Under the auspices of the Institutional Investors Group on Climate Change (IIGCC), a group of 53 global investors with $14 trillion in asset under management are calling on companies to:
- disclose a net zero transition plan;
- identify the director responsible for the plan; and
- provide a means for investors to vote annually on progress against the plan.
See the full Investor Position Statement for more detail.
At least a fifth of the world’s 2,000 largest public companies have committed to net zero targets, including 52% of the high-emitting companies engaged through the Climate Action 100+ initiative. However, the lack of standardisation in net zero commitments made so far by companies poses a challenge for investors, who are themselves looking to align their overall portfolios with net zero objectives.
Investors need to ensure that targets set by companies are robust and properly implemented, and that action can be taken where this is not the case. As the Chief Responsible Investment Officer for the Church of England Pensions Board, Adam Matthews, warns: "Directors will be voted out if the plans are not credible, do not provide a clear basis to deliver targets or if companies are not delivering against them.”
Investors supporting the statement include JP Morgan AM, GAM Investments, Federated Hermes, Fidelity International, UBS AM, Allianz SE and BT Pension Scheme Management.
The move, which is intended to complement the “Say on Climate” initiative first started by Chris Hohn (see here), places the topic firmly on the agenda ahead of the 2022 AGM season.
See our Climate Change Plans and Targets for practical tips on the topic.
“Time is against us and if a company is to carry the confidence of their shareholders they need credible transition plans with clear short, medium and long-term targets covering all material emissions. Directors will be voted out if the plans are not credible, do not provide a clear basis to deliver targets or if companies are not delivering against them.” adds Adam Matthews, Chief Responsible Investment Officer, Church of England Pensions Board.