Investors are still failing to vote for auditing that ensures a sustainable planet. This is the key finding from Greenpeace’s latest investigation into investor voting at carbon-intensive companies’ 2022 AGMs.
Despite audit firm promises to “align all relevant services and products to achieve net-zero greenhouse gas emissions by 2050 or sooner, scaling and mainstreaming Paris Agreement-alignment into the core of our business” (see https://www.netzeroserviceproviders.com/), the Big Four audit firms continue to sign off accounts that – apart for a few notable exceptions – assume climate change and decarbonisation are immaterial. And yet the climate crisis and the associated global drive towards net zero are reshaping markets, industries and whole economies.
An investor that ignores these profound shifts in the global economic landscape, will likely get caught holding wasting assets.
Investors rely on company accounts to deliver a true and fair view of the economic health of entities – this requires informed forward-looking assumptions that incorporate the real economic impacts of climate change and decarbonisation. Head in the sand accounting should be called out by auditors.
And yet, across all the companies reviewed by Greenpeace – accounts failed to properly reflect climate impact and auditors failed to call this out. In almost all cases, shareholders failed to hold either to account.
This has clear echoes of the years preceding the financial crisis – a collective blind spot for risks building up in banks’ balance sheets. This is what the Financial Stability Board is worrying about. It is time for investors to worry too. Above all, it is time for investors to vote against inadequate accounting and audit.
