Climate Action 100+ flagged resolutions: CRH plc (CRH LN): Annual General Meeting – Thursday 28 April 2022
CRH plc. — Sarasin & Partners to vote AGAINST three management proposals: Financial Statements; Audit Committee Chair; and re-election of the Auditors.
Summary of why the resolutions are being flagged
- Despite repeated requests from investors, CRH’s 2021 Financial statements fail to provide visibility on 1) how material climate risks have been considered; or 2) how CRH’s own climate targets have been incorporated into assessments of assets, liabilities and profitability. In addition, there is no disclosure for what a 1.5C pathway might mean for CRH’s financial position.
- The result is that investors are unable to ascertain whether CRH would be resilient to accelerating decarbonisation, despite its own ambition to be aligned with a 2050 net zero pathway.
- Moreover, where the accounts are not properly incorporating material climate risks they will drive a misallocation of capital into excessively carbon-intensive activities, thereby potentially destroying shareholder value. This is clearly also harmful for the planet.
- Consequently Sarasin & Partners LLP will be voting as follows at the 2022 AGM, with the stated rationales:
- Audit Committee Chair (Shaun Kelly) – Against: Notwithstanding welcome references to climate change in the Audit Committee’s report to shareholders and in the Financial Statements, there is little quantitative information. We continue to lack visibility for 1) how material climate risks are reflected in critical accounting assumptions, 2) how CRH’s own climate targets are integrated into its financial statements, and 3) the implications of a 1.5C pathway for its financials.
- Auditor (Deloitte Ireland) – Against: While additional commentary in its UK report describing how climate risks have been considered, and specifically how CRH’s carbon emission reduction targets are consistent with the financial statements, Deloitte provides no quantitative disclosure as to the materiality of climate risks. It has taken climate out of its identified Key Audit Matters without explanation. Moreover, it is difficult to understand why it has removed all reference to climate change in its US audit report to shareholders despite global investors express desire to have visibility on this matter. No comment is provided on the sensitivity to a 1.5C pathway, despite CRH’s net zero ambition.
- Financial Statements: Against: We cannot support approval of CRH’s financial statements where there remain questions as to how it has accounted for material climate risks, and where they fail to provide the requested visibility for a 1.5C pathway.
Download the full memo below.
Investor practices programme
Derivatives and Hedge Funds Discussion Paper