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U.N. climate envoy Carney backs annual investor votes on company climate plans
LONDON/BOSTON (Reuters) 9 November 2020 – U.N. climate envoy Mark Carney on Monday backed a push by investors to force companies to submit their climate change strategies to annual shareholder votes, saying such a mechanism could improve oversight of pledges to slash greenhouse gas emissions.
Carney, who took a U.N. climate finance role after stepping down as Bank of England governor in March, said investors could have an automatic advisory vote on a company’s climate plans, in the same way they are involved in pay discussions.
“Rather than have authorities be overly prescriptive on plans, it may be desirable to have investors have a say on transition”
“This would establish a critical link between responsibility, accountability and sustainability” .
U.N. Secretary-General Antonio Guterres, who has made climate change a signature issue of his tenure, also urged investors to push companies harder by “systematically supporting climate resolutions”.
Companies And Investors Are Failing to Address Climate Change
1 Growing recognition of the need for every company to publish a climate transition action plan:
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G30 report co-chaired by Mark Carney and Janet Yellen says: “At a minimum, companies will have to set out targets for their Scope 1, 2 and 3 emissions, and set credible milestones.”
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$47tn Climate Action 100+ group of investors has called on companies to set out net zero strategies
2 Companies are failing to show how they will make the transition to net zero:
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Only 2.5% companies have committed to set a Science-Based Target.
3 Investors are failing in their duty to hold companies to account:
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Fewer than 100 companies globally face their shareholders on climate change each year, and this is largely ad hoc. This must be the standard for every company, every year.
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The biggest asset managers have appalling voting records on the relatively few climate resolutions that get filed
Companies must publish climate transition action plans and put these to an annual shareholder vote
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Companies must have a clear action plan, because greenhouse gas emissions will:
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Be taxed and regulated by governments in the future
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Increase their cost of capital
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Damage their competitive position
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Harm customer relationships
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Undermine employee moral and recruitment
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A shareholder vote on climate transition plans is essential for ensuring good plans are produced and delivered on.
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Aena (Spanish airports group) is the first major company to adopt the publication an annual climate transition action plan with a shareholder vote. This sets a precedent for other companies.
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