Georgeson’s survey of institutional investors representing $30.5 trillion in AUM, 90% of which are signatories of the Climate Action 100+Initiative and 7% of which are signatories of Net Zero Asset Management initiative, revealed these key climate-related takeaways:
Scope 3 GHG emissions – 85% of respondents stated that they generally will not vote against companies based on their Scope 3 GHG emissions disclosure or reduction targets (or lack thereof, as the case may be). However, respondents reportedly expect alignment with the TCFD framework, at a minimum, for companies in carbon-intensive sectors, such as Oil & Gas.
Georgeson offers this commentary based on its in-depth interviews with respondents:
Laggards in the carbon intensive sectors can expect votes against directors if they fall even slightly behind the curve around climate disclosure and strategy. In other sectors, investors will also focus attention on laggards, perhaps targeting leaders to push the climate agenda and transition towards a low carbon economy.
Say-on-climate – Respondents were equally split (40% each) between supporting and remaining neutral on say-on-climate shareholder proposals if the proposals provide a compelling case, while 20% indicated they would not support these proposals. Nearly 70% of respondents said they would be likely to support management say-on-climate proposals.
As we reported last week, Vanguard doesn’t encourage such management proposals due to absence of consensus and still-developing standards and practices surrounding the actual vote as well as the substance of the proposals, in addition to the potential unintended consequences and motivations associated with such votes. As such, Vanguard is likely to support such proposals in limited, company-specific circumstances.
Informed voting – Respondents are much less likely to vote against management or support a climate-related shareholder proposal if the publicly disclosed data does not support the voting decision. Georgeson notes: “If there is a missing data piece like a reduction target, or carbon emissions for instance, but the information is not yet public, investors are more likely to take a lenient line in this instance.”
Disclosure priorities – Georgeson noted a consensus among respondents for more disclosure around climate-related lobbying/spending, if material; cap-ex, in particular as relates to investing in climate-related technologies (if applicable); verifying alignment with the Science Based Targets initiative (SBTi); and, for Oil & Gas industry companies specifically, information around implementation of a methane goal and participation in the multi-stakeholder Oil and Gas Methane Partnership initiative.
See our recent report “CalSTRS Reports Progress on Net Zero Pledge” (reporting on CalSTRS’ determination not to include its portfolio Scope 3 emissions for purposes of its net zero pledge due to the current inability to reliably measure and account for the data) and additional information & resources on our Climate Risk & Disclosure and Institutional Investors pages.
This post first appeared in the weekly Society Alert!