Audit briefing: Falling Short

Shareholder votes on audit and climate risk


This briefing is a review of the 2022 voting records of 50 leading global investors on key accounting-related votes at 17 companies that leading investors warned needed to improve their climate-related accounting. Despite the increasing prominence of the issue and pledges by investors to use their voting power, relevant votes continue to be waved through by the vast majority of shareholders at companies identified as having inadequate disclosures.

The failure to integrate material climate risks including transition risk into company accounts should concern both investors and regulators given the likelihood of both building up stranded assets risk and undermining confidence in company accounts.

Only one of the 38 votes on the appointment of auditors, audit committee chairs, and financial statements that took place at the 2022 AGMs of the 17 high carbon companies received less than 90% approval.

This briefing unfortunately confirms the patterns of inadequate investor scrutiny that we identified last year. Even when focusing the analysis on companies investors themselves have identified as priorities for escalated voting activity, the world’s leading investors continued to rubberstamp inadequate financial disclosures. We urge regulators to demand more of both investors and companies on this issue. The UK Government should step in and create a duty for companies and auditors to ensure climate risk is reflected in financial statements.

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