15 April 2021
The UN-convened Net-Zero Asset Owner Alliance has today released a new resource designed to help asset owners set expectations for, evaluate, and engage with asset managers on their climate-related proxy voting activities.
The document, Elevating Climate Diligence on Proxy Voting Approaches: A Foundation for Asset Owner Engagement of Asset Managers, outlines a set of principles and considerations that serve as the foundation for assessing and engaging asset managers on climate-related proxy voting. The principles centre on four key themes: governance, interest alignment, merit-based evaluation, and transparency.
Alliance members believe alignment between asset owners and asset managers in climate stewardship activities, including proxy voting, is essential to support the changes needed to reach the Alliance’s goal of net-zero portfolio emissions by 2050, and, importantly our 2025 interim targets. Working together with asset managers will enable us to speed up the crucial change in investment portfolios.
The Alliance is releasing this document as a tool for all asset owners to use when engaging their existing and prospective external asset managers on climate-related proxy voting. This includes asset owners who retain the right to vote their shares and asset owners with internally managed portfolios seeking to engage directly with publicly traded asset management firms.
The Alliance designed the principles in close collaboration with leaders throughout the asset management industry, as well as fellow investor coalitions.
The Alliance’s working group focused on engagement hosted two workshops to assist Alliance members in integrating the principles into their own proxy voting and asset manager selection, appointment, and monitoring processes.
The document will be updated regularly and seeks to incorporate the evolving best practices outlined by industry leaders and peers such as Climate Action 100+, Transition Pathway Initiative, PRI Making Voting Count, and Say on Climate.
Dave Zellner, Chief Investment Officer at Wespath, said: “Wespath believes that stewardship and active ownership are important tools for investors committed to working towards a sustainable global economy. We are confident these principles will achieve more effective engagement and collaboration with our asset managers to align voting with the goal of transitioning the real economy to net-zero GHGs.”
Johanna Köb, Head of Responsible Investment Zurich Insurance Company, said: “Climate-smart active ownership is an important tool for investors to enable the transition to a carbon neutral economy, which in turn also supports decarbonising investment portfolios. This new guide entails valuable tips to structure net-zero aligned proxy voting and engagement policies. We have recently updated our own proxy voting policy with a view to our net-zero targets, and recommend this guide as a source of inspiration to both asset owners and asset managers.”
Fiona Reynolds, CEO of the Principles for Responsible Investment, said: “If we are to reach net-zero by 2050 then all parts of the value chain need to be pushing in the same direction. Asset Managers have an important role to play in addressing both climate risks and opportunities, however, at the end of the day, they manage money for others and therefore alignment around the long-term interests of their clients and beneficiaries is essential.
“When it comes to climate related proxy voting, asset owners want to ensure that their managers have clear governance, interest alignment, evaluation mechanisms and are transparent about their voting activities.“
This work follows on from the PRI’s recently launched Make Voting Count guidance as part of its Stewardship 2.0 strategy, which is aiming to bring greater transparency and focus to proxy voting outcomes.
“We know that there is far greater scrutiny around net-zero commitments and transparency is required to ensure that we are all walking the talk,” Ms Reynolds said.
Download a copy of the report here.
About the UN-convened Net-Zero Asset Owner Alliance
The 35 members of the UN-convened Net-Zero Asset Owner Alliance have committed i) to transitioning their investment portfolios to net-zero GHG emissions by 2050 consistent with a maximum temperature rise of 1.5°C above pre-industrial levels; ii) to establishing intermediate targets every five years; and iii) to regularly reporting on progress.
Oliver Wagg, Communications Lead, Net-Zero Asset Owner Alliance