1. Here’s One Way Shareholders Can Get Companies to Act on Global Warming

    morningstar.com BoardBlogs
    Here’s One Way Shareholders Can Get Companies to Act on Global Warming

    Here’s one way your fund can start prodding companies to act on climate change: Link executive pay to their plans to reduce emissions that cause global warming, and then vote every year on how well executives are doing on those goals. After the global financial crisis, Congress mandated that shareholders OK the compensation every year for a company’s CEO, CFO, and top three most highly paid officers in a measure called “say on pay.” Shareholders would do this by voting on the company’s proxy ballot , as frequently as once a year. The goal was to correct the ...

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    1. Say on pay is an untapped source of strategic influence for investors and could become an increasingly contended vote as investors making pledges to bring financed emissions down to net zero by 2050 tackle carbon emissions at portfolio companies.
    2. Strong proxy-voting support for climate resolutions puts shareholders on a stronger footing in engagements with corporate management.
    3. Linking leadership incentives to decarbonization targets at the biggest emitters promises the biggest real-world impact for investors.
    4. The say-on-pay vote is a tool that gets directors' attention, and it's something people should be thinking about.
    5. We don't know how public policy will play out, but we discuss executive compensation and how net-zero goals can be integrated into pay or performance.
    6. If you want a company that meets its greenhouse gas emissions targets, you have to pay them to meet those targets.

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