European pension funds call for ‘consistency” on net-zero alignment plans

Several European pension funds have joined a group of global investors calling for consistency on corporate net-zero alignment plans and director accountability on climate targets.

Co-ordinated by the Institutional Investors on Climate Change (IIGCC) the group of 53 investors, managing more than USD 14trn of assets are calling for the implementation of new corporate governance measures to ensure shareholders can hold companies to account in achieving ‘net zero emissions commitments’.

The group includes AkademikerPension, AP7, AP2, City of Zurich Pension Fund, ERAFP, Lægernes Pension, Danica Pension and the Environment Agency Pension Fund among other schemes. The call for action follows commitments by at least a fifth of the world’s 2,000 largest public companies, including 52 per cent of the high-emitting companies engaged through the Climate Action 100+ initiative.

However, the lack of standardisation in commitments made to date poses a challenge for investors, who are increasingly looking to align their overall portfolios with net-zero objectives, through initiatives such as Net Zero Asset Managers and the Paris Aligned Investment Initiative, the group said.

In order to achieve this, investors need to ensure that targets set by companies are robust and properly implemented, and that action can be taken where this is not the case. Otherwise, investors are more exposed to climate risk and efforts to transition to a net-zero emissions future could be undermined.

In the statement published today, investors are calling on companies to i) disclose a net-zero transition plan, ii) identify the director responsible for the plan and iii) provide a means for investors to vote annually on progress against the plan.

“In order for investors to do their job as stewards of capital, companies must establish effective mechanisms to demonstrate their net-zero transition plans to shareholders and outline how they will be achieved,” IIGCC chief executive, Stephanie Pfeifer. “It is clear that shareholder voting and director oversight is needed to hold companies to account on their commitments to achieving a net-zero future.”

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