Led by IIGCC’s Proxy Advisor Working Group, 36 investors have supported a letter to ISS calling on it to further integrate climate into its proxy advice service.
The letter sets out clear investor asks for 2024 and coincides with ISS’s Benchmark Policy Consultation.
The letter also recognises that environmental and climate-related factors are material to investors’ stewardship and voting decisions as part of their fiduciary duty to mitigate financial risk and protect long term shareholder value.
The letter – available here – developed in advance of ISS’s Benchmark Policy Consultation, calls on ISS to further enhance its climate-related proxy advice service, while recognising ISS’s progress to date.
The letter, supported by 36 investor members of IIGCC was developed by IIGCC’s Proxy Advisor Working Group, which is chaired by Edward Mason, Director of Engagement at Generation Investment Management. See full list of investor supporters below.
Investor asks of ISS
Specifically, the letter calls for ISS to provide a specialty net zero policy for the 2024 proxy season; and to further integrate climate into its proxy voting recommendations on a more robust and consistent basis via its Benchmark Policy, one of the most widely used voting recommendation services.
Investors call for progress on ISS’s Benchmark Policy in four areas ahead of the 2024 proxy season: i. board accountability, ii. transition plans, iii. shareholder resolutions, and iv. Climate Action 100+ Net Zero Company Benchmark alignment.
A clear investor need
The letter highlights the need for a speciality net zero policy for the 2024 proxy season stating that it ‘is about providing individual investors with choices that fit their needs’.
It also explains that many of the investors making commitments under the Net Zero Asset Managers initiative and the Paris Aligned Asset Owners initiative, many of which are ISS’ clients, ‘are pursuing alignment with the Paris Agreement to manage investment risk and use their voting rights and proxy advisors to facilitate this’.
The letter also states that the Benchmark Policy is important as it ‘acts as a baseline for stewardship and voting decisions, forms the basis for investor ISS custom policies and creates a critical signal to companies on climate risk.’
Stephanie Pfeifer, CEO, IIGCC, said: “More and more investors are setting net zero commitments and pursuing alignment with the Paris Agreement. Their fiduciary duty is driving them to factor in financial risk, including transition and physical risks associated with climate change. As clients of ISS they need support from their proxy advisor when making stewardship and voting decisions so they can achieve their goals.”
Edward Mason, Director of Engagement, Generation Investment Management and Chair of IIGCC’s Proxy Advisor Working Group, said: “The climate crisis is changing investment, and investment service providers need to change with their clients. It is now four years since the first investor net zero alliance was established. Nearly 500 investors have made net zero commitments. Yet investors are still waiting for the major proxy advisors to offer advice that properly integrates assessment of companies’ performance on climate change. It’s time for that to change.”
Disclaimer: This letter was developed by IIGCC but does not necessarily represent the views of the entire membership, either individually or collectively.
Investor signatories to the letter:
AXA Investment Managers
Canada Life Asset Management
Danske Bank Asset Management
Eric Sturdza Investments
EOS at Federated Hermes Limited
Generation Investment Management
Investec Wealth & Investment
Irish Life Investment Managers
James Hambro & Partners
KBI Global Investors
La Française Asset Management
Nykredit Asset Management
P+, Pension Fund for Academics
Rathbones Investment Management
Sarasin & Partners
Stichting Pensioenfonds IBM Nederland (SPIN)
Storebrand Asset Management
Swedbank Robur Fonder AB
Tabula Investment Management
The People's Pension
UBS Asset Management (UK) Ltd
University Pension Plan
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