COP26 takes place this week in Glasgow and we asked industry experts what they were expecting from the event. David Sheasby, head of stewardship and ESG, Martin Currie, says financial assumptions about the future are increasingly in focus.
As investors, we believe that shifts in corporate behaviour can drive a significant change in both reducing emissions and providing capital to accelerate the transition to net zero.
How companies integrate their approach to climate change and assumptions about the future into their financial accounts is also increasingly in focus, and a useful tool of measurement. Investors are interested in how the narrative is reflected in financial assumptions, with auditors expected to challenge and hold management to account where these do not line up. The consequences can be material, as BP and Shell saw when they had to write down asset values once these were aligned.
We do believe that it is through strong interaction with both boards and management, via engagement and proxy voting, where we will ultimately see increasingly focused shareholder resolutions that will continue to bring the focus towards combatting climate change. However, the rate at which this comes into practice will rely on unified efforts from investment managers, corporates and central government policy, and the clock is ticking.
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