Skip to main content
MENU
Subscribe
  • Login
  • My Account
  • Logout
  • Register For Free
  • Subscribe
  • Topics
    • Alternatives
    • Artificial Intelligence
    • CIOs
    • Consultants
    • Defined Contribution
    • ESG
    • Face to Face
    • Hedge Funds
    • Industry Voices
    • Investing
    • Money Management
    • Partner Content
    • Private Credit
    • Pension Funds
    • Private Equity
    • Real Estate
    • Regulation
    • Special Reports
    • Washington
    • White Papers
  • International
    • U.K.
    • Canada
    • Europe
    • Asia
    • Australia - New Zealand
    • Middle East
    • Latin America
    • Africa
  • Rankings & Awards
    • 1,000 Largest Retirement Plans
    • Top-Performing Managers
    • Largest Money Managers
    • DC Money Managers
    • DC Record Keepers
    • Largest Hedge Fund Managers
    • World's Largest Retirement Funds
    • Best Places to Work in Money Management
    • Excellence & Innovation Awards
    • WPS Innovation Awards
    • Influential Women in Institutional Investing 2024
    • Eddy Awards
  • Resource Guides
    • Active Thematic Global Equities
    • Retirement Income
    • Fixed Income
    • Pension Risk Transfer
    • Pooled Employer Plans (PEPs)
  • ETFs
    • Latest ETF News
    • Fund Screener
    • Education Center
    • Equities
    • Fixed Income
    • Commodities
    • Actively Managed
    • Alternatives
    • ESG Rated
  • ESG
    • Latest ESG News
    • The Institutional Investor’s Guide to ESG Investing
    • ESG Sustainability - Gaining Momentum
    • ESG Investing | Industry Brief
    • Innovation in ESG Investing
    • ESG Rated ETFs
    • Divestment Database
  • Defined Contribution
    • Latest DC News
    • The Plan Sponsor's Guide to Retirement Income
    • DC Money Manager Rankings
    • DC Record Keeper Rankings
    • Innovations in DC
    • DC Plan Design: Improving Participant Outcomes
  • Searches & Hires
    • Latest Searches & Hires News
    • Searches & Hires Database
    • RFPs
  • Research Center
    • The P&I Research Center
    • Earnings Tracker
    • Endowment Returns Tracker
    • Corporate Pension Contribution Tracker
    • Pension Fund Returns Tracker
    • Pension Risk Transfer Database
  • Careers
  • Events
    • View All Conferences
    • View All Webinars
  • Print
Breadcrumb
  1. Home
  2. INVESTING
March 08, 2021 12:00 AM

Proxy season action on climate change will be hard to avoid

Hazel Bradford
  • Tweet
  • Share
  • Share
  • Email
  • More
    Reprints Print
    Eli Kasargod-Staub
    Eli Kasargod-Staub thinks investors are starting to take climate change risk seriously.

    It will be hard for corporate directors to not take climate change personally this proxy season, as institutional investors and regulators ramp up pressure for them to take meaningful action — or get out of the way.

    Investors are armed with a new metric for measuring a company's progress on climate change and a more collaborative approach for holding corporate directors and senior management directly responsible through proxy voting. And they are getting critical backup from regulators like the Securities and Exchange Commission, where climate risk is starting to feature prominently in both corporate reporting and enforcement priorities.

    "Investors are really starting to wake up to the systemic nature of these risks. The way to protect their portfolios is to hold boards accountable. You are seeing leading investors adopt proxy voting policies that make (it) abundantly clear that failure to eliminate material contributions to climate change is a thing of the past. That is really the foundation of what we can achieve this year," said Eli Kasargod-Staub, co-founder and executive director of shareholder advocacy organization Majority Action in Washington.

    Simiso Nzima, investment director and head of corporate governance for the $449.1 billion California Public Employees' Retirement System, Sacramento, agreed that "for anything to be effective you have to hold someone accountable," and said it is a long-standing CalPERS practice to vote against uncooperative directors on all sorts of ESG issues.

    "We take it seriously that when we engage companies and there are not responses, we have no qualms" in voting against directors, he said. "We are excited to hear that other investors are going to have policies that allow them to do that."

    CalPERS is a founding member of Climate Action 100+, an organization of more than 500 investor members with a collective $54 trillion in assets that flags key shareholder votes related to three key expectations for companies: that they implement a strong governance framework clearly articulating the board's accountability and oversight of climate change risks and opportunities; that they take action to reduce greenhouse gas emissions across their value chain; and they provide enhanced corporate disclosure that follows the Task Force on Climate-related Financial Disclosure recommendations.

