In this new post: “Say on Climate: empowering shareholders to drive positive change,” LGIM indicates that – likely in concert with Climate Action 100+, it will file shareholder proposals at companies that “fail to put suitably ambitious and credible transition plans to a shareholder vote.” The investor has most recently focused its climate stewardship activities on about 1,000 global companies in 15 “climate-critical” sectors (see page 30).
Among the first of the largest institutional investors to support or advocate the concept of a management-proposed say-on-climate vote, the post sets forth these expectations for management transition plan proposals:
- Public commitment to net zero by 2050
- Disclosure of short-term (up to 2025), medium-term (2026-2035) and long-term (2036-2050) targets covering Scope 1 and 2 emissions and material Scope 3 emissions
- Disclosure of current Scope 1, 2 and material Scope 3 emissions
- Credible targets that are aligned to a 1.5°C trajectory. LGIM indicates that obtaining approval and verification by SBTI (or other external independent parties as they develop) can help demonstrate the credibility and accountability of plans (implying that it is a plus, but not a requirement, for a “credible” target).
LGIM notes it will rely on proxy providers, its own modeling, and broader internal and external expertise and data to evaluate companies’ climate transition plans.
In contrast to LGIM’s view on say-on-climate proposals, many institutional investors (see also here) and even the PRI (see “PRI”) have expressed significant concerns about potential unintended consequences associated with tasking investors with a vote on companies’ climate plans.
See “LGIM to target firms failing to put up credible climate plans with proposals in 2023” (Responsible Investor); our prior reports: “Climate Action 100+ Signatories File Numerous Proposals,” “LGIM Reports on 2020 Stewardship, 2021 Priorities” and “LGIM Intensifies Climate Stewardship Activities”; and additional information & resources on our Institutional Investors and Climate Risk & Disclosure pages.
This post first appeared in the weekly Society Alert!