Nest, the largest workplace pension scheme in the UK by membership, announced that it has strengthened its voting policy in order to address backtracking on corporate climate commitments, stating that it may now vote against board chairs at companies that have materially scaled back their climate strategies.
According to Nest, the update aligns with its climate change policy, which includes goals to align transition its portfolio to the 1.5C global warming limit, channel more investments to renewables and green technology, and to use stewardship to hold companies accountable on their net zero commitments and push them to transition their business model in line with the goals of the Paris Agreement to protect investments against climate risks.
Diandra Soobiah, Director of Responsible Investment at Nest, said:
“This policy update builds on our existing approach. We have engaged — and where necessary, voted against — companies that weaken their climate plans and do not provide adequate transparency to shareholders. We also expect companies to put material changes to their climate strategy or transition plan to a shareholder vote.”
Under the new policy, Nest said that in cases in which a company has materially scaled back its climate strategy, or part of its strategy, without adequate explanation, it may vote against the chair of the board, and where adjustments are made, the pension scheme expects boards to provide clear and evidence-based justification to shareholders.
For investments in carbon intensive sectors, Nest has a policy to vote against transition plans if they do meet criteria including a commitment to net zero by 2050, short, medium and long-term emissions reduction targets and disclosure of capital expenditures towards carbon-intensive business activities and climate solutions, with the update stating that Nest may vote against the chair of the sustainability committee if the plan is materially scaled back without adequate explanation.
Soobiah added:
“We believe being explicit about how we evaluate these issues supports constructive dialogue with companies. Clearer guidance gives boards greater certainty about how we will approach our voting decisions.
“Our priority remains safeguarding our members’ long-term interests by encouraging responsible management of climate-related risks.”
