disclosure rule in California, as well as one recently issued by the US Securities and Exchange Commission. Both of the rules face ongoing litigation from business groups. Wingstop and Denny’s also cited the SEC reporting rule in their proxy statements when pushing back against the shareholder proposals, and highlighted sustainability initiatives they’re already pursuing. None of the three chains returned requests for comment for this story.

The California climate rule—the first of its kind in the US—requires public and private companies with more than $1 billion in revenue that do business in the state to disclose emissions annually starting in 2026, although Gov. Gavin Newsom (D) has proposed pushing back reporting to 2028. The SEC rule, which is currently on hold because of the legal challenges, would require companies to report their greenhouse gas emissions and climate-related risks.

The influential asset management giant BlackRock backed the shareholder bid at Jack in the Box. “We recognize the company’s efforts to date but believe that supporting the proposal may accelerate the company’s progress on climate risk management and/or oversight,” BlackRock said in a proxy voting results report.

The Accountability Board said it hopes that the message investors sent with their high level of support will encourage companies to provide stringent emissions disclosures and targets.

“We hope they’ll be robust, meaningful, and aligned with science-based targets,” Prescott said. “We hope that they’ll cover the companies’ entire operations and value chains. But as a starting point, we wanted to leave it up to management as to best set targets. And if they do establish them and they’re not robust, then we imagine that shareholder advocates will weigh in with proposals addressing that fact.”

Election Spending

Political spending transparency proposals also raked in strong support in this presidential campaign year with a shareholder bid at DexCom securing 51.9% of the vote. A similar bid at Crown Holdings garnered 48.9% support while another proposal at Spirit AeroSystems secured 45.3% of the vote.

Those proposals were all put forward by John Chevedden, a leading proponent of shareholder resolutions who for decades has been urging companies to make changes on a wide range of corporate governance issues.

The Chevedden bids asked for reports on the companies’ political spending policies as well as disclosures of who they’re funding with details about how much. The resolutions also pointed out the risk of companies giving to trade associations or Super PACs that support a range of candidates and causes that the business might not otherwise align with.

DexCom and Crown Holdings said in their proxy statements that they already disclose enough information about their political spending, while Spirit AeroSystems said it has an internal policy barring it from contributing to candidates seeking federal office.

Investors are going to keep pushing companies on ESG issues from political spending to climate whether their bids make it over the elusive 50% mark or not, said Welsh from the Sustainable Investments Institute.

“Shareholder resolutions have never been about getting a majority necessarily. It’s nice; it’s flashy; it’s exciting for them, but really this is a measure of dissent,” she said.