Fifty-three global investors under the direction of the Institutional Investors Group on Climate Change (IIGCC) have set a new baseline of expectations for companies to produce ‘net-zero transition plans’, ensure director accountability and link to AGM shareholder vote.

The investors, managing more than $14tr of assets, are calling for the implementation of new corporate governance measures to ensure shareholders can hold companies to account. The new drive follows the successful engagement outcomes at companies including Shell, Unilever, Nestle, Glencore, Iberdrola and TotalEnergies.

At least a fifth of the world’s 2,000 largest public companies have committed to net-zero targets, including 52 per cent of the high-emitting companies engaged through the Climate Action 100+ initiative. The lack of standardisation in commitments made to date poses a challenge for investors, who are increasingly looking to align their overall portfolios with net zero objectives, through initiatives such as Net Zero Asset Managers and the Paris Aligned Investment Initiative. In order to achieve this, investors need to ensure that targets set by companies are robust and properly implemented, and that action can be taken where this is not the case. Otherwise, investors are more exposed to climate risk and efforts to transition to a net zero emissions future could be undermined.

In the statement, investors are calling on companies 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,” explained Stephanie Pfeifer, chief executive, IIGCC. “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.”

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