ASX companies in SSGA's sights over climate disclosure

State Street Global Advisors (SSGA) has informed ASX-listed companies that they expect companies to make climate-related disclosures in line with the Task Force for Climate-related Financial Disclosures (TCFD) framework, or face votes against directors.

SSGA president and CEO Cyrus Taraporevala has issued his annual proxy letter to portfolio companies around the world, outlining the global fund manager's main areas of stewardship focus in 2022. The key issues outlined in the letter relate to the supporting "the acceleration of the systemic transformations underway in climate change," and increasing and enhancing diversity on boards and in workforces.

"We expect companies in major indices in the US, Canada, UK, Europe, and Australia to align with climate-related disclosures requested by TCFD, including whether the company discloses: (1) board oversight of climate-related risks and opportunities; (2) total direct and indirect GHG emissions ("Scope 1" and "Scope 2" emissions); and (3) targets for reducing GHG emissions," Taraporevala said in the letter. "... We will start taking voting action against directors across applicable indices should companies not meet these disclosure expectations."

Further, SSGA will expect all portfolio companies around the world to have at least one woman on their board, a standard that has previously only applied to "major indices in select markets around the world."

Additionally, beginning with the 2023 proxy season, SSGA will expect ASX-listed companies, along with companies in the US, Canada, UK and Europe, to have at least 30% women directors.

"We expect this change to result in boards with 3 or 4 female directors on average and as many as 3,000-to-4,000 additional female directors across covered indices," Taraporevala said. "In each instance, we are prepared to vote against the Chair of the board's Nominating Committee or the board leader should a company fail to meet these expectations."

SSGA will also expand their focus on diversity to include race and ethnicity. In the 2022 proxy voting season, SSGA will take voting action against responsible directors in S&P500 and FTSE100 companies that do not have a person of colour on their board, if they do not disclose the racial and ethnic diversity of their boards, and if companies in the S&P 500 do not disclose their EEO-1 reports.

"We will continue to encourage boards to have effective oversight of diversity, equity, and inclusion more broadly, beyond the board," Taraporevala said. "...With human capital management now widely seen as both a risk and opportunity for employers in the wake of the pandemic, we have also published guidance for effective disclosures and practices."

Read more: State Street Global AdvisorsTask Force for Climate-related Financial DisclosuresCyrus Taraporevala