Investor interest in nature has ramped up in this year’s voting season, boosted by some of the first calls for standard-aligned biodiversity disclosures, with financiers hailing a surge in awareness despite rising corporate resistance.

The overall number of nature-related proposals increased by two from the previous year, up to 20 in total, at some of the most influential companies in the world, according to analysis by Carbon Pulse across all filings.

Five proposals related to biodiversity risk disclosure in line with standards were filed this year – up from zero during the 2023 season – resulting in three withdrawals. The findings come the day after several institutional investors voted in favour of a proposal on the topic at PepsiCo.

Deforestation-linked filings plummeted to just three this year from 12 in 2023. However, overall figures were buoyed by five mining proposals – up from zero the year before – alongside more resolutions on water use and pesticides.

This analysis covers all shareholder proposals visible on the platforms of non-profit Ceres and UN-backed network Principles for Responsible Investors, alongside As You Sow’s research.

“Biodiversity proposals and commitments have become an overarching trend in 2024,” Elizabeth Levy, biodiversity programme coordinator at California-based non-profit As You Sow, told Carbon Pulse.

“Investors are continuing to look at the biggest drivers of biodiversity loss – including certain land use practices in the agricultural industry – and engaging with companies on those topics.”

For example, investors tackled deep-sea mining at Tesla, water stress at McDonald’s, and pesticides use at Target (see below for findings in full).

However, as nature expectations have ramped up, so has resistance at some companies. This year has seen just seven withdrawals so far, compared with 15 last year. A withdrawal usually means the corporation has committed to some of the requests in the proposal following dialogue with investors.

Some 11 votes on nature are set to happen, or have happened, this year – after just three reached this final stage in the 2023 season.

Environmental shareholder proposals allow investors to try to directly influence companies’ environmental practices and policies. They can drive corporate accountability, promote sustainability, and mitigate environmental risks.

The filings in this article focus on biodiversity disclosure, mining, chemical pollution, pesticides, and water, excluding other important issues such as plastics, animal rights, and human health.

MINING AND PESTICIDES

As You Sow filed five proposals this year on nature, matching its figure from the 2023 season, across mining, pesticides, and environmental protection goals.

Many companies are likely to be responsive to proposals asking for nature-based risk assessment, as they have been doing so in climate for years, As You Sow’s Levy said. However, last week a proposal from the non-profit at Kellanova on pesticides went to the vote, receiving support from 22% of shareholders.

Boston-based Green Century, meanwhile, submitted six nature-related proposals this year, including three on mining.

Douglass Guernsey, shareholder advocate at the firm, said the understanding of capital’s dependency on nature has grown significantly in the past four years – with many companies more interested in assessing their risks.

“It seems like before, business could take nature for granted. But that’s just not possible anymore. We’ve reached a real tipping point for our understanding,” he told Carbon Pulse.

“We have seen a definite increase in nature-related proposals. A lot of that has to do with the rollout of the TNFD, the recent biodiversity summits, and forthcoming science-based targets in nature.”

However, many filings have not resulted in corporate action. The US Securities and Exchange Commission (SEC) blocked three Green Century proposals on sourcing titanium-related products from around the Okefenokee Swamp on the Georgia-Florida border. The agency said the filings – at Chemours, Sherwin-Williams, and Home Depot – looked like micromanagement, Guernsey said.

“The SEC ended up blocking that, which is unfortunate, but we remain heavily committed. Sourcing titanium from that area is a big mistake,” he added. Mining in the region could trigger a massive release of carbon dioxide by draining peatlands.

Mary Beth Gallagher, director of engagement at Domini Impact Investments, said nature-related proposals are not new, with her organisation filing a rainforest sourcing proposal as far back as in 1997, but they are gaining traction.

“We’re seeing really an increased recognition among the investor community of the importance of addressing and understanding nature-related risks and dependencies,” Gallagher told Carbon Pulse. Last autumn, Domini reached a deforestation agreement with huge US packaging firm WestRock.

“We were concerned they didn’t have an explicit commitment to eliminate deforestation, that degradation and conversion weren’t adequately addressed in their procurement policy, and that Indigenous Peoples’ rights weren’t mentioned at all.”

WestRock addressed each of these pillars, despite not doing everything Domini requested, Gallagher said.

BIODIVERSITY DISCLOSURE

On biodiversity disclosure-related shareholder proposals filed this year, International Paper, Starbucks, and Kellanova have reached agreements with investors, reflecting wider pressures to disclose on impacts.

