Institutional investors are split over an upcoming shareholder proposal at Nestlé calling on the consumer goods giant to ramp up its efforts on healthy food.
The resolution, co-filed by Legal & General Investment Management (LGIM), Candriam, La Française Asset Management, VGZ, and Guy’s and St Thomas’ Foundation, asks the Swiss multinational to “dramatically improve its impact on people’s health”.
The investor group, which was coordinated by ShareAction, has urged Nestlé to increase the proportion of sales from healthier products and to implement internationally accepted standards that define healthy food.
When the resolution was filed, Catherine Howarth, CEO at ShareAction, said: “Nestlé is the biggest food company in the world and has an enormous influence on billions of people’s diets and lives through the products it makes, advertises and sells to us.
“While the company claims in its mission statement that its products have ‘the power to enhance lives’, in reality three-quarters of Nestlé’s global sales are unhealthy products containing high levels of salt, sugar and fats.”
In its proxy statement, Nestlé recommended shareholders not to support the resolution.
According to the firm, its articles of association “already foresee the publication of a comprehensive annual report on non-financial matters that covers ESG topics, as mandated by Swiss law”.
It added that Nestlé’s voluntary reporting on the matter “exceeds the transparency standards provided by most competitors”.
“Nestlé recognises the growing demand for healthier food and has strategies in place to meet these consumer expectations. However, this proposal would curtail the flexibility of the company to continuously evolve its product offerings.”
As shareholders gear up for Nestlé’s AGM on Thursday, key institutional investors have pre-declared their voting intentions.
Set to vote against the resolution are Norges Bank Investment Management (NBIM), the Office of the New York City Comptroller and CalSTRS.
At the time of publication, NBIM and the comptroller’s office – which oversees the city’s five public pension schemes – had not responded to Responsible Investor’s questions about their voting rationale.
CalSTRS told RI that it had “nothing to share” regarding Nestlé.
Meanwhile Storebrand Asset Management has disclosed plans to support the resolution.
The Norwegian investor said: “The proposal warrants support as it may better align Nestlé’s company strategy with global goals to combat non-communicable diseases like obesity and diabetes.”
NEST, PensionBee, Cardano and CCLA have also pre-declared support for the proposal.
Turning to the proxy advisers, Glass Lewis is recommending investors vote against the resolution.
In its advice, the firm said that although it understood the concerns and “how an inattention to changing nutrition-related trends and standards could ultimately harm shareholder interest”, it had several significant concerns with the resolution.
In particular, Glass Lewis noted is, if approved, the proposal would amend Nestle’s articles of association.
In response, Thomas Abrams, ShareAction’s co-head of health, told RI: “Unfortunately, there is no way to formulate a shareholder proposal in Switzerland right now that does not amend the articles of association. So we did not have any other options.”
He acknowledged that this is something investors “have been a little bit concerned about”.
He added: “Frankly, if this is going to make investors nervous about holding Swiss companies to account, then this is something we would argue needs to be reformed to create a more constructive route for shareholder proposals in the future in Switzerland.”
A spokesperson for Nestlé told RI: “While we share the common goal of increasing the availability of more nutritious foods for consumers around the world, we disagree with the idea of deliberately limiting growth in specific areas of our portfolio, as this would create opportunities for competitors without yielding public health benefits.”
It added that such a sales target “has no place in a company’s articles of association”, and would “restrict Nestlé’s strategic freedom and limit management’s ability to make responsible decisions”.
ACSI weighs in on Woodside AGM
The Australian Council of Superannuation Investors (ACSI) is recommending that members vote against Woodside Energy’s climate transition action plan but in favour of the re-election of Richard Goyder as board chair.
In a statement provided to RI, ACSI said that while Woodside has made improvements to climate-related disclosures over the past 12 months, it does not see Woodside’s climate strategy as sufficiently developed to warrant a vote in favour in 2024.
It said Woodside “is yet to make significant progress investing in large-scale abatement or new energy products” and that it is “unclear how the company will reduce Scope 1 and 2 emissions beyond 2030”.
Woodside calls for shareholders to support the climate transition action plan and 2023 progress report “because it reflects and responds to investor feedback on climate issues, and articulates how the company aims to thrive through the energy transition by building a low-cost, lower carbon, profitable, resilient and diversified portfolio”.
Regarding Goyder, ASCI noted that some investors may wish to vote against his re-election to “express concern over the level of progress made on the company’s climate strategy”.
But to ACSI, he should remain chair given the performance of the company during his tenure, alongside recent changes made to the board, as well as the improvement in engagement with investors on climate strategy.
It is the latest announcement on Goyder in what is turning out to be a tense build-up to the energy firm’s AGM.
In February, the Australian Centre for Corporate Responsibility filed a members’ statement at Woodside opposing the re-election of Goyder due to concerns over climate risk management strategy and governance. Then in March, Australian super fund Hesta announced it was pushing for its own climate-friendly nominees to become directors. This was, however, unsuccessful.
Earlier this month, both Glass Lewis and ISS Sustainability recommended shareholders do not support the re-election of Goyder nor Woodside’s climate transition plan.
And just last week, Allianz Global Investors said it will vote against the re-election of Goyder, as well as its climate transition plan.
In its proxy statement, Woodside recommends shareholders re-elect Goyder, saying he is a “highly capable and effective leader”.
Woodside could not be reached for comment at the time of publication outside of local business hours.
Investors back TD Bank climate resolution
Thursday will also see shareholders of TD Bank vote on a proposal calling on the Canadian bank to disclose its transition activities and “describe how it will align its financing with its 2030 sectoral emissions reduction targets”.
This include specific measures and policies to be implemented and timelines for implementation.
Investors for Paris Compliance is the lead filer. Co-filers include the UK arm of Japan’s Nomura Asset Management, AP Pension, Vancity Asset Management and Green Century Capital.
This is the second year in a row that the resolution has been put to TD Bank’s shareholders. According to the filing, last year 23.5 percent of shareholders supported it.
In TD Bank’s proxy statement, it called on shareholders to vote against the resolution.
“The bank already discloses a transition plan – its Climate Action Plan – which describes the bank’s approach to managing climate-related risks and opportunities as well as the transition activities the bank is undertaking to help achieve its 2030 sectoral financed emissions reduction targets,” it wrote.
So far, NBIM and Storebrand have pre-declared plans to support the resolution.
