Ninety One is increasing its climate efforts by encouraging investee companies to submit a Climate Transition Action Plan to a shareholder vote at their annual general meeting (AGM).
The investment manager has announced its support for the Say on Climate initiative, which is aimed at facilitating deeper engagement between companies and their investors on sustainable transition plans.
The initiative details three stages companies need to target to manage the transition to net zero:
- Annual disclosure of emissions
- A plan to manage those emissions
- An AGM to vote on this plan.
Ninety One is incorporating the Say on Climate initiative into its voting policies and engagement strategies, and is also committing to adding an advisory vote on its own transition plans at its AGM in 2021.
Therese Niklasson (pictured), global head of sustainability at Ninety One, told ESG Clarity: “It is not often advocacy initiatives come our way and we feel the need to sign up immediately.
“We have been advocating for disclosure on emissions for a long time and recently the conversation has turned to how we can manage that.
“Net zero pledges are important, but the Say on Climate initiative goes full circle as there is lots of engagement throughout from the AGM to the vote.”
She added this approach will also be the further push some companies need to publish the details around their climate commitments and also help with putting plans in place, rather than just paying lip service.
“We are not asking companies to supply all the answers on climate action,” she added, “this encourages companies to say where they are, the progress they have made and the plans in place. We can then take a view on whether that is good enough.”
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Niklasson also defended Ninety One’s decision to not join other asset managers in signing the Net Zero Asset Managers commitment put in place by six investor networks including the Institutional Investors Group on Climate Change (IIGCC).
“We haven’t committed to that at this point but supporting the Say on Climate initiative reinforces our journey.
“We are focused on the accountability point. We have been challenged, and rightly so, on our investments and their climate impact and we need that scrutiny. It is not as straightforward as just saying ‘we are tackling climate change’.
“This is a good way of giving the voice back to the companies, and creating that dialogue and sense of accountability.
“Requiring listed companies to present their transition plans annually will increase the pressure on management teams to take transition plans seriously. We want to steer companies towards higher disclosure standards, better plans and ultimately more sustainable, resilient business models – helping future-proof returns for all stakeholders.”
Initially, Ninety One will engage with a selection of portfolio companies to encourage boards to voluntarily publish a Climate Transition Action Plan and propose a resolution from management.
“We are not taking a scatter gun approach to this or sending the same letter to all our holdings’ management,” Niklasson explained.
“We are prioritising where we have influence and leverage to get companies over the line.”
Hendrik du Toit, CEO at Ninety One, added despite “incremental improvements in disclosure standards on emissions”, companies are merely scratching the surface.
“As active managers and stewards of our clients’ money, we believe the Say on Climate initiative will create a more effective dialogue between companies and investors through the opportunity to present their transition plans. In support of the good work by the TCFD and the expected improvement of disclosure, we want to support companies that have made significant emissions pledges to achieve those pledges. The enhanced engagement proposed in the initiative is a real step towards better progress on climate transition, aligned with the Paris Agreement.”
