Activist Shareholders Now Have Airlines on Their Radar

The world's leading airlines have long dabbled in sustainable aviation fuel, tinkered with artificial intelligence to shave off emissions where they can, introduced lighter and more efficient aircraft, and even floated the idea of electric planes to ferry passengers sometime in the near future. But for more activist shareholders, those measures are not enough.

Here in the U.S., these investors are not only filing more proxy statements on social and environmental issues, but as we learned last month with ExxonMobil, they are also winning, and winning big time. These aren’t the pyrrhic victories of a decade ago, when a losing effort at scoring 20 to 30 percent “yes” votes was considered progress and closing in on 50 percent was a huge coup.

Airlines are now feeling the same pressure from activist shareholders that global energy giants are experiencing.

For example, last week Delta Air Lines shareholders voted, by more than 62 percent, to seek information on how the company’s climate lobbying aligns with the goals of the 2015 Paris Agreement.

“We commend Delta Air Lines for responding to CDP’s annual climate change survey, including information on the company’s direct … and indirect … lobbying efforts related to climate change and their consistency with corporate policy,” BNP Paribas Asset Management wrote in its shareholder proposal. “[But] how does Delta work to ensure that its direct and indirect lobbying activities align with the Paris Agreement’s goals, and what does the company do to address any misalignments it has found? The investors received no response to their letter.”

They may soon get that response, based on that landslide vote.

Last month, a similar shareholder proposal asking United Airlines to do the same also passed, and by a wider margin of 65 percent. This group of activist shareholders, the U.S. Presbyterian Church, requested a similar report of Delta, one in which the company would evaluate its lobbying activities versus the Paris Agreement and share how it would “mitigate risks presented by any misalignment.”

United asked its shareholders to vote no, stating: “The Company is committed to operating an environmentally sustainable and responsible airline. This means we are constantly working to minimize our environmental impact and are continuously looking for new ways to reduce our carbon footprint in the air, on the ground and at our facilities.” The company also stated its long-term sustainability goals, while saying it had improved its overall fuel efficiency by 45 percent since 1990.

Unmoved, shareholders sided with the Presbyterian Church’s group of investors. Those votes occurring at the shareholder meetings of Delta, United and other companies indicate it’s not only the energy companies that have to take bolder action on climate change, but their largest customers need to do the same as well.

“The majority votes — one as high as 76.4 percent — and the string of corporate commitments are an indication of how serious the investment community is about tackling what they view as the ever-increasing systemic risk of climate change,” the Interfaith Center on Corporate Responsibility and the nonprofit Ceres wrote in an emailed statement to TriplePundit. “Investors want strong climate policies to protect the economy and their portfolios and so they can make investment choices with greater certainty.”

The shift toward pushing airlines for greater disclosures about their climate change impacts has been percolating for some time. Across the pond, for example, shareholders of Air France-KLM asked the company’s board several pointed questions about its work on climate action during an annual general meeting last year.  

Recent events have shown that we’re long past the “asking questions” phase. Now, investors want not only answers, but also proof that changes are coming. “Investors have made clear that they want good, solid data when it comes to sustainability performance," 3p’s Amy Brown wrote in late 2019, “and companies are increasingly giving investors what they want.”

Image credit: Avery Murray/Unsplash