Investor Groups Step Up Pressure on Climate Accountability and Consistency

JP Morgan Asset Management and Fidelity International are among 53 investor groups calling for more alignment on corporate net zero transition plans and increased director accountability.

The investors, which combined have more than $14 trillion in assets under management, have made the intervention via the Institutional Investors Group on Climate Change (IIGCC).

In a statement published yesterday (August 2), investor groups said companies should have to disclose a net zero transition plan, identify the director responsible for the plan, and provide a means for investors to vote annually on progress against the plan.

“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,” said Stephanie Pfeifer, chief executive of IIGCC, the European membership body for investor collaboration on climate change.

“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 statement from the investor groups stipulated that any net zero transition plan that companies produce should be provided within overarching Taskforce on Climate Related Financial Disclosures (TCFD) climate reporting. It should also use the Climate Action 100+ group’s Net-Zero Company Benchmark indicators as “core metrics” to demonstrate progress towards their net zero commitment.

Naming the directors responsible for net zero transition planning will help investors to determine which board directors should be engaged with – and, “as a last resort”, voted against when a plan has not been provided or “implementation is insufficient”, the investors’ statement outlined.

Yo Takatsuki, EMEA head of investment stewardship at JP Morgan Asset Management, said that to stand a chance of closing the gap between current carbon emissions and meeting the Paris Agreement, the transition to net zero must be “scientifically credible”.

“Responsibility, accountability and delivery of a credible net zero transition plan, coupled with the provision of good quality data, must therefore be implemented by the board of investee companies,” Takatsuki added.

Other asset managers that signed the statement included UBS Asset Management, Federated Hermes, and Legal & General Investment Management.

It was also supported by a number of leading European pension funds.