Investors call on UK’s largest firms to provide shareholders with climate vote

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Andrew Feinberg

White House Correspondent

A group of investors has urged most of the UK’s largest listed companies to provide shareholders with a vote on their climate transition plans.

Local Authority Pension Fund Forum (LAPFF) and impact investment management firm CCLA wrote to the chairs of 76 FTSE 100 firms that have not held a vote on their plans at their shareholder meetings in the last three years.

The group, which is supported by investors representing £1.6 trillion of assets under management, said investors expect firms to set out credible plans that align with the Paris Agreement goal of trying to limit warming to 1.5C and include detailed strategies on how to achieve them.

Setting out ambitions in transition plans and outlining climate-based impacts in financial statements enables shareholders to make informed investment and stewardship decisions, they wrote.

The investors said specific votes at annual general meetings (AGMs) on such climate transition plans enable shareholders to signal support for plans and associated capital expenditure requirements.

The signatories also pointed out that other FTSE 100 companies, excluding investment trusts, have provided their investors with the opportunity to approve their climate plans, which is now considered good practice.

It comes as emerging guidance, including from the Government-backed Transition Plan Taskforce, recommends transition plans are produced and updated every three years.

Doug McMurdo, LAPFF chairman, said: “AGMs provide shareholders with the opportunity to support a board’s approach to key strategic decisions and hold them to account for their management of material risks and opportunities.

“Given the considerable climate-related risks that major companies face and the implications for long-term company success, we are encouraging boards to provide investors with the chance to support their climate transition strategies or raise specific concerns.

“Such votes provide a great opportunity for boards to engage with their shareholders and wider stakeholders to strengthen their strategies and gain investor backing for their transition plans.”

Peter Hugh Smith, chief executive of CCLA, said: “Climate change is a material threat to medium and longer-term shareholder value so it is no coincidence that our clients tell us it is the number one issue they care about most.

“We all know that the world needs to do more and move faster if we are to reach net zero by 2050.

“As owners of the companies we invest in and as good stewards of our clients’ capital, we have a duty to continue to push companies, and support wider efforts, to limit global temperatures to below 1.5 degrees.”

The investors wrote to companies such as Associated British Foods, BAE Systems, British American Tobacco, BT Group, Burberry Group, Coca-Cola, EasyJet, HSBC Holdings, Intercontinental Hotels Group, JD Sports, King Fisher, Lloyds Banking Group, Marks and Spencer Group, Next, Persimmon, Rightmove, Roll-Royce Holdings, Sainsbury, Severn Trent, Taylor Wimpey, Tesco and Vodafone Group.

It comes after ShareAction, which campaigns for responsible investment, and the UN Environment Programme’s World Conservation Monitoring Centre (UNEP-WCMC) released a report on how investors should strengthen their approach to protect some of the world’s most important biodiversity-rich areas.

Alexandra Pinzon, head of biodiversity at the charity, said: “To address the global extinction crisis and unprecedented decline of nature, investors must recognise the vital role of protected areas as a tool for biodiversity conservation and strengthen their investment policies and engagement with companies accordingly.

“We need to see investors use the huge power they wield to reduce their nature-related risks and impacts, especially on internationally recognised areas of importance for biodiversity conservation.”

Neville Ash, director of UNEP-WCMC, said: “Asset managers and asset owners can drive positive impacts for nature through their investment decisions.

“For example, when they engage with companies and exercise their voting rights, they can be influential in ensuring that businesses respect and help manage protected area networks.”