Following proxy season, the stewardship team turned its attention in the final quarter of the year to writing to Chairs or Senior Independent Directors of our key engagement priorities to explain our votes and set out key expectations for the year ahead. We sent over 50 post-proxy letters this year.
For our deeper engagements, we have an opportunity to escalate concerns ahead of upcoming Annual General Meetings. Key highlights include ongoing efforts to ensure climate risk is reflected in companies’ financial statements, a focus on human and labour rights and pressing for meaningful board-level accountability.
Against a backdrop of worsening evidence of climate change, we published a statement reaffirming our commitment to support a net-zero transition.
Climate-aware financial reporting: progress but not yet routine
In December, we worked with Institutional Investors Group on Climate Change (IIGCC) to relaunch the Investor Expectations for Climate-Aware Accounting.[1] Originally published in 2020, the revised framework reflects evolving regulatory expectations and market norms. It reiterates a critical principle: companies must embed material climate risks into their financial statements. Without this, capital markets risk mispricing physical and transition risk, overstating asset values and obscuring liabilities tied to outdated business models.
The update coincides with the International Accounting Standards Board’s release of formal “Illustrative Examples” clarifying how climate considerations should be reflected under ex sting IFRS rules.
These efforts by standard setters and investors are needed because implementation remains mixed. Our engagement with HSBC and ING highlights this gap. Both banks have made net-zero commitments, yet still treat climate as immaterial within their expected credit loss estimates. We continue to press for forward-looking assumptions that better reflect real-world risks and deliver meaningful change.
Reaffirming a Paris-aligned path: our approach to net zero
In parallel with this accounting work, we have reaffirmed our broader commitment to net-zero
investing. Since the publication of our Net Zero Action Plan in 2022 and its update in 2024, we have embedded climate alignment into our investment process and stewardship.
Our approach is engagement-led and focused on driving meaningful change in companies’ strategy, capital allocation and governance.
The geopolitical context has become more complex, with increased polarisation around climate action in some jurisdictions. Nonetheless, the urgency of climate risk has only intensified. In 2024, global temperatures exceeded 1.5°C above pre-industrial levels for the first full calendar year, a signal that the window for limiting warming is narrowing.
Against this backdrop, we remain firmly committed to supporting the goals of the Paris Agreement, while at the same time recognising the need to build resilience in our holdings to the increasingly material physical consequences.
[1] https://sarasinandpartners.com/stewardship-post/investors-call-for-clearer-integration-of-climaterisks-in-financial-reporting/
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