The Investment Association (IA) has outlined its expectations of companies on issues including climate change, executive pay, audit quality and diversity ahead of the ‘AGM season’.

The IA, whose members own one third of the value of UK listed companies, is asking companies to explain in each annual report the impact climate change will have on their business models and how these risks are being measured and managed.

IVIS, the IA’s Institutional Voting Information Service, will be tracking companies’ progress towards reporting in line with the Task Force for Climate-related Financial Disclosures (TCFD) recommendations by 2022. This will see companies reporting on climate-related risks in a consistent, clear and comparable manner, enabling investment managers to make better informed investment decisions.

Andrew Ninian, director for stewardship and corporate governance at IA, said: “With one third of the FTSE owned by IA members, our industry is looking to the UK’s largest listed companies to demonstrate that climate change is being taken seriously in boardrooms. Climate change could result in a significant loss of value in companies if risks are not effectively measured and managed, ultimately hitting savers’ pockets. Companies need to be looking at the impact of climate change on their business, products and strategy and set out to investors how they are responding to these risks.”

In addition to climate change, investment managers will also be increasing the pressure on companies to improve gender diversity at a senior level, and to bring executive pensions in line with the rest of the workforce.

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