2025 Proxy Voting for Climate
The 2020s are a critical decade for climate action. Pathways to limit warming to 1.5°C and 2°C are technically within reach, but they involve immediate, rapid, and deep greenhouse gas (GHG) emissions reductions in all sectors. While climate change and its mitigation implicate every sector of the economy, the subset of large companies where fossil fuel production and consumption are central to their core business has outsized climate impact.
When companies fail to transform operations and business models in line with the aims of the Paris Agreement, responsible shareholders must use their most powerful tool—proxy voting on corporate board elections—to hold directors accountable. To help investors exercise this power, Majority Action evaluates the climate disclosures of industry laggards in the energy, utilities, and financial services sectors against widely accepted benchmarks and issues company-specific vote guidance against directors and board leadership responsible for climate oversight at corporations that have failed in the critical areas of target setting, capital expenditure alignment, and policy engagement alignment.
Majority Action assesses key U.S. utilities, oil and gas companies, banks and insurers against two categories of criteria.
Electric Utilities
The largest publicly traded electric utilities remain among the largest sources of carbon emissions in the U.S. economy. Their capital expenditure plans in fossil fuel-based electric power infrastructure have the potential to lock in greenhouse gas emissions for decades to come. In addition to curbing a direct source of emissions, the decarbonization of electricity production also enables increased electrification efficiencies that can decarbonize the transportation and buildings sectors. While electric utilities have made some progress towards decarbonization, the decreasing emissions intensity of electricity production has yet to be matched by reductions in absolute emissions. Given the substantial increase in electricity production necessary to decarbonize and electrify transportation and building activities, only deep reductions to electric utilities’ absolute emissions can deliver the broader reductions needed to limit warming to well below 2°C.
Majority Action’s metrics are closely aligned with the Climate Action 100+ Net Zero Benchmark Indicators for the utilities sector, while still focusing on the three core pillars of target setting, capital expenditure, and policy engagement. This allows for a more standardized assessment across companies that is broadly accepted by investors.
Priority Criteria
Target Setting: Indicator 1: Net-zero GHG Emissions by 2050 (Or Sooner) Ambition
Capital Expenditure: Sub-indicator 1.1: Coal power planned capacity alignment
Capital Expenditure: Sub-indicator 1.2: Natural gas power planned capacity alignment
Additional Criteria
Target Setting: Indicator 3: Medium-term (2028-2035) GHG Reduction Target(s)
Policy Engagement: Indicator 1 overall assessment: Performance Band (A+ - F)
Oil & Gas
The energy sector remains overwhelmingly off track to decarbonize. According to a recent analysis by Oil Change International, the projected production of just the top eight U.S. and European oil and gas companies exceeds the IEA's 1.4 °C pathway. Under the IEA’s updated NZE scenario, no new long-lead time upstream oil and natural gas projects are necessary as demand for oil and natural gas peaks in this decade – even without demand pressures from new climate policies. The projected project build-out by the world’s largest oil companies directly conflicts with the fossil fuel demand projections of the updated NZE scenario. This conflict highlights the potential stranded asset risks faced by energy companies failing to decarbonize as society transitions to a net-zero economy.
Majority Action’s metrics are closely aligned with the Climate Action 100+ Net Zero Benchmark Indicators for the energy sector, while still focusing on the three core pillars of target setting, capital expenditure, and policy engagement. This allows for a more standardized assessment across companies that is broadly accepted by investors.
Priority Criteria
Target setting: Indicator 1: Net-zero GHG Emissions by 2050 (Or Sooner) Ambition
Capital Expenditure: Indicator 1: Recent investments
Additional Criteria
Target Setting: Indicator 3: Medium-term (2028-2035) GHG Reduction Target(s)
Capital Expenditure: Indicator 2: Future investments (CapEx)
Policy Engagement: Indicator 1 overall assessment: Performance Band (A+ - F)
Financial Services
For banking and insurance firms, climate change is doubly material: On the one hand, the escalating climate crisis threatens the health and stability of both sectors. On the other hand, both sectors drive climate change through their lending, underwriting and insuring of high-carbon projects and actors. The physical and transition risks associated with climate change could damage property, impede business activity, diminish income, and alter the value of assets and liabilities. As these risks propagate throughout the economy, banks may experience credit, market, and operational risks associated with higher default rates, balance sheet losses, re-pricing of high-carbon assets, and loss of income. Meanwhile, as extreme weather events become more frequent and severe, insurers face the triple challenge of a shrinking base of insurable customers, increased claims, and decreased ability to absorb climate-related economic shocks.
Majority Action’s metrics for U.S. banks are closely aligned with the Ceres Net Zero Standard for North American Banks and assessments of the banking sector’s progress towards a low-carbon economy from the TPI Centre and Sierra Club. We focused this assessment on the banks’ oil and gas targets due to the outsized climate impact of oil and gas-related emissions. Insurance industry metrics are closely aligned with the PCAF insurance-associated emissions standards and the Insure our Future and Reclaim Finance benchmarking for the insurance sector.
Priority Criteria:
Medium-term oil & gas target setting: Sector specific oil & gas emissions target in terms of absolute emissionsOil & Gas emissions target 1.5C below APS by 2030
Oil & gas exclusion policies: Unconventional fossil fuels (Arctic oil & gas, coal mining, coal power)
We focused this assessment on the banks’ oil and gas targets due to the outsized climate impact of oil and gas-related emissions
Insurance
Priority Criteria
Oil & gas exclusion policies: Does the insurance company have a public policy restricting underwriting for oil and gas?
Additional Criteria
2030 oil & gas target setting: Does the insurer disclose its insurance-associated (scope 3) emissions?