The United Nations Climate Change Conference of the Parties (COP 26) will bring together governments
and stakeholders to accelerate actions to address the world’s climate crisis and limit global warming to
below 1.5°c by 2100. This ‘Statement of Shared Climate Change Responsibilities’ clarifies the position of
the International Corporate Governance Network (ICGN), a global organisation led by investors
responsible for assets of $59 trillion, regarding priorities for governments and capital market participants.
Scientists have warned that global carbon emissions have risen by 20% over the past five years with
atmospheric temperature increases set to exceed 3°c by 2100 if action is not taken now to wean our
dependence from fossil fuels. We are already experiencing weather extremes with intense temperatures,
rainfall, floods, fire, and drought. United Nations Secretary-General António Guterres has characterized
the most recent report of the Intergovernmental Panel on Climate Change (IPCC) as ‘code red’ for
humanity, asserting that “The alarm bells are deafening, and the evidence is irrefutable.”i
The climate crisis is intricately linked to the biodiversity crisis. In a landmark report, the IPCC and the
Intergovernmental Science Policy Platform on Biodiversity and Ecosystem Services concluded:
“Unprecedented changes in climate and biodiversity, driven by human activities, have combined and
increasingly threaten nature, human lives, livelihoods and well-being around the world. Biodiversity loss
and climate change are both driven by human economic activities and mutually reinforce each other.
Neither will be successfully resolved unless both are tackled together.”ii
The climate and biodiversity crises have exacerbated social inequality by decreasing life expectancies,
disrupting cultures, and impairing the ability of disadvantaged groups to sustain, cope and recover. As the
world’s industrial economy transitions towards net-zero carbon emissions, workers, communities, and
entire regions are in peril of being stranded. This was recognised in the Paris Agreement 2015 stating:
“Actions must take into account the imperatives of a just transition of the workforce and the creation of
decent work and quality jobs in accordance with nationally-defined development opportunities.” iii The
transition to net-zero must be just, inclusive, and effectively address social inequality as a systemic risk.
In this context, the United Nations Sustainable Development Goals (UNSDGs) set out a vision for a
prosperous future that can guide efforts towards a just transition to net-zero carbon emissions. Though
not initially designed for capital markets participants, the UNSDGs define global priorities for public and
private institutions. They provide a strategic vision for the future and can help guide how investors,
companies, and other capital market actors to adapt long-term strategy, enhance risk management
practices and innovate for a just transition towards net zero carbon emissions.
ICGN Recommendations
As we advance towards a just transition, strong corporate governance and investor stewardship,
supported by common sustainability reporting standards and reporting, will be critical. Corporate boards,
management, investors, the auditing profession, standard setters and others have unique responsibilities
to clearly identify challenges, determine solutions, and implement assertive action. This will help ensure
that present and future generations are not unfairly burdened with the negative social, ecological, political,
economic, and financial consequences that result from the climate and biodiversity crises.
It is in this spirit that ICGN recommends the following priorities for consideration:
For Investors:
• Publicly commit to science-based emission reduction targets (including credible interim targets) on how
investment portfolios will achieve net-zero carbon emissions by 2050. Improve the quality of climaterelated public disclosure including investment policies, company engagements, proxy voting and
submissions to authorities. Where feasible, investors should collaborate to leverage influence and align
expectations towards companies and stakeholders.
• Comprehensively integrate financial, natural, and human capital considerations into stewardship
activities across asset classes, investment decision-making, company monitoring, engagement
(individually or collectively) and votingiv
. Stewardship activities should ensure that boards of directors
are held to account for achieving progress towards meeting just transition plans.
• Ensure that contractual terms in mandates between asset owners and asset managers incorporate
stewardship obligations associated with sustainable value creation and positive impact as described in
the ICGN Model Mandatev consistent with just transition concepts.
For Companies:
• Publicly commit to science-based targets (including credible interim targets) on how the business will
adapt to net-zero carbon emissions by 2050 aligned with the company’s purpose and long-term
strategy. Transition plans should include assessments of physical, transition and liability risks and
opportunities based on climate change scenario analysis. The board should communicate progress
towards meeting just transition plans through annual reports to shareholders and other stakeholdersvi
.
• Ensure robust governance procedures and board competence in overseeing how management
identifies, monitors, measures, and manages climate change risks and opportunities aligned with
company purpose and long-term strategyvii
. Effective oversight relies on a genuinely diverse group of
directors with relevant knowledge, independence, experience, and cognitive skills to ensure effective,
equitable and inclusive decision-making.
• Align CEO and senior executive pay and incentives fairly and effectively with the company’s purpose,
strategy and workforce while respecting global best practicesviii
. This entails the use of quantifiable
financial, human, and natural capital related performance metrics, particularly those associated with the
company’s just transition plan and how long-term value is created by integrating these elements into
business operations.
For Auditors:
• Ensure the application of guidance related to climate change risks in planning and performing audits on
financial statements as provided by standard-setters such as the International Accounting Standards
Board and the International Auditing and Assurance Board. Commit to discharging obligations under
professional standards as external auditors with quality, integrity, and independence.ix
• Where required by regulation or requested by companies, provide assurance on quantitative and
qualitative corporate sustainability reporting, and ensure that conflicts of interest are well-managed.
Reporting should reflect the complexities in a contemporary business by blending financial, human, and
natural capital considerations in the context of a company’s current and future strategic direction.x
• Collaborate with standard-setters as they develop requirements that ensure companies report the
effects of climate risks and opportunities on assets and liabilities and develop financial reporting
requirements for various types of carbon or other pollutant pricing mechanisms.
For Governments and Standard-Setters:
• Publish action plans and commit funding for achieving net-zero carbon emission targets, including
carbon pricing, eradication of fossil fuel industry subsidies, phasing out coal-based electricity generation
and strengthening Nationally Determined Contributions for 2030 in line with the Paris Agreement.
Introduce incentives to mobilise private capital towards climate solution investments including
renewable energy, resource efficiency, smart technologies, and innovative infrastructure investments.
• Support the establishment of the International Sustainability Standards Boardxi as proposed by the IFRS
Foundation, to ensure consistency among sustainability reporting standards, coordinated with
standards on financial statements and management commentary. This includes consideration of
internationally agreed frameworks, such as the Taskforce for Climate-Related Financial Disclosures and
the Taskforce for Nature-Related Financial Disclosure to provide material information required by
investors and stakeholders to allocate capital appropriately.
• Mandate regulations and collaborate internationally to criminalise ecocide. Ensure sanctions,
enforcement, and resources to protect biodiversity, advance conservation and increase protected areas
as guided by science. Protect human rights and incorporate the perspectives of disadvantaged groups
and regions adversely impacted by biodiversity measures and transition plans. Countries should ratify
and implement relevant labour and occupational health and safety standards that contribute to decent
work for workers and businesses affected by the just transition.