Guide to taking action for proxy advisors

Proxy advisers play a key role in guiding investors’ voting decisions. Major proxy advisers recognise the materiality of climate risks and will often support reasonable shareholder proposals.

Why take action as a proxy advisor?

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. As an adviser, the proxy advisor has fiduciary duties that it owes its clients, meaning proxy advisors should recommend votes that are in the best interest of its clients.

Climate change is a systemic risk, and as such, proxy advisors have the responsibility to help investors and their 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 voice their support for resolutions that increase accountability on climate and encourage investors to file shareholder proposals asking for credible climate transition plans.

Why should proxy advisors support ‘Say On Climate’?

  • Every company in every sector must get to net-zero emissions, so a strong accountability mechanism is in the shareholder interest.
  • ‘Say On Climate’ votes on transition plans are reasonable and not overly burdensome on companies.
  • Proxy advisers are influential and have a responsibility to provide their clients with advice supporting best practice.

How to take action as a proxy advisor?

A step-by-step process

Proxy advisers play a key role in guiding investors’ voting decisions. Major proxy advisers recognise the materiality of climate risks and will often support reasonable shareholder proposals. Key actions proxy advisers should take:

  1. 1
    Publicly endorse this concept to help give asset managers the confidence to file shareholder proposals asking for credible climate transition action plans and provide reassurance that they are reasonable and in shareholders’ interest.
  2. 2
    Update proxy advice guidelines: make clear that you will be inclined to support resolutions that increase accountability on climate. TCFD-aligned disclosure is essential but should be accompanied by a credible action plan (see here).
  3. 3
    Recommend voting for ‘Say On Climate’ shareholder proposals: your recommendations are influential and can help to ensure positive votes.
  4. 4
    Work in partnership with existing initiatives to develop criteria for assessing the quality of a company’s climate transition action plan. Key existing frameworks include: the Assessing low-Carbon Transition (ACT) initiative, CDP company scoring, Climate Action 100+ benchmark, Science-Based Targets and the Transition Pathways Initiative.

Additional resources

Further information, guidance, and support to help you accelerate shareholder action on climate change.