Allianz Global Investors (AllianzGI) and Cevian Capital are urging shareholders to join them in voting against companies that fail to align executive remuneration with climate targets.

AllianzGI updated its 2022 proxy voting policy on February 22, revealing that the $743 billion asset manager will vote against European large-cap companies that fail to include ESG key performance indicators (KPIs) in their executive compensation structures.

Harlan Zimmerman, senior partner at Cevian Capital, similarly said in an interview it was “critical” that executive compensation is used to incentivize companies to accelerate engagement with climate change.

“In keeping with our desire to shape a more sustainable future with measurable positive outcomes, we want to ensure that our investee companies align their executive remuneration policies with ESG KPIs and we will vote against those that don’t,” said Matt Christensen, AllianzGI’s global head of sustainable and impact investing, in a press release.

AllianzGI supported 23.8% of advisory “say on pay” proposals internationally in 2021, compared to 24.3% in 2019 and 23.5% in 2020, Proxy Insight Online data reveal.

Both AllianzGI and Cevian want companies to break down their climate goals into short-term targets and provide evidence of progress being tied to executive compensation awards.

“It’s a justifiable fear that if ESG metrics are fuzzy, they will be inefficient and result in paying executives no matter what,” Zimmerman said. “They must be measurable, transparent and tied to the public pledges that companies have made.”