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Lennar Shareholders Push Homebuilder for Emissions Targets, Against the Company’s Recommendation

Meanwhile, BNY Mellon shareholders ask for better lobbying disclosure in proxy voting.

Illustration of a black two story house outlined in blue and part of a black two story house outlined in yellow in front of a black background depicting the real estate industry
Securities In This Article
Stride Inc
Lennar Corp Class A
Bank of New York Mellon Corp

Some 37% of Lennar LEN independent shareholders pushed the homebuilder to report its plans to reduce greenhouse gas emissions at the company. Officially, the proposal received 21% of the vote at Lennar’s April 10 annual meeting. But adjusting for Lennar’s dual-share-class structure, where supervoting shares are controlled by Lennar’s CEO, support for the resolution rose.

“This result means that 37% of shareholders voted against the recommendation of the company’s board of directors on this topic, which was to oppose the resolution,” says Jackie Cook, who oversees the stewardship program at Morningstar Sustainalytics. “Any support level above 25% should, and would, catch the board’s attention.”

The proposal was made by shareholder advocate As You Sow on behalf of Warren Wilson College, which owns Lennar shares. It notes that Lennar, America’s second-largest homebuilder, lacks both emissions disclosures and emissions reduction targets. The building sector accounts for 40% of total energy use in the US and 35% of carbon emissions. As You Sow said that 30% to 50% of those emissions could be mitigated with available, code-compliant building materials.

World leaders aim to limit global warming to well below 2.0 degrees Celsius and preferably at 1.5 degrees Celsius compared with preindustrial levels, per the 2015 Paris Agreement. That would involve adopting goals to hit net zero emissions by 2050, meaning there’s a balance between the greenhouse gases put into the atmosphere and those taken out.

As You Sow asked Lennar’s board to report on its plans to reduce emissions in line with the Paris Agreement’s net zero goal, such as disclosing all relevant emissions including those in its value chain, on its timeline for setting a net zero target for emissions reduction, on a climate transition plan, and on its annual progress. Lennar said the proposed report would duplicate its efforts and disclosures. You can read the proposal and response in Lennar’s proxy here.

Lennar discloses scope 1, 2, and 3 emissions in its 2023 sustainability report. But “it has not developed a clear plan for addressing regulatory, physical, and competitive climate risk, which the proponent highlights in this resolution, and which appears to have resonated with the company’s nonaffiliated shareholders,” writes Morningstar Sustainalytics analyst Matteo Felleca.

The results “underscore the critical need for companies to develop defendable climate transition plans anchored in science-based targets, encompassing scope 1, 2, and 3 emissions,” says Felleca. Many of Lennar’s direct competitors have already committed to or set emissions reduction targets. “This places Lennar at risk of falling behind industry peers, both in terms of environmental stewardship and competitive advantage.” The risks are myriad, the analyst notes: extreme weather, regulatory risks, and reputational risks among them.

Expect More Proxy-Voting Proposals Around Lobbying

Are more shareholder resolutions around lobbying on the way?

Some 38.4% of Bank of New York Mellon BK shareholders asked the bank to report on its lobbying. Specifically, they asked BNY Mellon to reveal information around direct and indirect lobbying and grassroots lobbying communications, including policies, payment amounts, membership, and payments to tax-exempt organizations that write model legislation. They also asked for a description of board oversight over such payments. The proposal was made by shareholder advocate John Chevedden.

BNY Mellon says it already discloses its advocacy and political engagement efforts, including policies and procedures, lobbying spending, trade association memberships, and board oversight of political engagement. You can read the proposal and BNY Mellon’s response here.

Writes Felleca: “On its website, BNY Mellon discloses the principal trade associations in which it holds memberships, as well as PAC lobbying expenditures from 2014 to 2021. However, this does not appear to be a complete list of trade association memberships, and the bank does not disclose its payments to trade associations, as the proponent requests.”

In December 2023, a similar resolution earned 49.5% support at educational specialist Stride LRN. “Looking ahead, we see a large number of lobbying transparency and political spending transparency resolutions coming up for vote over the next six weeks,” says Felleca.

The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.

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About the Author

Leslie P. Norton

Editorial Director
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Leslie Norton is editorial director for sustainability at Morningstar.

Norton joined Morningstar in 2021 after a long career at Barron's Magazine and, where she managed the magazine's well-known Q&A feature and launched its sustainable investing coverage. Before that, she was Barron's Asia editor and mutual funds editor. While at Barron's, she won a SABEW "Best in Business" award for a series of stories investigating fraudulent Chinese equities, which protected the savings of investors and pensioners by warning about deceptive stocks before they crashed.

She holds a bachelor's degree from Yale College, where she majored in English, and a master's degree in journalism from Columbia University.

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