    Even better is when companies are able to meet more detailed expectations set by the Global Investor Coalition on Climate Change to help investors assess a company's business plan in a range of climate scenarios, under a five-part framework for climate risk management and disclosure.

    Bloomberg

    A protester holds a sign reading 'System Change, Not Climate Change' during a demonstration in London's Parliament Square.

    Net-zero benchmark

    In mid-March, Climate Action 100+ will unveil a net-zero greenhouse gas emissions benchmark to help investors assess how companies are preparing for climate risk and a net-zero transition, including not just commitments but actual capital expenditures and lobbying activity.

    "The benchmark provides a way of engaging with the company to get them to either clarify further or push them if they are falling behind," Mr. Nzima said. "Once it is out, it's going to be clear, and different investors can use that."

    Finding power in numbers, Illinois Treasurer Michael Frerichs and Vermont Treasurer Beth Pearce are leading an effort that includes CalPERS and Connecticut to get more public institutional investors to create proxy voting policies aimed at directors of companies failing to make progress, including disclosing their exposure to climate risk or setting emissions targets aligned to limiting global warming to 1.5 degrees Celsius, a key goal of the Paris Agreement.

    "We have a core of states and large cities that are committed to this. It's all about partnership," said Ms. Pearce, whose office oversees the Vermont Pension Investment Committee, Montpelier, and the investment management of the $5.3 billion Vermont State Retirement Systems. "We are not looking for marketing, we are looking for tangible results," she said.

    The focus goes beyond fossil-fuel companies, Mr. Frerichs said. "There is no company that will not be affected" by the net-zero emissions transition, including real estate firms with shoreline properties and insurance companies dealing with all kinds of climate-related risks.

    "We have reached a time where boards need to act. We as a fiduciary and shareholder need to act. Climate risk is an investment risk. It's a systemic risk for the entire economy, but the transition also presents enormous opportunities for innovative companies and forward-thinking investors," Mr. Frerichs said.

    Illinois and many other institutional investors are also turning up the pressure on asset managers to use their own proxy power this year to see more tangible progress on managing climate risk from companies.

    "We are also calling on our asset managers, including BlackRock and Vanguard, to use their proxy to put their money where their mouth is" when it comes to pushing for change at companies, Mr. Frerichs said.

    That has already happened in Vermont, where "we put our managers on the hook with respect to climate change," Ms. Pearce said.

    "If more investors hold boards accountable, we will see change. We just need more investors to hold boards accountable," Mr. Nzima of CalPERS said.

    Bloomberg
    President Joe Biden and Canadian Prime Minister Justin Trudeau unveiled 'The U.S.-Canada Partnership Roadmap.'
    Encouraging news

    Investors are encouraged by recent actions in Washington, including the Biden White House rejoining the Paris Agreement, and a new U.S. collaboration agreement with Canada to improve reporting and disclosure of climate risks. They also welcomed the naming of a special adviser for climate and ESG at the Securities and Exchange Commission.

    In the new role, returning SEC official Satyam Khanna will advise acting chairwoman Allison Herren Lee on how climate risk fits into a regulatory framework. "That might actually provide tailwind," Mr. Nzima said.

    SEC examiners will now focus more on climate and ESG-related risks to make sure that proxy voting policies and practices and companies' continuity plans serve investors' best interests "in light of intensifying physical risks associated with climate change," Ms. Lee said.

    In late February, Ms. Lee also directed the division of corporation finance "to enhance its focus" on how public companies disclose climate-related issues, a bold move that sends "a clear message that the SEC is serious about updating guidance to meet investor demands for consistent, comparable and reliable climate-related disclosures," said Doug Davison, a partner at Linklaters LLP in Washington and counsel to former SEC Chairman Arthur Levitt.

    Investors should also find an ally in the person tapped for permanent SEC chairman. Gary Gensler, who presided over the Commodity Futures Trading Commission during the global financial crisis, said at his March 2 confirmation hearing that he supports more climate risk disclosure, and pledged to have the SEC undertake economic analysis and seek public feedback on how to advance it.

    "There are tens of trillions of investor dollars that are going to be looking for more information about climate risk," he said.

