IIGCC calls for accountability on corporate net-zero plans

August 6, 2021

The Institutional Investors Group on Climate Change (IIGCC) has called for new corporate governance measures to allow shareholders to hold companies to account in achieving their net-zero plans.

The IIGCC said a lack of standardisation poses a challenge for investors looking to align their overall portfolios with net-zero objectives.

The IIGCC – a group of 53 leading investors managing more than $14trn in assets between them – explained that investors needed to ensure targets set by companies were robust and properly implemented, and allowed actions to be taken where this was not the case.

In a newly published ‘Investor Position Statement’, the IIGCC called on companies to disclose a net-zero transition plan, identify a director responsible for the plan, and provide a means for investors to vote annually on progress against the plan.

Stephanie Pfeifer, chief executive of IIGCC, said: “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.

“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.”

Victoria Barron, head of sustainable investment at BT Pension Scheme Management, added that investors want clear accountability, metrics and targets for corporate net-zero strategies.

She said: “Investors are increasingly setting net-zero goals to address climate change but to be successful, the companies in which they invest have to be aligned.

“Growing numbers of companies are developing net zero plans recognising that climate change is a core consideration. But we need more urgent action and more consistent disclosure.”

Adam Matthews, chief responsible investment officer of the Church of England Pensions Board, stated: “Time is against us and if a company is to carry the confidence of their shareholders, they need credible transition plans with clear short-, medium- and long-term targets covering all material emissions.

“Directors will be voted out if the plans are not credible, do not provide a clear basis to deliver targets or if companies are not delivering against them.”