Say on Climate is a shareholder voting mechanism allowing investors to express non-binding support or opposition to corporate climate strategies. Adopted by institutional investors including CalPERS and the UK's Local Authority Pension Fund Forum, it enables stewardship without direct board authority.
What Is Say on Climate?
Say on Climate is a shareholder voting mechanism allowing institutional investors to express non-binding support or opposition to corporate climate strategies. Unlike traditional proxy contests that focus on board composition or compensation, Say on Climate targets the substance of a company's climate transition plan—emissions reduction targets, capital allocation, governance structures, and disclosure quality. The vote is advisory, meaning boards retain legal authority to ignore it, but the mechanism creates reputational and commercial pressure when significant investor blocs (typically 20%+) oppose a company's climate approach.
The mechanism emerged from fiduciary capitalism frameworks in which long-term institutional investors—pension funds, sovereign wealth funds, and endowments—treat climate-related financial risk as a material fiduciary concern. By formalizing investor input on climate strategy, Say on Climate bridges the gap between engagement (private dialogue) and divestment (exit), positioning itself as a governance tool rather than activism.
How Did Say on Climate Originate?
The concept crystallized in 2020-2021 through coordination among European asset owners and the Ceres Investor Network, a coalition representing over $60 trillion in global assets. The UK's Local Authority Pension Fund Forum, which manages approximately £350 billion ($440 billion USD equivalent) across 80+ local authority funds, led early shareholder resolutions demanding climate strategy votes at Shell, HSBC, and other FTSE constituents.
In May 2021, Shell faced a binding "Vote Against" resolution on its energy transition strategy—unprecedented in Dutch corporate governance. Although the resolution was technically non-binding under Dutch law, 96% of voting shareholders opposed Shell's climate plan, forcing management to acknowledge the result and revise strategy disclosures. This watershed moment demonstrated that institutional investor coordination could move corporate needle even without legal enforcement mechanisms.
Canada Pension Plan Investment Board (CPPIB, $616 billion AUM) and CalPERS ($440 billion AUM) followed suit in 2021-2022, filing Say on Climate proposals at US oil majors and diversified energy firms. By 2023, the mechanism had spread to banking, utilities, and diversified industrials across North America, Europe, and selected Asia-Pacific markets.
What Is the Governance Structure Behind Say on Climate?
Say on Climate resolutions typically emerge through coordinated investor coalitions rather than individual fund action. The Ceres Investor Network provides research and coordination. In Europe, the Local Authority Pension Fund Forum convenes dozens of public pension funds. In North America, the Interfaith Center on Corporate Responsibility and As You Sow facilitate investor networks.
A Say on Climate resolution follows standard proxy mechanics: institutional investors file a shareholder proposal, management drafts a response, proxy advisory firms (Institutional Shareholder Services and Glass Lewis) issue recommendations, and shareholders vote at the annual meeting. The resolution text varies but typically asks shareholders to vote "For" or "Against" the company's climate transition plan, or to request enhanced disclosure.
Where most Say on Climate votes differ from traditional proxy resolutions is in framing. Rather than demanding board removal or policy specificity, resolutions ask shareholders to affirm strategic direction. This positions Say on Climate as a governance health check rather than a punitive mechanism.
What Role Does Climate Disclosure Play?
Say on Climate operates within the regulatory architecture of climate disclosure frameworks. The Task Force on Climate-related Financial Disclosures (TCFD) provided the technical lingua franca, requiring companies to disclose governance structures, strategy scenarios (including 1.5°C pathways), and emissions metrics. The SEC's Climate Disclosure Rule (finalized in 2024) mandates Scope 1 and 2 emissions for US public companies, with Scope 3 phased implementation.
Institutional investors use these disclosures to evaluate Say on Climate resolutions. When companies fail to provide adequate climate scenario analysis or lack emissions reduction targets, institutional investors cite disclosure gaps in shareholder proposals. CalPERS, for example, has filed Say on Climate resolutions citing insufficient net-zero pathway detail and misalignment with 1.5°C science.
The mechanism creates a feedback loop: Say on Climate votes pressure companies to strengthen climate disclosure, which in turn allows institutional investors to make more informed stewardship decisions. This reinforces the concept of What Is a Universal Asset Owner?, in which long-term capital allocators treat stewardship and disclosure quality as fiduciary responsibilities.
How Do Institutional Investors Deploy Say on Climate?
Deployment varies by asset class and investor type. Public equity allocators use it most frequently. CalPERS and the UK Local Authority Pension Fund Forum have filed multiple resolutions at energy majors (Shell, BP, Equinor, ExxonMobil) and financial institutions (HSBC, Barclays, Lloyds). The mechanism is less common in private markets, where governance structures and exit timelines differ.
Asset owners typically coordinate through investor coalitions to amplify pressure. A single institutional investor's Say on Climate proposal rarely crosses 20%+ voting thresholds. But coordinated filings—often supported by tens of billions in aggregate AUM—force proxy advisory firm endorsements and retail shareholder attention.
Some institutional investors treat Say on Climate as a precursor to formal engagement escalation. If a Say on Climate vote receives strong support (>30%) but management ignores it, investors may escalate to director election campaigns or divestment. Others view it as the primary stewardship tool, using engagement dialogues to shape company positions before the vote.
What Are Typical Outcomes of Say on Climate Votes?
Outcome quality varies. At Shell (2021), 96% shareholder opposition to the energy transition strategy prompted management to commission independent climate review and strengthen net-zero commitments. At Unilever (2023), investors opposed the board's climate strategy in a non-binding vote, citing insufficient emissions reductions for Scope 3 (supply chain) emissions. Management subsequently enhanced disclosure and engaged investor coalition representatives.
