Say on Climate: Mechanics, Outcomes, and Investor Perspectives
What Is Say on Climate and Does It Work?
Say on Climate is a relatively recent innovation in ESG shareholder engagement: an advisory shareholder vote on a company's climate transition plan, analogous to say-on-pay votes on executive compensation. The concept was developed by Sarasin & Partners (UK) and the Say on Climate initiative around 2020–2021, with the core argument that shareholders should have the same advisory authority over climate strategy as they have over executive pay — given the financial materiality of climate risk and the long-term implications of corporate climate commitments. Several major companies adopted Say on Climate processes voluntarily; investors have also filed formal resolutions requesting adoption at resistant companies.
Say on Climate is an advisory shareholder vote on a company's climate transition plan, designed to give institutional investors formal input on corporate climate strategy — distinct from resolutions requesting specific climate actions, it creates a structured feedback mechanism for evaluating the quality and credibility of company-prepared plans.
Key Takeaways
- Say on Climate gives shareholders an advisory vote on management-prepared climate plans, not a binding mandate to adopt specific targets.
- Early adopters (Shell, BP, HSBC, Nestlé, Glencore) typically received 80–90% support for their plans — reflecting shareholder approval of the concept and qualified approval of the plans.
- Vote outcomes of 70%+ for management plans do not mean shareholders unconditionally endorse the plan; they may reflect approval of general direction while expecting continued improvement.
- Critical perspectives argue that Say on Climate's impact depends entirely on plan quality and enforcement mechanisms — without consequences for plan failure, the vote has limited teeth.
- The initiative has been less successful in the US than in the UK/Europe; SEC Rule 14a-8 restrictions have complicated filing voluntary Say on Climate resolutions at US companies.
How Say on Climate Works
Voluntary Adoption
Companies voluntarily committing to Say on Climate put their climate transition plan to an advisory vote at the AGM. The process:
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Company prepares a climate transition plan covering:
- GHG reduction targets (short-term milestones, long-term net-zero or carbon-neutral goal)
- Capital expenditure alignment with those targets
- Physical and transition risk assessment
- Governance of climate strategy
- Progress reporting and metrics
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Plan is published in advance of the AGM (typically in the proxy statement or a standalone climate transition plan document)
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Shareholders vote at the AGM — either:
- Simple advisory vote (shareholders approve or disapprove the plan)
- Management resolution (management puts the plan to a vote)
- Shareholder resolution (investor coalition puts a Say on Climate resolution on the ballot)
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Results are announced publicly
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Company engages with shareholders following the vote, particularly if significant opposition emerged
Resolution-Filed Say on Climate
At companies not voluntarily adopting Say on Climate, investors file formal shareholder resolutions requesting:
- Annual advisory vote on the company's climate transition plan, OR
- Adoption of a climate transition plan meeting specific standards for annual shareholder vote
Key Adopters and Outcomes
Shell (Netherlands, oil and gas): First major energy company to adopt Say on Climate (2021). Shell's climate plan received 89% support in 2021. In 2022, a Dutch court ordered Shell to cut emissions more aggressively than its plan — creating a legal pressure context independent of the vote.
BP (UK, oil and gas): Adopted Say on Climate in 2022. BP's climate plan received 84.8% support in 2022. In 2023, BP modified its climate ambitions downward — shareholders who voted 85% for the previous plan faced a more diluted subsequent commitment.
HSBC (UK, banking): Climate plan received 86% support in 2022. Engaged on fossil fuel financing commitments.
Nestlé (Switzerland, consumer goods): 97% support for climate plan in 2022 — reflecting high confidence in plan quality.
Glencore (UK/Switzerland, mining): Received 94% support in 2022; used to address coal transition planning specifically.
Critical Perspectives
The "Rubber Stamp" Critique
Critics argue Say on Climate votes have functioned as rubber stamps — with 80–90% support becoming the baseline regardless of plan quality. If shareholders automatically approve whatever management presents, the mechanism adds little accountability.
Counter-argument: Companies with weaker plans have received lower support (some companies in 60–70% range), signaling investor concern. The mechanism creates a floor of expected disclosure and engagement even if not always a ceiling of ambition.
The Plan Quality Problem
Say on Climate votes are on company-prepared plans. The quality of those plans varies:
- Some plans (BP, Shell) have been scrutinized by independent analysts as insufficient for Paris alignment
- Others (Nestlé) have received high ratings from independent climate assessors
Without independent assessment of plan credibility incorporated into the voting recommendation, shareholders are largely voting on disclosure quality rather than climate ambition quality.
The Enforcement Gap
Advisory votes have no legal enforcement. If a company receives 85% approval for a plan and then significantly retreats from that plan (as BP did in 2023), shareholders have no direct legal remedy through the voting mechanism. The enforcement mechanism is reputational and through subsequent voting — the company faces accountability at the next year's vote.
US Context
Say on Climate adoption has been more limited in the US than in Europe:
SEC Rule 14a-8 constraints: The SEC has allowed companies to exclude some Say on Climate proposals as "ordinary business" matters — claiming climate strategy is a management decision exempt from shareholder vote.
Political context: The anti-ESG environment has made US companies more resistant to ESG-related governance innovations.
Institutional investor ambivalence: Some major US institutional investors (including Vanguard historically) have been lukewarm on Say on Climate, preferring bilateral engagement to formal voting mechanisms.
Common Mistakes
Treating Say on Climate approval as endorsement of plan adequacy. A company receiving 85% Say on Climate support has not necessarily been certified as Paris-aligned — it may simply have disclosed more than peers and engaged well with investors.
Assuming Say on Climate will discipline plan retreat. BP's 2023 climate ambition reduction following an 84.8% 2022 vote demonstrates that the advisory mechanism does not prevent management from modifying plans between annual votes.
Treating non-adoption as resistance to climate action. Some companies have not adopted Say on Climate because they prefer other engagement mechanisms (bilateral engagement, TCFD disclosure, CA100+ engagement) rather than formal advisory votes.
Related Concepts
Summary
Say on Climate gives shareholders advisory votes on company climate transition plans — voluntary at early adopters (Shell, BP, HSBC, Nestlé) and pursued through formal resolutions at resistant companies. Early votes received 80–90% support, reflecting shareholder approval of the concept alongside varied plan quality assessments. Critical perspectives note the potential for rubber stamping, plan quality variation, and the advisory mechanism's lack of enforcement when companies retreat from commitments. US adoption has lagged Europe due to regulatory constraints and political context. The mechanism's ultimate value depends on whether vote outcomes translate into accountability for plan quality and implementation — which requires sustained institutional investor follow-through.