Legal & General's (LGEN.L) investment arm (LGIM) has said companies should give the City a say on their plans to tackle climate change.
According to a report in the Sunday Times, the financial services firm has said it wants advisory shareholder votes on proposals to reach net-zero. This would make carbon-friendly initiatives a hot topic at annual meetings.
LGIM has said the initial focus would be on carbon-heavy sectors where changes are needed in order to hit targets set by the Paris Agreement. Aviation, cement, shipping and steel will be on the block.
Only a handful of FTSE 100 (^FTSE) companies have volunteered to give investors a say in these initiatives — pressure from LGIM, one of the most powerful investors in the London market, could make a big difference.
Pressure is growing on big companies to do the right thing. Activist groups such as Follow This already champion shareholder action in terms of pressuring firms to make changes towards a greener future. Follow This is more geared towards putting pressure on oil and energy companies to change than FTSE companies in general.
LGIM named the National Grid (NG.L) as an example of a company that had embraced the idea, as it plans to put its climate change plan to a vote next year at its AGM. It has also said it will provide a yearly update on progress. The company is aiming to cut emissions by 80% by 2030 and 90% by 2040. Net-zero is planned for 2050.
Governments and companies have been under fierce scrutiny in recent years to improve their position as the earth heats up.
A report from the Institute for Public Policy Research (IPPR) in November found that the UK government has not yet delivered the scale of investment needed to ensure a low-carbon future. The research showed that over the course of this parliament the government has committed to investing just 12% of what is needed to meet their net zero emissions target.
The think tank estimated that £33bn ($43.4bn) a year in additional annual investment is needed to meet the net zero target, but only around £4bn annually has so far been committed.
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