Investors demand vote on climate transition plans at FTSE firms
A group of asset managers and pensions bodies has written to FTSE listed companies calling for a ‘Say on Climate’.
Asset manager Sarasin & Partners plus the Local Authority Pension Fund Forum (LAPFF), investment manager CCLA and Swiss pension fund body Ethos have written to the chairs of all FTSE-listed companies (excluding investment trusts), urging them to disclose their Paris Agreement aligned transition plans and pushing for a shareholder vote on the issue.
The letter has been written with an eye on the upcoming AGM season, with many of the firms contacted due to be holding such sessions in March and April.
The letter welcomed those FTSE boards that have already enabled shareholders to have a “Say on Climate” through a balloted resolution. However, the letter also demands that all such listed companies follow suit by disclosing their transition plans and allowing investor oversight on the robustness of these plans through a vote on the strategy.
A FTSE 100 company that so far does not have a fully established climate transition plan is mining giant Anglo American. According to Climate Action 100+, Anglo American only fully meets one of its ten targets (Task Force on Climate-Related Financial Disclosures reporting), and its decarbonisation strategy only partially meets CA100+’s criteria.
A FTSE 100 company with a published climate transition plan is Aviva, which has targeted a 60% cut in the carbon intensity of investments, combined with having net-zero operations and supply chain by 2031, and full net-zero operations by 2040.
In 2022, the London Stock Exchange Group itself published its first climate transition plan.
Natasha Landell-Mills, head of stewardship at Sarasin & Partners, said: “Companies cannot continue to generate wealth on the back of eroding natural capital. Where will investment go to build a net-zero future? What harmful activities will be wound down? Investors – and the public – need to know how these promises are going to be delivered.”
The letter’s signatories also noted the launch of a Transition Plan Taskforce by the UK Treasury to develop the “gold standard” for private sector climate transition plans. The taskforce states that a transition plan should be integral to a company’s overall strategy, setting out how it aims to prepare and contribute to a rapid shift towards a decarbonised economy.
Response from signatories
Tessa Younger, better environment lead at CCLA, called for companies to produce “high-quality transition plans” to enable them to make better-informed decisions on how to allocate capital.
“We believe there should disclosure of robust transition plans, and governance and accountability mechanisms that support their delivery. A routine vote at company AGMs would provide this mechanism for companies to take account of shareholder feedback,” she added.
Doug McMurdo, chair of LAPFF, said: “The lack of disclosure and the timidity of climate plans at many companies are very serious concerns for investors. Such concerns should be addressed by all companies publishing credible climate action plans and allowing investors to have a say on whether the strategies are fit for purpose.”
Vincent Kaufmann, CEO of the Ethos Foundation, emphasised that the letter will look to enable shareholders to assess the effectiveness of climate strategies and, when necessary, increase pressure on the board of directors if the measures taken are not considered sufficient.
Last month, Daniel Litvin, senior advisor to the executive committee of sustainability consultancy ERM, argued that the climate movement needs to engage with ‘Big Mining’ firms such as Anglo American “as never before”.