    Related Articles
    Full suite of concerns add complexity to 2021 proxy season – ISS
    SEC launches climate task force
    Progress in fighting climate change falls short – U.N.
    Recommended for You
    Global family offices scale back U.S. exposure as Asia and Europe rise
    Global family offices scale back U.S. exposure as Asia and Europe rise
    european-union-flag-brussels-bourse_i.jpg
    Tariff uncertainty creating opportunities for European investments, sources say
    Donald Trump speaking in the Rose Garden with two American flags behind him.
    Global tech sell-off prompted by Trump tariffs has investors eyeing diversification abroad
    Sponsored
    White Papers
    The State of Lifetime Income Report
    The Next Wave of LDI Evolution
    Retirement security to future income wins, TIAA brings you the latest financial…
    U.S. Public Funds Top Performers: Q2 2024
    Generative AI Investing: Opportunities at a Key Tech Inflection Point
    Research for Institutional Money Management: Advancing Physical Risk Modelling,…
    View More
    Sponsored Content
    Partner Content
    The Industrialization of ESG Investment
    For institutional investors, ETFs can make meeting liquidity needs easier
    Gold: the most effective commodity investment
    2021 Investment Outlook | Investing Beyond the Pandemic: A Reset for Portfolios
    Ten ways retirement plan professionals add value to plan sponsors
    Gold: an efficient hedge
    View More
    E-MAIL NEWSLETTERS

    Sign up and get the best of News delivered straight to your email inbox, free of charge. Choose your news – we will deliver.

    Subscribe Today
    October 23, 2023 page one

    Get access to the news, research and analysis of events affecting the retirement and institutional money management businesses from a worldwide network of reporters and editors.

    Subscribe
    Connect With Us
    • RSS
    • Twitter
    • Facebook
    • LinkedIn

    Our Mission

    To consistently deliver news, research and analysis to the executives who manage the flow of funds in the institutional investment market.

    About Us

    Main Office
    685 Third Avenue
    Tenth Floor
    New York, NY 10017-4036

    Chicago Office
    130 E. Randolph St.
    Suite 3200
    Chicago, IL 60601

    Contact Us

    Careers at Crain

    About Pensions & Investments

     

    Advertising
    • Media Kit
    • P&I Custom Content
    • P&I Careers | Post a Job
    • Reprints & Permissions
    Resources
    • Subscribe
    • Newsletters
    • FAQ
    • P&I Research Center
    • Site map
    • Staff Directory
    Legal
    • Privacy Policy
    • Terms and Conditions
    • Privacy Request
    Pensions & Investments
    Copyright © 1996-2025. Crain Communications, Inc. All Rights Reserved.
    • Topics
      • Alternatives
      • Artificial Intelligence
      • CIOs
      • Consultants
      • Defined Contribution
      • ESG
      • Face to Face
      • Hedge Funds
      • Industry Voices
      • Investing
      • Money Management
      • Partner Content
      • Private Credit
      • Pension Funds
      • Private Equity
      • Real Estate
      • Regulation
      • Special Reports
      • Washington
      • White Papers
    • International
      • U.K.
      • Canada
      • Europe
      • Asia
      • Australia - New Zealand
      • Middle East
      • Latin America
      • Africa
    • Rankings & Awards
      • 1,000 Largest Retirement Plans
      • Top-Performing Managers
      • Largest Money Managers
      • DC Money Managers
      • DC Record Keepers
      • Largest Hedge Fund Managers
      • World's Largest Retirement Funds
      • Best Places to Work in Money Management
      • Excellence & Innovation Awards
      • WPS Innovation Awards
      • Influential Women in Institutional Investing 2024
      • Eddy Awards
    • Resource Guides
      • Active Thematic Global Equities
      • Retirement Income
      • Fixed Income
      • Pension Risk Transfer
      • Pooled Employer Plans (PEPs)
    • ETFs
      • Latest ETF News
      • Fund Screener
      • Education Center
      • Equities
      • Fixed Income
      • Commodities
      • Actively Managed
      • Alternatives
      • ESG Rated
    • ESG
      • Latest ESG News
      • The Institutional Investor’s Guide to ESG Investing
      • ESG Sustainability - Gaining Momentum
      • ESG Investing | Industry Brief
      • Innovation in ESG Investing
      • ESG Rated ETFs
      • Divestment Database
    • Defined Contribution
      • Latest DC News
      • The Plan Sponsor's Guide to Retirement Income
      • DC Money Manager Rankings
      • DC Record Keeper Rankings
      • Innovations in DC
      • DC Plan Design: Improving Participant Outcomes
    • Searches & Hires
      • Latest Searches & Hires News
      • Searches & Hires Database
      • RFPs
    • Research Center
      • The P&I Research Center
      • Earnings Tracker
      • Endowment Returns Tracker
      • Corporate Pension Contribution Tracker
      • Pension Fund Returns Tracker
      • Pension Risk Transfer Database
    • Careers
    • Events
      • View All Conferences
      • View All Webinars
    • Print