Border to Coast, the pooling vehicle for 11 Local Government Pension Scheme (LGPS) funds, has voted against the reappointment of directors of at 95% of all oil and gas companies in a bid to escalate its engagement with the fossil fuel industry.
Describing climate change as a key investment risk for its partner funds, the pool also said it has backed 81% of environmental shareholder resolutions during the 2023 annual general meeting (AGM) season, according to its latest proxy voting report.
Jane Firth, Border to Coast’s head of responsible investment, said: “Investors risk giving up value by failing to ask portfolio businesses how they are managing risk.
“Given we consider climate change a critical risk to the long-term success of some portfolio companies, we are using perhaps the most influential means at our disposal - voting - to support credible proposals that are aligned with achieving net zero.”
Having strengthened its responsible investment voting guidelines in 2023, the LGPS pension pool’s report detailed that it exercised its voting rights during the AGM season to express concern at firms’ approaches to managing the risks of climate change.
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The report outlined that during the season Border to Coast voted for 81% of environmental shareholder resolutions but voted against 71% of ‘Say on Climate’ resolutions but forward by company management.
In total, the report revealed that Border to Coast voted on 10,167 resolutions at 690 annual meetings, supporting 88% of management resolutions.
Colin Baines, Border to Coast’s stewardship manager, said: “Investors need to be authentic in how they put commitments to net zero and company engagement into practice, resisting attempts to politicise environmental, social and governance (ESG) and climate risk management.
“Voting across all our funds in alignment with our responsible investment policies and voting guidelines ensures a clarity of approach for our partner funds. However, many asset owners do not have this assurance and misalignment between asset owners and some asset managers is becoming evident.
“Not only are some investors exposing themselves to accusations of greenwashing by voting counter to their climate commitments, they are also hindering the potential of ESG stewardship to secure quality company transition plans, reduce climate risk, and add long-term value.”
