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Forward thinking | Article - 4 Min

‘Say on Climate’ voting: Losing steam – or set for a rebound?

Launched in 2020, the Say on Climate initiative encourages companies to consult shareholders about their climate strategies and net zero action plans at annual general meetings. The number of companies allowing such ballots doubled over the first two years, but 2023 has so far seen fewer initiatives. A recent paper from BNP Paribas Asset Management looks more closely at current trends, challenges still to be overcome, and the role investors can play.

‘Say-on-climate’ votes are modelled on ‘Say on Pay’ which subjects executive compensation to shareholder votes. The approach consists of companies voluntarily submitting their climate strategy and/or progress report to a consultative shareholder vote at annual general meetings. This approach was launched by British billionaire Christopher Hohn’s activist fund The Children’s Investment Fund Management (TCI) back in 2020, with the aim of fostering greater transparency and accountability on climate issues. Since then, ‘Say-on-climate’ votes have developed around the globe, although they still take up a minor share of shareholder votes globally and are subject to debate.

In the first six months of 2023, 23 management-backed climate resolutions were presented to shareholders worldwide. That is about the same number as in the whole of 2021, but fewer than during the same period in 2022. The decline may be due to the irregularity of proposals presented. There is no standard dictating how often climate resolutions should be voted on. A few companies have given shareholders the opportunity to vote once or twice annually, but most (78%) have only had one vote since 2020.

Global voting patterns: Europe remains ahead

Europe has accounted for 80% of Say-on-Climate votes, with France, the UK and Spain heading the country ranking. The proportion of votes taking place in France rose during 2023 (accounting for 42% of resolutions worldwide).

French regulators have started to consider the benefits of standards. An update to the French Green Industry Bill seeks the mandatory submission of climate strategies to a consultative shareholder vote every three years, and the publication of climate progress reports every year. A possible French law is now on the horizon, but its arrival depends on discussions starting this October.

Developments in other markets have been slow. International efforts on harmonising reporting standards could eventually result in regulatory intervention. Within the EU, the Corporate Sustainability Reporting Directive (CSRD) is expected to create a level playing field and enhance investors’ decision-making as it ensures that investors can access the information they need to assess the impact of companies on people and the environment and the financial risks and opportunities arising from climate change and other sustainability issues.

Energy-intensive sectors more active  

Say-on-Climate voting is most prevalent in the highest greenhouse gas-emitting sectors.The energy sector represents 74% of global emissions as of 2019, so it is no surprise that consultative votes are mainly held by companies in the sector as well as the utilities sector (30% of proposals over 2021-2023). Energy-intensive sectors such as industrials (23%), materials (13%), and real estate (9%) are also active organisers of Say-on-Climate voting.

These sectors are the focus of investors, public policymakers and civil society given their impact on the climate. External scrutiny may have raised public awareness of the potentially meaningful financial impact of climate change on businesses. This may be encouraging companies to allocate more resources to climate accounting and action planning, especially those in the public eye.

Shareholder support stable despite lack of common framework  

Although there have been fewer votes so far in 2023, they are receiving a stable level of shareholder support.On average, the level of positive votes was 89% between 1 January and 30 June this year, compared to 87% in 2022 and 91% in 2021.

The steady support is likely due to: 

  • Active shareholder engagement by companies prior to their AGMs
  • Better alignment by companies with investor expectations and/or progress against recognised standards such as those of the Science Based Targets initiative (SBTi)
  • A higher acceptance of some climate action plans when they are submitted for the first time, or a shift in the voting approach. 

Climate campaigners have maintained their efforts, calling at times on shareholders to vote against corporate climate plans and, in some cases, filing shareholder proposals that seek to move the company’s strategy forward. However, there is no common framework yet that clearly defines what credible climate action plans should comprise. That can make it hard for investors to assess such plans.

BNP Paribas Asset Management’s opposition rate, which was high at 58% in the first half of 2023, reflects our current view that only a few proposals warrant our support, based on our voting policy. We are still seeing many climate plans that lack full GHG emissions disclosure, net-zero ambitions covering the entire business, or intermediary reduction targets across all horizons.

A critical approach by investors matters

Say-on-Climate votes have moved climate change up boards’ agendas. Greater oversight and shareholder engagement are welcome developments, especially at companies operating in the highest GHG-emitting sectors: they are the ones that should be refocusing their priorities. Their adjustments will be decisive in achieving global climate goals.

BNPP AM supports the adoption of periodic Say-on-Climate voting in the highest GHG-emitting sectors. Meanwhile, investors should be demanding. In our view, taking investor expectations to a higher level means having a holistic approach linking climate risk management at the portfolio level and active proxy voting.

Based on our firm-wide net zero strategy and an ambitious stewardship policy, we will be using our votes to advance global climate goals through both critical Say-on-Climate assessments and escalation in the form of stakeholder engagement.


Please note that articles may contain technical language. For this reason, they may not be suitable for readers without professional investment experience. Any views expressed here are those of the author as of the date of publication, are based on available information, and are subject to change without notice. Individual portfolio management teams may hold different views and may take different investment decisions for different clients. This document does not constitute investment advice. The value of investments and the income they generate may go down as well as up and it is possible that investors will not recover their initial outlay. Past performance is no guarantee for future returns. Investing in emerging markets, or specialised or restricted sectors is likely to be subject to a higher-than-average volatility due to a high degree of concentration, greater uncertainty because less information is available, there is less liquidity or due to greater sensitivity to changes in market conditions (social, political and economic conditions). Some emerging markets offer less security than the majority of international developed markets. For this reason, services for portfolio transactions, liquidation and conservation on behalf of funds invested in emerging markets may carry greater risk.
Environmental, social and governance (ESG) investment risk: The lack of common or harmonised definitions and labels integrating ESG and sustainability criteria at EU level may result in different approaches by managers when setting ESG objectives. This also means that it may be difficult to compare strategies integrating ESG and sustainability criteria to the extent that the selection and weightings applied to select investments may be based on metrics that may share the same name but have different underlying meanings. In evaluating a security based on the ESG and sustainability criteria, the Investment Manager may also use data sources provided by external ESG research providers. Given the evolving nature of ESG, these data sources may for the time being be incomplete, inaccurate or unavailable. Applying responsible business conduct standards in the investment process may lead to the exclusion of securities of certain issuers. Consequently, (the Sub-Fund's) performance may at times be better or worse than the performance of relatable funds that do not apply such standards.

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