An investor group including pension organisations has written to the chairs of 35 FTSE 350 companies, outlining their expectations for shareholder votes on climate transition plans ahead of next year’s AGM season.

The 18 investors, which include the Local Authority Pension Fund Forum (LAPFF), Denmark’s P+ Pension, and the Superannuation Arrangements of the University of London, have targeted FTSE 350 companies in high-risk sectors whose actions are “essential” to the accelerated action required to meet the Paris goals.

For several years, the investors have called on companies to provide votes to enhance transparency and accountability due to the “substantial” climate-related financial risks.

However, while some firms had responded positively, the letter noted that such resolutions were far from standard practice in 2023, including among high-emitting companies.

The letter also highlighted to firms that have not provided a climate transition plan vote that, if they had such a vote, this would enable shareholders in the first instance to express their views on transition plans through a specific resolution, rather than immediately voting against the chair or another board member.

Commenting on the letter, LAPFF chair, Doug McMurdo, said that, as climate change was one of the biggest risks facing investors, it made sense that companies provide shareholders with a vote on how they were planning and delivering the transition to a decarbonised economy.

“For those companies not providing its own investors with the opportunity to have a say on climate plans, the focus of shareholder attention will inevitably first fall on director elections,” he stated.

Sarasin & Partners LLP partner, Natasha Landell-Mills, commented: “AGMs have always been a key moment for shareholders to hold boards accountable. But they also provide an opportunity for boards to build shareholder backing for important strategic shifts.

“For high-carbon companies seeking to pivot their strategies towards net zero, shareholder support will be vital. It is for this reason that we encourage boards to put their transition plans to a vote at forthcoming AGMs.

“Far better to seek shareholder input and thereby shore up investor support for the transition, rather than provoke potentially destabilising dissent by denying shareholders a say.”

Ethos Foundation CEO, Vincent Kaufmann, added: “Votes on transition plans and transition plan reporting put responsibility for the climate strategy firmly with the board and promote shareholder buy-in on climate.

“Thus, institutionalising a regular high-quality dialogue on climate between companies and their investors. These votes also ensure timely and comprehensive disclosure of relevant information in the run-up to the annual general meeting.”

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