Purpose on Payday April 2024

After March Madness and before May-hem, April marks AGM month – a pivotal time in the climate and governance calendars. AGMs can ratify a company’s commitments, or signal backtracking on ambitions. This month, it’s been more of the latter.

Energy companies face particular scrutiny when it comes to ESG commitments at AGMs. Just this week, we have seen the BP and Drax shareholder meetings in London targeted by activists, unhappy with the progress the energy majors are making on their net zero commitments. On the other side of the world, Woodside Energy, Australia’s largest energy company, suffered what has been described as a “globally unprecedented rebuke” of its climate credentials as its proposals were overwhelmingly rejected. More than half (58%) of investors voted against Woodside’s climate report which critics said was “overly reliant on offsets”.

AGMs aren’t just arenas for climate issues; governance and executive pay are also hotly debated. Earlier this month, AstraZeneca shareholders approved CEO Pascal Soriot’s enormous £18.7 million pay package, but not without significant backlash with 36% of shareholders opposing the pay rise. Only today, LSEG shareholders backed proposals to double the pay of its CEO to a maximum possible of £13.1 million making David Schwimmer one of the highest paid FTSE bosses despite well documented challenges facing the London exchange.

These CEOs, well paid as they are, shoulder immense responsibilities. Take Hein Schumacher, the new-ish CEO of Unilever, one of the world’s largest companies. This month he has been responsible for a backtracking on Unilever’s climate commitments – or has he? Unilever has long been the sector leader for sustainability, but Schumacher has scaled back the company’s ambitions, claiming that the new laxer targets aim for “realism and that there is little point in making targets that are “simply impossible to reach”. Some commentators are saying that Schumacher is backtracking on his own backtracking, but he is out in the media this morning saying that he is “doubling down” on climate commitments.

Political leaders, whilst not compensated quite as generously as CEOs, also must make major decisions which have significant consequences. Just look how it is playing out in Scotland where the First Minister Humza Yousaf is embroiled in a fight to keep his job after pulling the plug on the three-year-long coalition with the Scottish Greens that maintained SNPs hold on Holyrood. The issue: the Scottish Government has ditched its emissions targets to reduce greenhouse gasses by 75% by 2030. Scotland, a bit like Unilever, was a leader in climate ambition, so backtracking has significant consequences for those at the top.

Chris Stark, the outgoing head of the Climate Change Committee, has been in the media this month, most noticeably for his criticism of Rish Sunak, whom he says has “clearly not prioritised” the global climate crisis as much as his predecessors. As seems to be a running theme this month, Stark accused Sunak of “sending the world a message that the UK is now less ambitious than it once was”.

Global leadership is needed now more than ever – both with corporates and political leaders. As both groups prepare for COP29 – which is set to be a business COP – expect to see a regular drumbeat of climate announcements in the coming months.