Given the significant material climate risks for Volvo based on its business lines, we expect robust reporting on the governance framework around these risks and how they are incorporated into the company’s strategy and risk management process. Volvo acknowledges the impact of climate change on its business and has set energy efficiency and greenhouse gas emissions reduction targets to 2020.2 However, there is limited disclosure beyond this in its public reporting, and no detail on oversight or its strategy to mitigate the impact of climate risk on its business. The company’s climate-related risk disclosures do not meet our expectations of a company exposed to significant material climate risks.
In our engagement with the company, it became clear that climate risk is indeed considered a strategic risk and is built into decision-making across the organization, from product planning to R&D spend. As a result, we would expect the company to already have fulsome disclosures in place, including more explicit alignment with the TCFD framework. We will look for such enhanced disclosures in its reporting next year.
- Re-elect Matti Alahuhta, James Griffith, Martina Merz and Carl-Henric Svanberg as Directors; Re-elect Carl-Henric Svanberg as Board Chairman
BIS believes board members should be held accountable for the level of oversight provided on governance matters, including executive pay, and how the management team addresses material issues, such as climate risk. Given the lack of progress the company has made on its climate disclosures and our ongoing concerns with its executive pay policy, BIS’ policy is to withhold support from the re-election of those board members who are most accountable through their membership on relevant board sub-committees or, in the absence of such committees, the most senior board member. We voted against the re-election to the board of Matti Alahuhta, James Griffith and Carl-Henric Svanberg as members of the remuneration committee.
We voted against the re-election of Mr. Svanberg as Board Chair, as the most senior board member responsible for climate disclosures. In particular, we are holding Mr. Svanberg to account for the current lack of adequate climate-related risks disclosures and expect more fulsome disclosure regarding the company’s long-term adaptation strategies in line with the TCFD by next year.
…Consistent with our EMEA proxy voting guidelines, we consider Matti Alahuhta and Martina Merz to hold an excessive number of mandates. In addition to his role at Volvo, Mr. Alahuhta serves as board chair at Outotec Oyj and non-executive director at Kone Oyj and ABB Ltd. In addition to her role at Volvo, Ms. Merz serves as the CEO of ThyssenKrupp AG and non-executive director at SAF-HOLLAND SA. This raises substantial concerns about their ability to exercise sufficient oversight on Volvo’s board.