UK master trust NEST has updated its voting policy to make clear it may vote against a board chair where a company materially scales back its climate strategy without adequate explanation, including when boards block shareholder resolutions.
The £60bn (€68.9bn) pension fund, which has more members than any other workplace scheme in the UK, said the update clarifies how it evaluates significant changes to climate-related targets, investment plans or transition timelines, and reinforces its expectation that companies maintain credible and transparent transition strategies.
Speaking to IPE, a NEST spokesperson said: “We have a sanction in our policy that we will consider voting against the re-election for the chair where the company has not sufficiently acknowledged and outlined how they will address shareholder dissent. This could include where the board has decided to block a resolution.”
The comments follow accusations by a group of UK pension funds and other major investors managing more than €1trn in assets that BP undermined shareholder rights by refusing to circulate a climate resolution ahead of its annual general meeting (AGM).
Climate backtracking
“As one example, we’ve seen BP change its strategy twice without bringing it back to a shareholder vote, using arguments including a greater focus on capital discipline which we didn’t think were convincing,” NEST told IPE.
Where adjustments are made, boards are expected to provide clear, evidence-based justification to shareholders, NEST added.
Diandra Soobiah, director of responsible investment at NEST, said: “This policy update builds on our existing approach. We have engaged with, and where necessary voted against, companies that weaken their climate plans and do not provide adequate transparency to shareholders. We also expect companies to put material changes to their climate strategy or transition plan to a shareholder vote.”
Soobiah added that the fund believes being explicit about how it evaluates these issues supports constructive dialogue with companies.
“Clearer guidance gives boards greater certainty about how we will approach our voting decisions. Our priority remains safeguarding our members’ long-term interests by encouraging responsible management of climate-related risks,” she added.
Last year, BP announced a “fundamental reset” of its strategy, saying it would scale back its efforts to support the low-carbon energy transition in favour of growing its fossil fuel business.
As a result, investors, including NEST, called for a ‘Say on Climate’ vote on BP’s revised transition strategy. The company did not include such a vote at its 2025 AGM, resulting in a significant protest vote against the chair by shareholders.
Strong signal
Speaking to IPE, Lindsey Stewart, director of institutional investor content at Morningstar, said this type of policy detail sends a clear signal to pension members and other investors about the escalation an asset owner may pursue if expectations are not met.
“I get the impression that the appetite of UK pension funds to take this kind of action on climate has not diminished, and given all that’s been going on with shareholder proposals, it’s likely we’ll see more direct expressions of dissent against board directors by UK pension funds, as well as sustainability-conscious asset managers, in the near future,” Stewart said.
