CNX Responds to Sustainalytics’ Meeting Profile Regarding Shareholder Proposal
April 19, 2023
VIA Email to Sustainalytics ([email protected])
Dear Sir or Madam:
We recently received Sustainalytics’ Meeting Profile (the “Profile”) regarding CNX Resources Corporation (“CNX”) and specifically a shareholder proposal from Handlery Hotels (via Proxy Impact) regarding how CNX’s lobbying and policy influence activities align with the Paris Agreement (the “Handlery Proposal”). The Profile, which contains as its rationale three short paragraphs of generic text, recommends that CNX shareholders vote for the Handlery Proposal because “Sustainalytics believes that corporate lobbying inconsistent with the Paris Agreement presents increasingly material risks to companies and their shareholders” and that supposedly, “CNX does not report on the alignment of its lobbying and policy influence activities with the of the Paris Agreement . . . nor does the company disclose its lobbying expenditures or trade association memberships.” We find the Profile inaccurate and overall disappointing, especially in its broad, non-specific statements and utter lack of supporting analysis. Thus, we provide this response to provide Sustainalytics’ subscribers with information about CNX and the Proposal that should have been included in the Profile and which a cursory review of our company and public filings would have revealed.
First, CNX does not lobby, either directly or indirectly through membership in trade associations, against the Paris Agreement. We made that clear in the one-page report we issued and filed with the SEC in response to the Handlery Proposal.1 Rather than spending valuable company resources on matters of global public policy, we focus on local policy initiatives that directly impact our business, such as local license to operate issues. And our Corporate Responsibility Report identifies all organizations that CNX is an active member of that engage in the public policy process.2
Second, CNX has a track record of success on ESG topics, including methane reduction, which we disclose to shareholders in our Corporate Responsibility Report,3 our Proxy Statement, and other public communications. CNX has achieved over a 90% reduction in GHG emissions since 2011, and we invest millions of dollars of capital into methane emissions reduction technologies to achieve continued reductions in Scopes 1 & 2 CO2e.
Lastly and most importantly, CNX’s objection to the Handlery Proposal is also about the proponent’s abuse of the shareholder engagement process and the broader cottage industry of firms like Proxy Impact that submit spam proposals without regard for relevance to a company’s actual conduct of operations and without consequences. We feel compelled to publicly rebuke this charade. As Glass Lewis recently noted in its proxy report, which recommended a vote “AGAINST” the Handlery Proposal, the proponent of the Handlery Proposal, Handlery Hotels, has refused to engage with CNX in a dialogue about this issue. Our own shareholder, who purports to support the Handlery Proposal, refuses to engage with us on the topic, yet Sustainalytics suggests that our shareholders vote for it. To blindly acquiesce to the purported concerns of a shareholder, when they won’t engage with you is simply poor governance and something that CNX will not tolerate. Sustainalytics is in the business of rating companies about their governance practices. It should recognize bad governance and refuse to perpetuate it. This approach undermines the very foundation of the shareholder engagement process, yet Sustainalytics somehow concludes it appropriate, presumably because they label it as climate-related despite it being a governance issue at its core.
We recommend a vote “AGAINST” the Handlery Proposal and urge our shareholders, including any Sustainalytics subscribers, to review the above points and research the tangible impacts CNX is making before passing judgment on a shareholder proposal that its own proponent is unwilling to discuss.