IIGCC launches ‘systematic framework’ to prioritise high-impact corporate engagement

The Institutional Investors Group on Climate Change (IIGCC) has launched the Net Zero Stewardship Toolkit, which aims to provide investors with a foundational process to enhance their stewardship practices to deliver ‘rapid acceleration’ in decarbonisation.

With the end goal of halving carbon emissions by 2030 and net-zero emissions by 2050 or sooner, the toolkit provides a framework for net-zero stewardship with six steps.

The toolkit’s six steps include prioritising key engagements, setting net-zero alignment criteria, the development of an engagement strategy for priority companies, the development of a baseline engagement and voting policy, asset owner and manager alignment and engagement, and transparency.

Aligning with both the Net Zero Asset Manager and Paris Aligned Asset Owners initiatives, the toolkit is committed to implement a stewardship and engagement strategy that is consistent with an ambition for all assets under management to achieve net-zero emissions by 2050 or sooner.

IIGCC CEO, Stephanie Pfeifer, commented: “The toolkit provides clear parameters and a systematic framework for what good corporate engagement looks like, including escalation actions, such as filing a shareholder proposal, to be used when time bound objectives are not met.

“This gives investors a clear process with tangible actions in order to engage companies and pressure laggards where progress on climate-related matters is insufficient.”

“While corporate engagement can be a multi-year process, the toolkit is timely given the imminent AGMs at many of Europe and North America’s largest public companies. For those companies putting forward climate transition plans, including via ‘Say on Climate’ votes, the message is clear: only put forward credible plans or expect investors to vote against you.”

Railpen senior investment manager, Chandra Gopinathan, added: “Railpen is unwavering in its commitment to creating a better future for our members to retire in. We are particularly proud of the collaborative work that delivered this toolkit, which we feel could be instrumental in ensuring that the world achieves net zero by 2050. We have already begun to embed the toolkit into our own stewardship processes.

“The Net Zero Stewardship Toolkit emphasises the crucial iterative link between conducting company analysis, where a company might be failing to align to net zero, and the engagement and voting activities that might follow.

“It provides a standardised foundation for climate-related engagement across listed equities and bonds. This will be expanded to include unlisted assets as well in future versions. It will enable investors to deliver the substantive remedial actions that will drive the change that the world needs to see from us all.”

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