30 Pension Protection Fund Responsible Investment Report 2021/22 ESCALATION AND EXERCISING SHAREHOLDER RIGHTS CONTINUED Voting on climate issues BHP – Opposing a company’s climate transition plan Say-on-Climate – Say-on-Climate votes against 2021 saw the emergence of Say-on-Climate (SoC) BHP Group Limited is an Australian multinational how we voted in 2021 management by rationale resolutions proposed by management. The majority of mining, metals, natural gas and petroleum public these proposals were proposed by companies in the UK and company. The company proposed its climate transition Europe. Most of these companies were proposing a climate plan to shareholders at both the Australian and UK plan or climate-action report that had emissions trajectories 2021 AGMs. aligned with the Paris Agreement. Many of the proposals were intended to be one-time events with a minority We recognise the substantial progress the company of companies stating that a resolution would be put to has made in climate reporting, transparency and shareholders at a later shareholder meeting to approve scenario analysis, and the importance of the 27 6 progress and/or changes to their emissions strategy. company’s products in enabling a transition to Given the importance of the topic and the need to ensure a a low-carbon global economy. We remain concerned rigorous threshold for shareholder approval was set, we took that the company’s interim operational emissions a robust approach to voting on these resolutions. We did not targets (to 2030) are insu昀케ciently ambitious to be support six of the 27 climate-related management proposals considered aligned with the 1.5°C trajectory. As a that we voted on during the year under review (in contrast result, we chose not to support the transition plan at both AGMs on this occasion. Against management 22% to the main proxy advisor supporting all 27 proposals). The Insu昀케ciently ambitious short-term targets 4 primary reason for voting against the Say-on-Climate proposal With management 78% Lack of short-term disclosure 1 was the lack of ambition in setting robust short-term targets. 85% Disclosure and lack of ambition 1 Shareholder proposals on climate-related matters increased year on year, exceeding the number seen in 2018 following Voted ‘For’ across the combined President Trump’s withdrawal from the Paris Agreement. Interestingly, despite its relatively small 昀椀nancial market, Ltd and Plc AGMs we voted on 17 shareholder resolutions in Australia, surpassed only by the US, where we voted on 25 climate- focused resolutions. In terms of supporting climate-focused shareholder resolutions, we voted ‘For’ at 53 of the 71 resolutions, of which 46 were against management and seven were supported by management. AutoZone Inc – Supporting greenhouse gas Whilst the company disclosed some short-term targets Votes on shareholder resolutions by climate theme The primary reason for us emissions targets for GHG emissions reductions, no comprehensive GHG AutoZone Inc is an American retailer of aftermarket emissions reductions targets had been provided. In voting against Say-on-Climate automotive parts and accessories, the largest in light of the disclosure provided, a vote in favour of the was the lack of ambition in the United States. As You Sow, on behalf of the shareholder proposal was therefore justi昀椀ed. Elizabeth Gale Michaels Revocable Trust, submitted setting robust short-term targets. a precatory proposal asking the company to disclose short, medium, and long-term targets to reduce 70% 71 greenhouse gas emissions that are aligned with the Paris Agreement goals of limiting the global average temperature rise to 1.5°C. Voted ‘For’ the shareholder resolution Climate Change Action 10 GHG Emissions 13 Renewable Energy 7 Report on Climate Change 36 Advisory vote on Climate Action Plan 5