Climate focus at AGMs – coming sooner than you think

Climate focus at company meetings is not new. 2020 saw a number of shareholders putting forward environmental resolutions at listed company AGMs. That trend is set to continue.

Going further, 2021 has already seen a number of listed companies announce that they will voluntarily offer shareholders a say on their climate plans at either their 2021 or 2022 AGMs.

Meanwhile, the UK government is driving climate-related reporting for companies, with the aim that by 2025 all UK businesses must report on the climate risks they are exposed to, how they manage these risks and how they build climate into their strategy under the TCFD framework.

Most recently, the Investment Association has said that it will flag when companies in "high risk sectors" fail to make climate-related disclosures under the TCFD framework.

Crucially, the message from the Investment Association is that it wants this data sooner – starting with the upcoming annual meeting season – rather than waiting for the mandatory TCFD requirements to kick in.

To understand this, it pays to take a step back and consider the bigger picture drivers behind these developments. Investors, in allocating their capital, have a key role to play in supporting the transition towards a more sustainable, greener economy. Better data is at the crux of this. Investors need clear and comparable data on the climate risks and climate impacts of companies, and the strategies (short and long term) that companies have in place to deal with this.

What is clear is that investors will continue to put pressure on companies which fail to provide the information they need.

On a practical level for companies, getting on the front foot cannot be underestimated. Controlling each of (i) the company's narrative, (ii) the development of the climate strategy, (iii) the pace at which that strategy is implemented, and (iv) engagement with shareholders and other stakeholders will all be key to successfully navigating these challenges over the years to come.