New Solution to Integrate Climate Performance & Disclosure into Investors’ Bespoke Voting Policies
ROCKVILLE, Md. (December 4, 2019) — Institutional Shareholder Services Inc. (ISS), the leading provider of end-to-end governance and responsible investment solutions to the global financial community, has announced the launch of a new Custom Climate Voting Service, providing investors with the ability to include customizable climate-related factors in their proxy voting policies starting with the 2020 annual meeting season.
The Custom Climate Voting Service will allow institutional investors to easily integrate into their proxy voting decisions their own views on a company’s climate change-related performance and disclosures. Drawing on unique and proprietary climate data and research from ISS ESG, the responsible investment arm of ISS, and based on widely recognized international frameworks such as the Taskforce on Climate-related Financial Disclosures (TCFD), the new service provides a scorecard approach incorporating multiple climate-related factors, giving investors the flexibility to select and weight varied climate change and carbon risk factors reflective of their views and integrate the results into their custom voting policies, providing insightful climate information to help inform their voting decisions.
“Many of our institutional investor clients have expressed interest in having more climate-related information on the companies they invest in, and in particular many want to have more climate-related information that can be directly reflected in their own proprietary voting policies, with the flexibility to customize from a selection of signal indicators,” said Georgina Marshall, ISS’ Global Head of Research. “By leveraging the rich data and expertise of ISS ESG, the Custom Climate Voting Service will enable investors who wish to do so to apply a climate-focused lens to help inform their voting decisions. It will also enable streamlining of those clients’ proxy voting workflows by incorporating relevant information directly as part of the ISS Custom Research service.”
Five key pillars undergird the Custom Climate Voting Service, drawing on data and analytics from ISS ESG:
- Disclosure signals, featuring over 200 climate disclosure indicators, aligned with TCFD disclosure requirements.
- Current climate performance signals, such as a company’s greenhouse gas emission intensity, following the Greenhouse Gas Protocol’s carbon accounting methodology for Scope 1-3 greenhouse gas emissions.
- Future Performance signals drawing from the ISS Carbon Risk Ratings (CRR) and sector-specific controversial business practices.
- Sector-specific materiality, following the ISS Carbon Risk Classification.
- Norms Violations, based on violations of globally recognized climate norms.
The Custom Climate Voting Service coverage universe will initially span approximately 3,400 companies globally, across more than 20 capital market main indices, including: the U.S. (S&P 500 & Russell 1,000); U.K. (FTSE 100); Germany (DAX 30); Australia (ASX 200); France (CAC 40); OMX Copenhagen 20; OMX Stockholm 30; and the STOXX Europe 600.
ISS is also enhancing its proxy research reports for all companies in the coverage universe of the Custom Climate Voting Service to include ISS’ Climate Awareness Scorecard, which reflects data and reporting on a company’s climate change-related disclosures and performance. The Scorecard uses a range of climate-related factors to indicate a company’s disclosure practices and performance record including its industry risk group. Companies are evaluated on overall disclosure (Governance, Strategy, Risk Management, Metrics & Targets) and performance factors (Norms, GHG Emissions, Performance Ratings).