Two-thirds of investors say the quality of climate transition plans is considered when it comes to voting on the re-election of board directors.

The news comes in an annual survey of investors conducted by the proxy advisor Glass Lewis as it develops voting policy.

When asked if a company’s transition plans were a factor in AGM votes on directors, 68.4% of investors and 52.4% of non-investors said they factored them in.

One respondent told Glass Lewis: “Director votes should focus on the directors’ expertise to oversee climate transition strategies and related risks and opportunities.”

The news comes even as the COP29 climate deal reached in Baku to help developing countries attracts criticism for being inadequate.

Other research shows that there is boardroom unity around the world on sustainability, but CEOs and non-executives doubt each other’s ability to manage in the current business environment.

Companies are also facing more litigation for their policy on climate change, with cases against corporates growing by one-third in 2023 alone.

The Glass Lewis research holds some hope that investors are focused on climate fears. However, the figures still show almost one-third of investors are unwilling to use director elections as a lever for improved climate transition plans.

Glass Lewis, writing for the Harvard Law School governance blog, says some investors only consider transition plans when voting at “certain companies” or if a company “has not been responsive to discussions” on climate change.

A stark divide appears to be opening up between North America and Europe when it comes to voting against non-financial reporting.

More than one in 10 North American investors say they would never vote against a non-financial report. No European investors would say the same.

Among the investors polled, the biggest reason for voting against non-financial reporting is “material concerns” about the completeness or quality of the reporting.

The next biggest reason is failure to provide a “sufficient response” to a “material ESG controversy”.

Glass Lewis’s research also reveals some interesting trends emerging in sustainability audits. In jurisdictions where they are mandatory, only 26.4% of investors believe it is “reasonable” that statutory auditors carry out the sustainability audit for all companies. For non-investors, however, the figure is 43.8%.

There is other news for board members. More than three-quarters of investors believe poor performance by a director at one company is relevant to their re-election at other boards where they serve.

This is particularly relevant where investors perceive “poor strategic decisions or oversight” or “poor responsiveness to shareholders”.

There is also subtle divergence over the governance regime companies should adhere to. Glass Lewis finds most non-investors, 49.6%, believe it should be the “country of incorporation”. However, the bigger proportion of investors, 41.8%, say it should be the “the regime with the higher standards”.

One investor told the proxy advisors: “Multijurisdictional companies should ideally be held to the governance regime with the higher standards, as this promotes a ‘race to the top’ in terms of corporate governance, transparency and accountability.”