On the go: The Pensions and Lifetime Savings Association is calling on companies to improve their disclosures on climate change, executive remuneration and diversity, as it updates its Stewardship and Voting Guidelines.
The industry body said it will be focusing on ensuring businesses are properly disclosing their footprint on the environment, at a time when “the ongoing climate emergency is paramount to their future success”.
As schemes ramp up their Task Force on Climate-related Financial Disclosures reporting, the PLSA will be seeking references to this framework from companies.
It will also be calling for better disclosure from businesses of their impact on the environment, including Scope 1 and 2 emissions and, where relevant, Scope 3.
On executive remunerations, the PLSA will be encouraging companies to show caution on pay proposals, especially where they have benefited from government support during the pandemic, and in light of the increasing cost of living, it said.
Regarding diversity, and despite seeing a “significant progress”, the industry body will call for a continued focus in this area.
It also noted that FTSE 100 companies that are failing to meet the Parker Review target of “no white boards” by 2021 should expect to see this challenged by investors.
The Stewardship and Voting Guidelines 2022 provide practical guidance for schemes considering how to exercise their vote at annual meetings, and the latest review focused on ensuring they remain relevant amid the challenges posed by the post-Covid-19 world, a fast-moving regulatory environment, and increases in savers’ everyday bills, the PLSA noted.
Nigel Peaple, director of policy and advocacy at the PLSA, said: “Investors recognise how incredibly tough the past two years have been for companies to navigate.
“While being empathetic to these issues, the AGM season is an opportunity for pension scheme trustees and their asset managers to engage with company directors, to revisit environmental, social and governance policies and seize the chance to build back better than before.
“As part of this, we have strengthened the language on expectations on TCFD disclosures, to which all companies should be held accountable,” he continued.
Peaple noted that “while climate change matters remain vital to address, it’s also important to not forget the other aspects of ESG investing”.
“This is not only the right thing to do but also that numerous studies have shown companies that uphold the highest ESG standards tend to financially outperform, adding value to the millions of pension savers they count among their shareholders,” he added.