However, outcomes are not universally strong. At some companies, management acknowledges the vote but makes minimal strategy changes, relying on the advisory (non-binding) status to defer accountability. BP and Equinor have received Say on Climate votes with mixed investor support but proceeded with existing strategy frameworks.
The absence of binding consequences distinguishes Say on Climate from statutory "say on pay" votes common in US and UK governance. A negative Say on Climate vote does not trigger automatic board removal or management replacement. Instead, it operates as a signal to capital markets, influencing analyst coverage, credit spreads, and investor allocation decisions.
How Does Say on Climate Relate to Fiduciary Duty?
Institutional investors justify Say on Climate campaigns through fiduciary duty arguments. Climate-related financial risk—stranded assets, regulatory shifts, supply chain disruption—is material to long-term returns. The UN Principles for Responsible Investment and global pension fund guidelines (including the Australian Prudential Regulation Authority) treat climate risk assessment as a fiduciary requirement.
Court cases in the Netherlands and Germany (2019-2021) explicitly linked fiduciary duty to climate risk oversight. Dutch courts found that pension funds and asset owners have a legal obligation to consider climate risk in investment decisions. This jurisprudence gives institutional investors legal foundation to file Say on Climate resolutions as fiduciary acts rather than activism.
The concept also aligns with emerging global standards. The ISSB (International Sustainability Standards Board) issued climate disclosure standards in 2023 that institutionalize climate reporting as a baseline governance expectation. Institutional investors argue that Say on Climate formalizes investor input on how companies operationalize these standards.
What Is the Geographic Variation in Say on Climate Adoption?
European asset owners lead adoption. UK Local Authority Pension Fund Forum resolutions have targeted Shell, HSBC, Unilever, and Barclays—all major capitalisations. Scandinavian pension funds (particularly Norwegian Government Pension Fund Global, $1.3 trillion AUM) have backed Say on Climate campaigns, though often through engagement rather than formal resolutions.
US adoption accelerates but remains concentrated in energy and finance sectors. CalPERS, one of North America's largest pension funds, has filed multiple Say on Climate proposals at US oil majors. Canadian pension funds (CPPIB and Ontario Teachers' Pension Plan) have engaged but filed fewer formal resolutions compared to European counterparts.
Asia-Pacific adoption is nascent. Mandatory climate disclosure requirements in Australia and Singapore are creating conditions for institutional investor Say on Climate campaigns, but adoption lags North America and Europe by 2-3 years. Japanese pension funds have engaged on climate strategy but not through formal Say on Climate votes, partly due to lower institutional investor activism culture.
What Are the Limitations of Say on Climate?
Say on Climate lacks binding enforcement. A company can receive 70%+ shareholder opposition and legally proceed unchanged. Without regulatory mandate or contractual consequence, the mechanism depends on reputational damage and investor voice to drive compliance. This creates a ceiling on effectiveness when boards prioritize short-term returns over long-term stakeholder alignment.
Second, Say on Climate applies primarily to public companies in developed markets. Private equity, infrastructure, and unlisted asset classes—where institutional investors allocate trillions—fall outside the mechanism. This creates a governance gap in private credit and private equity structures, where climate risk stewardship relies on contractual terms and fund manager discretion.
Third, the mechanism does not address systemic climate risk or just transition concerns. A company can pass a Say on Climate vote while cutting jobs or externalizing climate costs to suppliers. Institutional investors increasingly supplement Say on Climate with complementary stewardship tools—engagement on supply chain climate risk, just transition frameworks, and biodiversity risk.
What Does Say on Climate Signal About Fiduciary Capitalism?
Say on Climate operationalizes the principle that long-term capital allocators have fiduciary and governance responsibilities beyond portfolio optimization. By formalizing investor input on climate strategy, the mechanism asserts that stewardship—not exit—is the primary tool for large institutional investors managing universal portfolios.
This reflects the broader concept of fiduciary capitalism, in which institutional investors act as agents for ultimate beneficiaries (retirees, members, future generations) and hold portfolio companies accountable to long-term value creation rather than quarterly earnings. Say on Climate votes create visible, measurable evidence of this accountability.
The mechanism also illustrates how Universal Asset Owners approach governance. Universal asset owners hold diversified, long-duration portfolios spanning developed markets and multiple asset classes. They cannot exit climate risk through diversification—it is systemic. Say on Climate becomes a rational stewardship response, enabling universal asset owners to shape climate transition pathways across their portfolios.
Implications for Long-Term Allocators
Institutional investors should expect Say on Climate to become a routine stewardship tool, particularly in energy, utilities, financials, and materials sectors. As climate disclosure standards harden (via ISSB and SEC rules), investor expectations for climate strategy quality will rise. Say on Climate votes will intensify where company disclosure remains weak or emissions reduction targets misalign with science-based pathways.
Asset owners should also prepare for escalation scenarios. A negative Say on Climate vote may presage engagement campaigns, director election challenges, or divestment decisions. Conversely, strong shareholder support for climate strategy can de-escalate tensions and support management credibility in capital markets.
For asset managers and investment consultants, Say on Climate represents a material governance signal. Institutional client bases increasingly expect climate risk stewardship as a core service offering. Managers should develop frameworks linking climate disclosure quality to engagement intensity and allocation decisions.
Finally, institutional investors should recognize Say on Climate's limitations. The mechanism does not address systemic climate transition risk, does not apply to private markets, and carries no binding enforcement. It should complement rather than replace comprehensive climate risk frameworks spanning portfolio construction, fund finance terms, manager selection, and proxy voting integration.