Accelerating corporate action on climate change
Empowering investors to manage the transition to net zero by requiring companies to implement credible climate transition plans, and putting these plans to a vote at future annual general meetings (AGM).
What is Say on Climate?
Listed companies are responsible for 40% of all climate-warming emissions, but only a small fraction disclose a credible climate transition plan specifying short-term targets and actions. Say On Climate is an initiative to ensure the world’s largest companies take necessary action on climate change in line with the 1.5°C trajectory recommended in the Paris Agreement.
Investors’ voting rights are an essential tool to influence companies – to emphasise their expectations for board accountability on climate change. This includes the request for credible climate transition plans, along with annual accountability such as a shareholder vote.
Why take action?
The evidence is clear: climate change is an increasingly substantial driver of risks and opportunities that companies and their shareholders must manage. Businesses are confronted with the rising costs of both physical risks linked to the impacts of climate change, and transition risks as regulators, the market and public sentiment shifts to address the crisis. Navigating these risks requires careful stewardship to ensure the long-term viability and value of companies.
But currently, less than 1% of businesses have credible climate transition plans in place and investors are failing in their duty to hold companies accountable for managing the transition.
Engagement on a company’s climate transition plan is a vital tool to ensure companies move forward with short-term action to get on a 1.5°C pathway.
Use your voting powers in companies to accelerate their decarbonisation by systematically supporting climate resolutions.” – U.N. Secretary-General Antonio Guterres urges investors to push companies to slash their greenhouse gas emissions faster by “systematically” supporting shareholder resolutions on climate change.
News and insights
Stay informed on the latest Say On Climate developments and learn how to get involved by exploring our news, blog posts and resources.
As the transition to a net-zero emissions economy accelerates, investors are looking for companies to demonstrate that they are planning proactively to ensure their business models remain competitive in a decarbonised world.
A climate transition plan puts climate change at the centre of a company’s strategy and operations, with the targets and actions needed to reduce emissions in line with achieving net-zero by 2050 or sooner. Along with the adoption of a strong accountability mechanism, e.g. by putting climate transition plans to a vote at future annual general meetings (AGM), a credible climate transition plan is a vital tool for companies to succeed in a low-carbon, more resilient future.
Asset owners increasingly expecting engagement and results on climate issues from investment managers. This demand is driven by the knowledge that whilst climate change presents a significant challenge for companies around the world, its risks can be mitigated by adopting credible climate transition plans, which should align with a net-zero pathway.
Asset managers should guide companies to develop and disclose a climate transition plans showing how they intend on transitioning to net-zero emissions by 2050 or sooner, and can ask for a vote on the plan at future annual general meetings (AGM).
Asset owners, who sit at the top of the investment chain, have a vital role to play in the transition to a net-zero economy and need to ensure their asset managers can and are taking active steps to act on climate change if they are to protect their investments over the long-term. Part of this process requires asset owners to ensure their managers are actively seeking credible climate transition plans and using their voting power accordingly. Only by consistently holding companies to account for the steps they are taking to address climate change, can we shift the dialogue away from setting targets to actually reaching the targets.
Proxy advisers play a key role in guiding investors’ voting decisions and it is overdue for them to take a stronger position on climate change. Climate change is a systemic risk, and as such, proxy advisors have the responsibility to help companies mitigate rather than exacerbate that risk.
As climate action and the transition to a net-zero economy are expected to be at the top of the agenda during this year’s AGM season, proxy advisors should support resolutions that increase accountability on climate and encourage asset managers to file shareholder proposals asking for credible climate transition plans.