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With a staggering £1.8 trillion in assets under their purview, a consortium of heavyweight investors is pushing for something significant. Leading the charge are CCLA Investment Management, Sarasin & Partners, Premier Miton, Nordea AM, and Charles Stanley, and they're not alone; 18 robust investors are turning up the heat on 35 chairpersons of FTSE 350 firms. They're urging—no, demanding—that these companies hold shareholder votes concerning climate transition strategies at the forthcoming annual general meetings (AGMs).
What's so special about these companies? Why are they under the microscope? The laser focus is on those firms heavily involved in greenhouse gas emissions and entrenched in sectors staring down the barrel of "heightened climate risks." It's not just a matter of corporate responsibility; it's a vital pivot that aligns with meeting the Paris Agreement targets. Inaction, or insufficient action, exposes investors to jaw-dropping financial risks that could be earth-shattering.
The investment community's call for climate votes at AGMs isn't exactly fresh news—it's a drumbeat that has grown increasingly louder over the years. The primary aim? Sharpening the edges of corporate transparency and accountability, particularly given the ominous mushrooming of climate-related financial risks. But let's be candid: the uptake has been less than ideal. In 2023, making such resolutions a staple at AGMs, especially among the major polluters, has been anything but standard operating procedure.
The letter urged those firms who still need to provide a climate transition plan to stage a vote. "Having such a vote will enable shareholders in the first instance to express their view on transition plans through a specific resolution rather than immediately voting against the chair or another board member," it said.
Natasha Landell-Mills, partner at Sarasin & Partners, one of the letter's signatories, said AGMs have always been a "key moment for shareholders to hold boards accountable" and to build shareholder backing for significant strategic shifts.
"For high-carbon companies seeking to pivot their strategies towards net zero, shareholder support will be vital," she said.
Landell-Mills added it is "far better to seek shareholder input and thereby shore up investor support for the transition, rather than provoke potentially destabilizing dissent by denying shareholders a say."
And let's not forget the larger context; this investor move dovetails with an expanding global emphasis by governments and regulatory bodies on climate transition planning. For instance, a nascent recommendation in the UK is taking shape—thanks to the government-backed Transition Plan Taskforce—that nudges companies to unfurl transition plans triennially. Across the channel, France is mulling over new legislation that would make it mandatory for publicly traded companies to subject their transition strategies to an advisory vote every three years, complete with an annual review.
In essence, we see a synchronized, multinational call to action: A nexus of investors, governments, and regulators, all propelling forward to make climate transition not just a checkbox exercise but an imperative of our time.
Tessa Younger, stewardship lead for the environment at CCLA, said: "We see a vote on transition plans or transition plan reporting as a mechanism for shareholders to assess company commitments, support associated capital spend, and ensure debate on expectations for more significant action where needed.
"Such accountability is not just about individual companies; it underscores the urgent need for systemic change across industries and economies."
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