New York City’s five public pension funds recently settled a lawsuit against TransDigm Group, an aerospace company, to win the right to include a shareholder proposal concerning the company’s environmental impact on their upcoming proxy vote.
The pension funds issued a shareholder proposal to TransDigm on September 19 to adopt a policy with “time-bound, quantitative, company-wide goals for managing greenhouse gas (GHG) emissions.” The funds argued that climate change is a critical issue that the multi-billion dollar company should take into account, noting that the World Bank stated that a 4 degrees Celsius increase in average global temperatures could have devastating effects.
Together, the five retirement systems own 59,729 shares in TransDigm with a market value aggregating to over $22 million.
TransDigm attempted to “illegitimately block” the shareholder proposal, despite climate change awareness evolving to “a practice that is an industry norm,” according to a statement from the funds.
The proposal did not specify emissions limits, leaving that to be determined by the company if the policy were adopted. The document noted that many of TransDigm’s peers in the aerospace industry, such as Boeing, Lockheed Martin, and Northrop Grumman, have all adopted GHG emissions standards.
The pensions filed the lawsuit in December on the issue. As a result of the settlement, the proposal will be added to TransDigm’s proxy ballot so that all investors can voice their opinion on whether the company should examine and address its role in climate change.
“TransDigm unlawfully blocked the funds from weighing on one of the most important environmental issues facing our society today,” corporation counsel Zachary W. Carter said in a statement. The company initially argued that the fund’s proposal influenced the “ordinary business” of the company.
The lawsuit marks the first environmentally focused shareholder proposal conducted by the funds. The most recent shareholder proposal litigation was conducted in 2008 against Apache Corp., regarding a proposal to prohibit discrimination based on sexual orientation and gender identity.