Kingspan faces pushback on first Iseq ‘say on climate’ vote

Insulation maker Kingspan’s shareholders have been urged by a leading investor advisory firm to vote against the first climate action resolution to be put forward by an Iseq company at an annual general meeting.

Glass Lewis, a proxy advisory company that makes voting recommendations to large investment groups, said Kingspan’s “Planet Passionate” plan, which sets out a series of carbon, energy, product circularity and water usage targets over 10 years, does not appear to have explicit board oversight.

The blueprint, which aims to cut Kingspan’s direct greenhouse gas emissions and indirect emissions from the generation of purchased energy by 90 per cent by the end of the decade, “provides very little information on the results of its scenario analysis”, Glass Lewis said. The firm also took issue with a “lack of disclosure concerning how the board intends to use and interpret this vote in its strategy-setting process”.

Kingspan has rejected Glass Lewis's analysis, saying sustainability has been "fully integrated" into its medium-term strategy, which the board is ultimately responsible for approving.

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It added that the vote was just one of the company’s ways of enhancing engagement with shareholders on its sustainability strategy.

"Our advisory resolution on our Planet Passionate Report is intended to provide shareholders with the opportunity to review progress against our sustainability strategy and provide feedback to the Kingspan board that complements the regular engagement throughout the course of the year," Kingspan's company secretary, Lorcan Dowd, said in a shareholder communication this week, reacting to the proxy advisory firm's views.

“We believe Glass Lewis’s recommendation displays a misunderstanding of the resolution proposed and of Kingspan’s approach to sustainability.”

Mr Dowd added: “As a company who [sic] manufactures solutions which enable climate change mitigation, sustainability is fundamental to our value proposition to our customers. Sustainability is therefore a key pillar of our strategy and not something which is managed or engaged on as a separate workstream.”

First to adopt

Kingspan is the first Irish company to adopt an emerging international trend at annual general meetings (agms) in recent years, where shareholders are given a vote on corporations’ climate action plans – or what are known as “say on climate” resolutions.

Early adopters include Spanish infrastructure group Ferrovial, consumer goods giants Unilever and Nestlé, oil companies Shell and TotalEnergies.

Global institutional investors, including BlackRock, Fidelity, Vanguard, and State Street, are focusing increasingly on environmental, social and governance (ESG) issues at companies in which they are invested.

However, the UN-supported Principles for Responsible Investment organisation argued recently that the benefits of "say on climate" resolutions "seem to be outweighed by the risks and potential unintended consequences". These include shareholders rubber-stamping plans that are unfit to limit global warming to 1.5 degrees Celsius, and the possibility of companies' climate ambitions being restricted by an approved plan.

The Irish Times reported earlier this week that three-quarters of the top 20 companies on the Irish stock market are now linking executive bonuses in some way to ESG targets.

The move, from an almost standstill position two years ago, has been accelerated in the latest slew of annual reports in recent months, as companies prepare to hold in-person agms for the first time since the onset of the Covid-19 pandemic.

Executive variable pay in Ireland and elsewhere remains mainly tied to financial measures such as earnings, return on equity for shareholders and cash flows.