The British government has been urged to give shareholders a vote on how businesses are responding to global warming in a sign of growing investor concern about the risks of climate change to financial returns.
The Investor Forum, an influential group whose members account for a third of the UK’s FTSE all-share market capitalisation, called on the government to consult on rolling out so-called “say on climate” votes — a concept popularised by hedge fund billionaire Chris Hohn.
“[Mandatory climate votes] would be absolutely groundbreaking,” said Andy Griffiths, executive director of The Investor Forum.
The proposed vote is akin to the advisory “say on pay” votes held at shareholder meetings in the UK and US.
Last year, Aena, the Spanish airport group, became the first company in the world to agree to regular climate votes following an intense campaign by Sir Chris. Since then, Unilever, the consumer goods giant, has also pledged to give shareholders a recurrent say on its efforts to address global warming.
But Mr Griffiths said there was a need for a “systemic solution” rather than individual company responses. He said the rollout of such votes could help the UK to cement its position as a global climate leader ahead of the country hosting the UN climate change conference, known as COP26, later this year.
“If it could go this extra step [and introduce a say on climate vote] that would be a world beating opportunity. It is really important that companies and investors are part of a solution to meet that challenge,” he added.
Chancellor Rishi Sunak said last year that by 2025 Britain would become the first country in the world to make large listed and private companies disclose the threats to their business from climate change in line with the Taskforce on Climate-related Financial Disclosures — a reporting framework.
The UK is due to consult on these changes. While doing this, Mr Griffiths said the government should also gather views on a “say on climate” vote.
Big investors have become increasingly concerned about the financial risks of climate change on their portfolios, arguing that many companies are failing to fully outline the risks they face from global warming.
“What we want is a framework to enable [investors] to understand which companies are making great progress [on addressing climate change] and which aren’t,” said Mr Griffiths.
“There is an opportunity with COP26 to pull this together to get a framework,” he said. “We argue that the UK has a unique opportunity to lead the world by embracing a ‘say-on-climate’.”
The proposal from The Investor Forum, whose members include BlackRock, Standard Life Aberdeen, Fidelity International and Schroders, was made in a report reviewing the group’s discussions, including with companies Boohoo and Royal Mail, in 2020.