IIGCC publishes net zero voting guidance, embracing different approaches

The Institutional Investors Group on Climate Change (IIGCC) has published its net zero voting guidance – advice centred around key principles which the initiative said allow for different approaches.

The group described shareholder voting as a “critical lever for investors to communicate with companies”, and said the guidance was designed to support asset owners and asset managers in developing their own net zero voting policies and practices.

Investors that had made individual commitments to net zero through the Net Zero Asset Managers and Paris Aligned Asset Owners initiatives were expected to develop stewardship strategies with a clear voting policy consistent with the aim of all portfolio assets achieving net zero emissions by 2050 or sooner, the IIGCC said.

Under the Net Zero Investment Framework too, investors were expected to publish a voting policy aligning with the net-zero objectives of the framework, it said.

“Accordingly, the new guidance is designed to support investors in developing their own net zero policies and practices,” the group said.

The new guidance was based on the principle that an investment strategy should prioritise engagement and stewardship as the primary mechanism to drive alignment with the goals of the Paris Agreement, according to the IIGCC.

Laith Cahill, senior net zero stewardship specialist at the IIGCC, said: “There is no one-size-fits-all approach to voting.

“This paper embraces those differences, setting out three principles that will help investors develop bespoke voting policies and actions that effectively support and communicate their net zero objectives and targets to companies,” he said.

The three core principles behind the concept of net zero voting are that voting should align with the investor’s own net zero objectives and targets; that it should communicate net zero expectations, and that it should support net zero stewardship, engagement and investment approaches.

“While voting is only one tool amongst many in the stewardship toolkit, utilising the full range of resolutions and options available to shareholders is important for investors seeking to secure real world emissions reductions,” said Cahill.

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