LAPFF alongside other investors call for climate vote at high-emitting companies

Local Authority Pension Fund Forum (LAPFF), a stewardship platform for the UK's local government pension schemes, alongside 17 other investors has called on “high-emitting companies” to allow shareholder votes on their climate transition plans.

In a letter written to the chairs of 35 FTSE 350 companies, the investors representing £1.8trn of assets under management set out their expectations for shareholder votes on climate transition plans ahead of next year’s annual general meeting (AGM) season.

The letter encourages companies to provide a climate transition plan vote to enhance transparency and accountability given the “substantial climate-related financial risks”. It wrote: “Such resolutions during 2023 were far from standard practice, including among high-emitting companies.”

“Having such a vote will enable shareholders in the first instance to express their view on transition plans through a specific resolution rather than immediately voting against the chair or another board member,” the letter continued.

The letter focused on companies within sectors considered to “face heightened climate risks, whose actions are essential to the accelerated action required to meet the Paris goals and where the risks we face as investors are substantial.”

Doug McMurdo, LAPFF’s chair, said: “Climate change is one of the biggest risks facing investors. Therefore, it only makes sense that companies provide shareholders with a vote on how they are planning and delivering the transition to a decarbonised economy.

“For those companies not providing its own investors with the opportunity to have a say on climate plans, the focus of shareholder attention will inevitably first fall on director elections.”

Other investors to sign the letter include CCLA Investment Management, Sarasin & Partners and Ethos Foundation.

Their letter comes as governments and regulators have started to increase their focus on climate transition planning. For example, France has proposed a new law, which would require listed companies to put their transition plans to an advisory vote every three years with an annual vote on the implementation of the strategy.

Tessa Younger, CCLA’s stewardship lead – environment, added: “We see a vote on transition plans or transition plan reporting as a mechanism for shareholders to assess company commitments, provide support for associated capital spend and ensure debate on expectations for greater action where needed.

“Such accountability isn’t just about individual companies; it underscores the urgent need for systemic change across industries and economies.”