July 23, 2021
Companies are beginning to feel the pressure from investors to take tougher action in handling climate-related risks, threatening shareholder value for those who aren’t acting. Consequently, some companies are looking to the Say on Climate initiative to help manage their transition to net zero emissions.
Speaking to The Globe and Mail, partner and co-head of the firm’s Capital Markets practice Rima Ramchandani noted that “whether Say on Climate becomes as commonplace as Say on Pay will depend on how companies take the initiative to report details of emissions and plan to reduce them, and how policy changes will affect financial results as the country moves closer to its net-zero greenhouse gas target.”
In keeping with the Say on Pay model, an initiative that provides transparency into the salaries and bonuses of top managers, non-binding Say on Climate votes are starting to be included in annual meeting agendas. However, Rima pointed out that we still need to overcome some challenges before we can expect to see the widespread adoption of climate votes.
“The Say on Pay initiative was really about trying to create some accountability for the pay practices that boards were putting in place,” Rima said.
“Climate change is a bit different because there’s still a dearth of disclosure. We’re not even at the point where there’s a market standard for public disclosure in this space.”
Rima added that while it’s not clear how pervasive the climate votes will become, they can help companies skirt the nuclear option of a proxy contest.
“Putting the climate action plan squarely in front of investors and asking for this non-binding advisory vote does sort of take the steam out of some of those proposals,” she said.
You can read more about our Board Advisory and Governance work on our practice page.