Influencing companies is essential to reflect investors’ own commitments, ensure risk is managed, and fiduciary duty is respected. With the damages generated by unmitigated climate change and nature destruction increasing at a frightening rate, this need has become ever more urgent. However, if asset owners and managers often emphasize their engagement activities on climate, a worrying gap exists between the prominence of engagement in financial discourses and the actions taken by them on this account or their impact on company behavior. Regulation can play a key role in helping to fill this gap. Indeed, current limitations and uncertainties on shareholder rights notably contribute to lower the ability to engage and the effectiveness of this engagement. In this note, Reclaim Finance identified changes to the European Shareholder Rights Directive (SRD) II (Directive 2017/828) to address these barriers including a mandatory “Say on climate”; easier and legally safer submission of resolutions to AGMs; and, increased transparency on the practices of asset managers, asset owners and proxy advisors.
