ISS has taken a step forward in explicitly recognising that directors must be held accountable for climate misconduct.
What is troubling about their announcement, however, is the qualifications applied to it. First, it only applies in ‘extraordinary circumstances’. Second, ISS say they will only ‘consider recommending a vote against’ directors where there are material failures of governance linked to climate change.
As a planet, we face an existential threat. And yet ISS is wringing its hands over whether or not to suggest voting against directors that have demonstrably failed to act. At the same time it routinely recommends votes against directors for a range of governance matters from poorly constructed remuneration, a lack of independence, or inadequate diversity. These are all important issues. But if we don’t tackle the climate crisis, much else becomes secondary.
The most important take-away from this announcement is how out of step ISS is. It is time the world’s largest proxy agency set out its own commitment to align all its voting recommendations – not just for directors but also auditors, remuneration, capital distributions, etc with the Paris goals. It is time they understood that we are now in ‘extraordinary circumstances’.