All five of the biodiversity proposals mentioned the Taskforce on Nature-related Financial Disclosures (TNFD), after its release of recommendations in September enabled investors to ask for specific disclosure action.

Gallagher said Domini’s proposal at International Paper was triggered by the need for more supply chain disclosure. The largest paper manufacturer in the world, based in Tennessee, agreed to become one of the TNFD early adopters early this year.

“There were things about location-specific impact and dependency assessments that we wanted them to really focus on. How much control do they have around understanding the impacts on land use change, soil health, or water pollution?” The paper firm used a biodiversity-related tool, but did not disclose the results, Gallagher said.

“There are probably going to be increasing proposals in that frameworks bucket now that we have the Global Biodiversity Framework and the TNFD. Companies have a governance or management systems way to look at this issue, rather than a controversies-based way.”

Last month, Kellogg’s owner Kellanova committed to disclosing in 2026 under either TNFD or the GRI biodiversity impact standard 101 in its withdrawal agreement, according to Green Century. Global food leader Kellanova had sales of $13 billion in 2023.

PEPSICO SUCCESS?

Not all companies responded positively to pressure on biodiversity disclosures. A proposal on nature at drinks giant PepsiCo from Green Century went to the vote on Wednesday, receiving 18% of support from investors.

In light of the vote, PepsiCo’s board had rejected the need for a biodiversity assessment, claiming it would not be in the best interests of the company or its shareholders, and pointing out that the firm already reports on sustainability initiatives. These include a project to accelerate regenerative farming in nine countries.

The proposal won support from investors. The influential Norwegian sovereign wealth fund is among six financiers who have said they will back the Green Century proposal, according to the Principles of Responsible Investment’s shareholder platform.

The backing reveals wider awareness on the financial risks associated with nature ramping up pressure on companies to act.

Andrew Shalit, shareholder advocate at Green Century, said he had not set the threshold of success at securing 51% of the PepsiCo vote. The 18% result figure is strong enough to keep biodiversity on the company agenda, even though it won’t force PepsiCo to act.

“Shareholder resolutions are advisory, regardless of the number of votes they garner, and every shareholder who is willing to vote against management is significant,” Shalit said.

“ISS and Glass Lewis recommended voting against, maintaining their recent trend of recommending ‘yes’ votes on fewer ESG proposals.”

HOME DEPOT VOTE

On May 16, shareholders with the US-headquartered construction giant Home Depot will vote on another biodiversity disclosure resolution, filed by Domini, potentially indicating the wider need for more in-house experts, said Gallagher. Kutxabank Gestion and Allianz Global Investors have pre-declared support for the filing.

Domini’s inability to come to an agreement with Home Depot may be due to the corporation’s relative inexperience in the area, Gallagher said. Home Depot only responded to CDP’s forests questionnaire for the first time last year – receiving a ‘C’ score for awareness-level engagement.

“I think they’ve been responsive to consumer pressure or campaigns along the way, but I don’t know that they have the expertise in-house on biodiversity,” said Gallagher.

“That’s something that we’re seeing across the board. Upskilling of the sustainability team of the board, the supply chain management, is really necessary – so that you’re getting the right data, or thinking about the right types of risks.”

NA100

The Nature Action 100 (NA100) initiative intends to further catalyse investor engagement on nature. More than 200 institutional investors, representing over $28 trillion in assets under management or advice, have signed up to the organisation.

Launched at COP15 in 2022, NA100 aims to boost engagement on nature across 100 companies, intending to learn lessons from its climate-focused sister initiative Climate Action 100+.

Meryl Richards, programme director of food and forests at NA100 secretariat co-lead Ceres, said her company – which posts proposals online – has seen more nature-related filings this season.

“It speaks to the growing awareness not only among investors, but among companies of the risks that nature loss poses to their businesses,” Richards told Carbon Pulse.

Despite its considerable reach, NA100 does not direct investors to file proposals. Engagement tactics and strategies are all driven by the financiers, she said. Last month, NA100 published a guide on engaging with companies across eight priority sectors for investors.

“There are no binding requirements in terms of what they do. We’re relying on the integrity of the investors to conduct their engagements,” said Richards.

“Investors who are signing up are saying: ‘We’re going to participate in the initiative, and we’re going to engage the companies on the list somehow.’”

THE 2024 RESULTS

THE 2023 RESULTS

Sources: As You Sow, Ceres, Principles for Responsible Investment, Environmental Finance, and the investors who filed the proposals. 

Please get in touch if we have missed any nature-related shareholder resolutions. The status of some of the 2024 proposals will change.

By Thomas Cox – t.cox@carbon-pulse.com

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