IN-DEPTH: Q&A with Green Century
This interview with Annie Sanders, director of shareholder advocacy at Green Century, was first published on Diligent Market Intelligence's Voting newswire. To register for a demonstration and trial of the product, click here.
Green Century was founded in 1991 and for decades has been engaging companies to adopt more environmentally sustainable policies and practices. How has the range of demands evolved in that period?
We are focused on just the "E" under ESG, but that means anything from climate change to biodiversity, forest protection, reducing single use plastics or plastic pollution. We also work on animal welfare issues and more recently on the right to repair, a somewhat nascent topic in the investor space.
Reflecting on last season’s priorities, what results were you particularly proud of in 2024?
Many were on plastics and that's an issue area where there aren't a lot of active filers. We advanced 10 shareholder proposals last year on plastics alone and withdrew nine of them for commitments including from toy companies like Mattel and Hasbro, to hotels like Hilton and Marriott and clothing companies, as well. We were not able to reach a withdrawal agreement with General Mills and that went to a vote in September where we got a 40% vote. I understand that was one of the highest environmental votes in 2024 and the highest non-climate environmental vote in the period.
On plastics, you referenced some key withdrawal agreements. How important is that outcome which largely happens behind the scenes?
The impact largely lies in the withdrawal agreements. A strong vote in the U.S. is great, and while it’s not binding, it's not a good look if a company does not respond adequately or at all to a strong vote. The withdrawal agreement, however, that we secure before a proposal even gets to the ballot, is our preferred option if the company is willing to meet us part way, do what the proposal is asking or in some way meaningfully address the risks that were raised. Best-case scenario, we approach a company, bring up a set of risks, have a productive dialogue and the company agrees to take action in response. That happened with six engagements last year.
Moving from plastics to deforestation, how do you feel that issue is progressing in terms of your engagement on the topic?
We've been working on deforestation for over 10 years now since 2013, when we filed at Kellogg's asking the company to commit to zero-deforestation palm oil, which was ultimately a successful engagement and we withdrew that proposal in exchange for commitment from Kellogg's. Over that time, dozens upon dozens of companies have come out with no deforestation commitments - whether that's zero deforestation across their entire value chain or for specific high-risk commodities.
Where deforestation is a potential issue in the supply chain, most companies have in some way addressed it if not set targets to ultimately eliminate or mitigate it, so the space has come a very long way overall. We're largely in follow-up mode now in 2025, which was the target set in many such commitments, and we want to understand how companies are making sure that they're on track.
On emissions demands, how do you feel resolutions focused on Scope 3 disclosure or target setting are being received by the investor base?
We're filing a number of these proposals across a variety of industries, semiconductors and also footwear and apparel, as well as insurance, and we will see how they fare. But it is worth noting that the conversation around ESG has been changing and now we have a change in administration too. We will see how the season goes on the climate front, as that can be a politically charged issue. But overall investors are increasingly recognizing that climate change is an economic risk that companies need to address.
Environmental proposals were regularly challenged for being seen as overly prescriptive or repetitive last season. What is your response?
I would push back against the argument that environmental proposals have become overly prescriptive generally. Perhaps a small number of them have, which has led to that narrative becoming more prominent. But overall, we are asking for very similar things that we've asked for in the past – disclosure, reporting and in some cases, target setting when there is international consensus and a framework against which to set those targets that most people in the world agree needs to happen to avoid systemic risks. We're very deliberate about what we ask for and some resolutions involve a combination of disclosure and target setting, some disclosure alone and some targets alone.
I don't think in a lot of cases target setting is too prescriptive given the stakes and the issues that we are facing, and the threat to our portfolios, the planet and the ecosystems upon which we depend to run businesses. If we don't have those ecosystems, if we don't have a planet to operate businesses on, none of this matters.
According to DMI data, the number of U.S.-listed companies turning to the Securities and Exchange Commission’s (SEC) no-action process to exclude environmental- and social-themed shareholder proposals surged last proxy season, with the SEC appearing to take a more corporate-friendly approach. Do you think proponents are likely to take a different approach with proposals in 2025?
Absolutely. Every season, we analyze the results from the past season and we're taking into account lessons learned from lower support for proposals that were viewed as too prescriptive by certain asset managers and proxy advisors. At Green Century, we are making tweaks to the language that we've used for the past couple of years to attempt to avoid no-action challenges and to succeed if they are triggered, while still working to make our proposals as strong and as effective as possible at meaningfully bringing about change. It's a tricky balance.
ESG policy now finds itself at a crossroads in the U.S. What do you feel this could mean for climate ambition and net-zero efforts?
The net-zero transition is happening. The momentum has been built. It's underway and no administration is going to stop that. Companies have made commitments. They've set targets. They've developed plans. They are still responsible for a number of regulatory requirements and disclosures in other markets, particularly in the EU.
The landscape may be a little bit more challenging rhetorically for companies in terms of what they're disclosing and how proactive they are publicly about the steps they're taking to address climate risk, biodiversity risk, etc. But the work is happening and it's going to continue to happen, and we will be there to push and encourage companies along the way.
