The Church of England Pensions Board plans to vote against the reappointment of directors at banks if it believes they are “backtracking” on previous commitments related to combatting climate change.
The £3.4bn pension manager will put this into action at Santander’s annual general meeting (AGM) on Friday (27 March), as well as the AGMs of NatWest and HSBC. In a statement, the Church of England Pensions Board said it would “monitor other banks’ reporting as proxy season continues”.
Campaign group ShareAction has been warning for some time that banks are retreating on previous climate-related commitments, and has specifically highlighted the organisations targeted by the church. The board will also use data from the Transition Pathway Initiative’s Banking Tool.
The Church of England intends to identify directors who are responsible for banks’ weakened climate or risk policies, assess whether governance failures “represent material risks to long-term value”, and escalate votes to other directors and chairs where necessary.
It said these actions would “signal to the banking sector that backtracking on commitments is incompatible with good governance and management of long-term financial risk”.
“Investors need confidence that directors will maintain consistent, credible oversight of climate and risk policies. Where that confidence is undermined, we will act.”
Laura Hillis, Church of England Pensions Board
Laura Hillis, the Church of England Pensions Board’s managing director for responsible investment, explained: “Good governance is the first line of defence against systemic risk.
“When banks dilute or abandon commitments that investors have understood as being part of the company strategy and risk management approach, it raises serious questions about board oversight, risk management, and long-term strategic resilience.
“We recognise that circumstances materially change in some cases. This is not about punishing companies that haven’t been able to meet their commitments despite best efforts. This is about integrity of governance.
“Investors need confidence that directors will maintain consistent, credible oversight of climate and risk policies. Where that confidence is undermined, we will act.”
In the statement announcing its intentions, the Church of England Pensions Board said its stewardship framework “emphasises that climate change, nature loss, and social instability are systemic risks that require strong, accountable governance from the companies in which it invests”. It also believes that “effective governance is foundational to long-term value creation and to the board’s fiduciary duty to members”.
Nest pledges action against corporate climate plan rollbacks
Nest will vote against board chairs if companies “materially” scale back climate strategies, as part of a new approach to stewardship announced earlier this month. The master trust’s new voting policy aims to clarify its approach to voting on climate-related issues such as energy transition plans and decarbonisation. Read the full article.
ShareAction warns of ‘backtracking’ banks
ShareAction welcomed the Church of England Pensions Board’s plans, which follow its own work on the banking sector.
Kelly Shields, senior campaign manager at ShareAction, said: “Extreme weather is already pushing up insurance costs, disrupting supply chains, and driving up food prices, and these risks flow directly into pension pots.
“When directors make decisions that expose people’s pensions to long‑term risk, they should expect scrutiny, not a free pass.
“With AGM season around the corner, this approach sends a clear signal: accountability still matters. Other pension funds have the same tools and they must use them to protect savers and push banks to stay on track.”
“Investors must step up pressure on banks and use every available lever to ensure climate risk and the enormous financial and human costs of runaway global heating are properly managed.”
Xavier Lerin, ShareAction
In December, ShareAction published a report assessing the biggest banks in Europe that found progress on addressing climate change had “ground to a halt, and in several cases moved backwards”.
The report highlighted HSBC, NatWest, and Santander, along with Scandinavian bank Nordea, as having “weakened commitments to shift capital away from high-polluting clients”.
It warned that fossil fuel-related policies were “far from aligned with climate science”, and banks were still providing funding to new fossil fuel infrastructure developments such as pipelines.
At the time, Xavier Lerin, Head of Financial Sector Research at ShareAction, warned: “If banks continue on this path, they are not only exposing communities to harm – they are also storing up major financial instability for the years ahead.
“Investors must step up pressure on banks and use every available lever to ensure climate risk and the enormous financial and human costs of runaway global heating are properly managed.”
