A group of 53 major investors representing over $14 trillion of assets have issued a call for greater accountability and transparency from companies on their climate strategies, in order to progress their net zero aligned-investing efforts.
In a statement published by the Institutional Investors Group on Climate Change (IIGCC), the investors, including J.P. Morgan Asset Management, GAM Investments and BT Pension Scheme, released an Investor Position Statement requesting that companies provide disclosure on their efforts to reach net zero goals, and offer investors the ability to vote on their plans and progress.
Stephanie Pfeifer, Chief Executive, IIGCC, said:
“In order for investors to do their job as stewards of capital, companies must establish effective mechanisms to demonstrate their net zero transition plans to shareholders and outline how they will be achieved. It is clear that shareholder voting and director oversight is needed to hold companies to account on their commitments to achieving a net zero future.”
While the investors acknowledge that many companies have announced commitments to reach net zero emissions, including more than half of the major emitters targeted by the Climate Action 100+ initiative, they note that the plans presented lack standardization and consistent data reporting.
Yo Takatsuki, EMEA Head of Investment Stewardship, J.P. Morgan Asset Management, said:
“If we stand any chance of closing the gap between current carbon emissions and meeting the goals of the Paris Agreement, the transition to net zero has to be scientifically credible. Responsibility, accountability and delivery of a credible net zero transition plan, coupled with the provision of good quality data, must therefore be implemented by the Board of investee companies. And there’s no time to waste.”
To address these issues, the statement urges companies to undertake a series of key actions to improve consistency, transparency and accountability. Specifically, the investors request listed companies to disclose a climate transition plan, provide a routine vote on the implementation of the net zero transition plan (where permissible), and identify the director responsible for the plan. Disclosure should be aligned with the Taskforce on Climate Related Financial Disclosures (TCFD) climate reporting recommendations and utilizing the Climate Action 100+ Net-Zero Company Benchmark.
The IIGCC noted that several major companies have already implemented the measures outlined in the investor statement following engagement, including Shell, Unilever, Nestle, Glencore, Iberdrola and TotalEnergies.
Stephanie Maier, Global Head of Sustainable and Impact Investment, GAM Investments, said:
“Transparency and accountability are critical to the effective delivery of net zero commitments. Putting corporate net zero alignment plans to the vote will allow shareholders to send a clear message to the Board on the scale and pace of implementation.”