The Institutional Investors Group on Climate Change (IIGCC) has called on investors to push proxy advisers for climate analysis improvements.
In a recent statement the group reiterated its own stance on scope 3 greenhouse gas emissions as well as transition-plan best practice, urging its members to take the opportunity to draw attention to their own climate considerations in this year’s Institutional Shareholder Services (ISS) and Glass Lewis annual benchmark policy surveys.
Investors have until 30 August and 5 September to submit responses to the Glass Lewis and ISS surveys.
The statement comes a year after the IIGCC, along with thirty-six investors, called on the Institutional Shareholder Services (ISS) to step up on its climate proxy voting advice and expressed concerns around the research and recommendations from the firm on environmental issues.
For proxy advisers to better reflect investor priorities on transition plans, they must place a greater focus on engagement with climate solutions and disclosures around emissions and accounting, the IIGCC has said.
Assessing scope 3 emissions and transition plans
IIGCC corporate programme manager, Jack Steenson, said: “The scope 3 emissions data of investee companies is vital for investors looking to credibly decarbonise their portfolios and manage climate-related risks. Disclosures on scope 3 emissions and targets provide investors with the information to gauge and engage with the progress companies are making as part of their Paris-aligned commitments.”
Additionally, the group warned against climate-related shareholder proposals being viewed as a form of escalation adding that it should be a normal part of communicating net zero expectations.
“The ambition of climate-related shareholder proposals shouldn’t be limited by fears of being “overly prescriptive” or infringing on a board’s oversight of strategy,” Steenson said.
“Similar to how assessments of company transition plans are conducted, shareholder proposals can simply be a process of highlighting where fundamental pillars of climate strategy are absent in a company’s policies, or where they are out of step with best practice,” he added.
CEO pay
Separately, NBIM has released its own guidance for Glass Lewis and ISS, opting to focus on CEO compensation. Among its recommendations is a move urging Glass Lewis to no longer view performance shares as favourable compared to simple equity incentives.
Furthermore, the Norwegian sovereign wealth fund also suggests that equity grants with longer time horizons should be viewed more favourable than those with shorter time horizons.
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