Inaction now threatens the very existence of human society: the Intergovernmental Panel on Climate Change (IPCC) warns that averting the most serious consequences of climate change requires a radical overhaul of the global economy, while the OECD argues biodiversity loss is among the top global risks to society3. [...] Indeed, in 2019 the directors of BP, Chevron, ExxonMobil, Shell and Total were all (re-)elected with on average 97% support from shareholders, despite these companies being some of the largest emitting companies on earth and lacking plans to transition to a well-below 2°C world8. [...] However, climate change is a systemic risk that has the potential to negatively impact the entire portfolio value of investors, and as such the climate performance and greenhouse gas emissions of individual companies can have an impact on the value of other investments as well. [...] However, given the systemic risk posed by climate change and the failure of many companies to align their operations with the 1.5C goal of the Paris agreement, this policy should be applied as broadly as warranted by the consideration of the factors set out below rather than arbitrarily limited to a small number of directors each year. [...] The failure to prepare for these foreseeable future risks is a material governance failure and waiting until such risks are fully realised to hold boards accountable for risk oversight of these issues is not in the best interests of shareholders.
Authors
- Pages
- 4
- Published in
- United Kingdom
