Investors are calling for the implementation of new corporate governance measures that would ensure shareholders can hold companies to account regarding their net zero emissions goals.
The $14 trillion coalition of investors – including JP Morgan Asset Management (JPMAM) and the Church of England Pensions Board – said governance is needed to ensure companies are true to their decarbonisation promises.
If company directors are unable to demonstrate credible plans with clear targets for transitioning to net zero, they will be voted out, the coalition of 53 global investors warned.
At least a fifth of the world’s largest 2,000 public companies have committed to net zero targets, according to the Institutional Investors Group on Climate Change (IIGCC), which is spearheading the campaign.
Stephanie Pfeifer, chief executive of IIGCC, said: “In order for investors to do their job as stewards of capital, companies must establish effective mechanisms to demonstrate their net zero transition plans to shareholders and outline how they will be achieved.
“It is clear that shareholder voting and director oversight is needed to hold companies to account on their commitments to achieving a net zero future.”
The drive to secure change in corporate governance on climate risk follows the ‘successful’ engagement outcomes at companies including Shell, Unilever, Nestle, and Glencore, according to IIGCC.
The group is aiming to put net zero accountability firmly on the governance agenda ahead of 2022’s annual general meeting season.
Stephanie Maier, global head of sustainable and impact investment at GAM Investments, said: “Transparency and accountability are critical to the effective delivery of net zero commitments.
“Putting corporate net zero alignment plans to the vote will allow shareholders to send a clear message to the board on the scale and pace of implementation.”
Yo Takatsuki, regional head of investment stewardship at JPMAM, added: “If we stand any chance of closing the gap between current carbon emissions and meeting the goals of the Paris Agreement, the transition to net zero has to be scientifically credible.
“Responsibility, accountability and delivery of good quality data must therefore be implemented by the board of investee companies. And there’s no time to waste.”
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