ESG Round-up: Climate-focused shareholder proposals up 88% on last year, says ICCR

The latest developments in sustainable finance: Danish pension fund puts Turkmenistan govvies on exclusion list; UK publishes TCFD guidance

Climate-focused shareholder proposals are up 88% on last year, according to proxy voting guidance for 2022 published by the Interfaith Center on Corporate Responsibility (ICCR), with 103 being filed at companies already this proxy season. The US non-profit also revealed that racial justice and diversity resolutions also increased this year by 60%. The uptick is likely due to the orientation of the US Securities and Exchange Commission (SEC) under the President Biden Administration, which has made it clear that companies will find it difficult to use the same rules previously at the powerful financial regulator to exclude ESG shareholder proposals going forward.   

Industriens Pension added Turkmenistan to its sovereign bonds exclusion list on ESG grounds during 2021, a spokesperson told RI. On why the decision was made, the spokesperson for the Danish pension fund said: “The underlying score for our exclusion decision contains a large number of ESG parameters, which together form the basis of our decision. Thus, it is not a single parameter that is decisive, but a large number of factors that together form the basis of our decision.”   

The EU’s College of Commissioners will tomorrow discuss the sustainable corporate due diligence proposal, it was confirmed at a press conference today. The directive is expected to introduce mandatory human rights and environmental due diligence requirements across the bloc. 

The UK’s Department for Business, Energy and Industrial Strategy has published new guidance for publicly quoted and large private companies on their TCFD reporting. The document provides answers to frequently asked questions and information on interaction with other regulation and frameworks for companies who fall within the scope of the new mandatory regulation. UK-listed companies with more than 500 employees, private companies with 500 employees and more than £500m turnover and large LLPs will be required to produce TCFD reports from April 6th.

The UK government has also announced a series of reforms to the EU’s Solvency II regulation, which regulates insurers in the bloc. Speaking at the Association of British Insurers Annual Dinner, Economic Secretary to the Treasury John Glen said that the regulation had “never worked well for us”. The UK plans to significantly increase flexibility for insurers, allowing them to invest more in long term assets such as infrastructure, he said, as well as simplifying reporting and administrative requirements. A full consultation on the proposals will be published in April. 

Non-financial indicators and specific ESG objectives are only reflected in executive remuneration packages to a very limited extent, according to an analysis by PwC Netherlands of the Dutch responses to PwC’s annual global CEO survey. Nevertheless, PwC’s Janet Visbeen said that ESG performance is “weighing more heavily in the executive remuneration of an increasing number of companies”. “This is in line with the Dutch code for corporate governance, which states that executive pay must focus on the long-term value creation of the company. Moreover, stakeholders – investors, regulators and more generally society – are asking for it.” The analysis also found that 25% of Dutch CEOs have committed to Net Zero, while more than one third saying they are preparing to set such a target.