Ontario Teachers’ Pension Plan (OTPP), one of Canada’s largest investors, announced the release of its 2024 Proxy Voting Guidelines, with strengthened expectations for company boards on climate oversight.
One of the key changes to OTPP’s proxy voting guidelines this year includes the expectations for board audit committees, specifically related to climate change. According to OTPP, audit committees are coming under increasing scrutiny on climate matters, with shareholder expectations for “companies to clearly communicate and measure their climate commitments.”
New expectations outlined in the guidelines include setting climate competency as a core requirement for audit committee members and for members to take steps to gain climate literacy where gaps exist, and for directors to evaluate the impact of climate when reviewing budgets, performance and M&A activity, as well as for members to understand environmentalEnvironmental criteria consider how a company performs as a steward of nature. impact and related reporting requirements for their companies.
The changes add to OTPP’s prior climate-related guidelines, including expectations for companies to report based on the International Sustainability Standards Board’s (ISSB) SASB standards and the TCFD recommendations, disclosure of targets and metrics and performance on managing climate risk, and the performance of credible scenario analysis in order to enable climate risk oversight assessment.
Anna Murray, Senior Managing Director and Global Head of Sustainable Investing at OTPP, said:
“This year we are emphasizing the role of the Audit Committee in managing climate change risks. We believe their oversight will play an increasingly crucial role in helping companies navigate the challenges presented by climate change.”