ESG, D&I main focuses for State Street in 2022

State Street Global Advisors, the investment management division of State Street Corporation, has signified its intention to focus on propelling climate action in the market and developing its gender diversity policy ahead of the 2022 proxy season.

In the annual proxy letter released today, Cyrus Taraporevala, President and CEO of State Street Global Advisors, highlighted how portfolio companies have had to manage the threats and opportunities spurred on by the COVID-19 pandemic, as the global mindset swings toward a low-carbon and more inclusive future.

“As directors of public companies, you are keenly aware of these historic shifts,” Taraporevala wrote in the letter.

“While capital markets transition to a more sustainable global economy, material environmental, social and governance (ESG) issues have come to the forefront alongside more traditional strategic and financial issues, making your role more important and more challenging than ever before.

“For these reasons, our main focus in 2022 will be to support the acceleration of the systemic transformations underway in climate change and the diversity of boards and workforces.”

Taraporevala also wrote that since investors have become more engaged with ESG-related criteria and more sophisticated in their examination of climate-related risks in portfolios, it has led to a growing demand for more disclosure.

“Indeed, the Task Force for Climate-related Financial Disclosures (TCFD) framework has become table stakes for any climate-related discussion, with investors increasingly using this new information to tilt, or even transform, their portfolios for the future,” he said in the letter.

In the letter, State Street said it would be targeting companies in the US, Canada, the UK, Europe and Australia with the most significant carbon emissions through an engagement campaign to encourage them to meet disclosure expectations around decarbonisation strategy, capital allocation, climate governance and climate policy in 2022.

Continuing the firm’s Fearless Girl campaign established in 2017, State Street will also hold expectations of all its holdings to have at least one woman on their boards in 2022. By 2023, this expectation will rise to boards being comprised of at least 30% female directors for companies in major indices in the US, Canada, the UK, Europe and Australia.

“We will continue to encourage boards to have effective oversight of diversity, equity, and inclusion more broadly, beyond the board,” Taraporevala wrote in the letter.