UK-based investment pool Border to Coast Pensions Partnership has warned that oil majors and banks must make greater progress on climate pledges or risk losing its support on key votes this annual general meeting (AGM) season.
The pool, which is responsible for £38.3bn (€43bn) of investments on behalf of 11 local government pension schemes (LGPS), has strengthened its expectations of the oil and gas and banking sectors to ensure they align with a low-carbon economy and support global net-zero ambitions.
Border to Coast said it will vote against the chair of the board of oil companies that fail to meet one of the first four indicators of the Climate Action 100+ benchmark, which includes short, medium and long-term emission reduction targets.
It will also vote against oil companies scored 3 or lower by the Transition Pathway Initiative (TPI), meaning they have not yet developed a strategic understanding of climate risks and opportunities or integrated this into business strategy and capital expenditure decisions.
Jane Firth, head of responsible investment at Border to Coast, said: “Oil and gas companies are amongst the highest carbon emitters in our portfolios and must do more to address the systemic risk climate change poses.”
She added that as a responsible investor, Border to Coast will continue to “leverage the strength of our collective voice to influence companies, via both voting and engagement, to drive greater progress”.
Alongside voting, Border to Coast will engage oil and gas companies on decarbonisation strategy and capital alignment with net zero goals and will raise concerns regarding the development of new fossil fuel reserves, which are incompatible with limiting global warming to 1.5°C.
It will also vote against the chair of the sustainability committee at banks where the company has materially failed the first four indicators of the TPI framework for the sector.
This includes banks that have not sufficiently integrated targets, decarbonisation strategy, or climate policy engagement into business strategy.
As part of its climate engagement work, Border to Coast is also committed to ensuring a just transition. It recognises that not all countries are at the same stage in their decarbonisation journey and will work to ensure social considerations and risks are integrated into climate strategies.
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