Voting is essential to managing climate change risk, says Border to Coast

Having strengthened its responsible investment voting guidelines, Border to Coast Pensions Partnership exercised its voting rights during the 2023 AGM season, to express concern at firms’ approaches to managing the risks of climate change.

As one of the largest UK Local Government Pension Scheme (LGPS) pools shares its proxy voting report, outlining how it voted on behalf of its Partner Funds, Head of Responsible Investment, Jane Firth, commented:

“Investors risk giving up value by failing to ask portfolio businesses how they are managing risk. As an active steward of our Partner Funds’ capital, we have a responsibility to clearly express our concerns about the lack of transition progress.

“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.”

In implementing its voting policies Border to Coast:

• Voted against 71% of ‘Say on Climate’ management resolutions
• Voted against the chair at 50 companies
• Voted against the re-election of the chair of the board at 95% of oil and gas companies
• Voted for 81% of environmental shareholder resolutions

“Investors need to be authentic in how they put commitments to Net Zero and company engagement into practice, resisting attempts to politicise ESG and climate risk management.

“Voting across all our funds in alignment with our RI 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.”