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A Metro grocery store in Stouffville, Ont. on Jan 12.Fred Lum/The Globe and Mail

Metro Inc. MRU-T says it’s serious about addressing climate change. It has pledged to reduce its greenhouse gas emissions by 37.5 per cent from 2020 levels by 2035 – and that’s just one of the ways the Quebec-based grocery and drugstore chain is planning to deal with a threat it calls a systemic risk to society and the economy.

But one investor advocacy group says Metro’s moves fall short, and that the grocer has not provided the necessary detail to show it can achieve what it is touting. That group, the Shareholder Association for Research and Education, or SHARE, has put a proposal on the ballot for Metro’s annual meeting this month that calls for an “enterprise-wide climate action plan” rich with details and timelines that outline how the company intends to meet science-based emissions targets.

In its management proxy circular, Metro urges its investors to reject the proposal.

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Metro is the first among several companies whose climate policies SHARE is targeting during the 2023 proxy season. Chief among its aims is to get companies to beef up their pronouncements with solid climate action plans. The group, which represents investors that control $90-billion of assets, has published a guide that sets out what kind of disclosure investors should expect when it comes to the climate commitments of publicly traded businesses.

Companies in virtually all sectors have announced they will reduce emissions to net zero by 2050, in line with the Paris Agreement, but many have not set interim goals or shown how they will achieve them through adjustments to capital spending. This raises questions about their credibility, said Shannon Rohan, SHARE’s chief strategy officer.

“When you dig a little bit deeper, you’re seeing some misalignment in terms of current company practices,” Ms. Rohan said. “We’re trying to cut through that greenwashing and really move to understand what is a meaningful climate action plan by a company. The guide really gives investors the tools to dig into that and to be able to understand the difference.”

There’s no question institutional investors are seeking more clarity on the way companies are dealing with the full range of climate-related risks, including damage to physical assets, costs of abatement, and policy and regulatory changes. The SHARE guide says climate action plans should include details on governance, policies for transitioning away from high-carbon operations and disclosures about companies’ government lobbying efforts.

It says investors should look for climate targets that are scientifically aligned with limiting global temperatures to 1.5 degrees above preindustrial levels, the most ambitious path outlined in the Paris Agreement. They should expect companies to spell out specific approaches to realigning their business models to meet a series of long- and short-term targets. SHARE says these corporate strategies should include detailed breakdowns of the activities required to achieve them. And the group says companies should also deliver annual disclosures of progress and impact, verified by third parties.

In many sectors, the toughest struggles are in reducing so-called Scope 3 emissions, over which companies have little direct control. Such emissions emanate from supply chains and the end users of products. In oil and gas, agricultural commodities, capital goods and financial services, for instance, those emissions account for more than 90 per cent of corporate totals.

“There’s no doubt that is the nut to crack,” Ms. Rohan said.

“That’s why, in the work that we do, we’re not only focused on the supply side of the equation, but how we actually address emissions reductions across all sectors and looking at the demand side of the equation.” She added that SHARE is also focused on financial institutions and other investors in fossil-fuel infrastructure.

In urging investors to reject the SHARE proposal, Metro has acknowledged the importance of the 1.5-degree warming target. But doing what’s needed to get there would require the company to make annual emissions cuts of 4.2 per cent, and its current data show that’s not achievable today, it says in its proxy circular. The company adds in the circular that it is committed to doing its “fair share” and assessing the feasibility and costs of getting to net zero. It also stresses the importance of adaptation strategies to stem physical and transitionary climate risks. Last year, it signed on as a supporter of the Task Force on Climate-related Financial Disclosures, the global gold standard for emissions measurement and reporting.

SHARE’s proposal at Metro may not win this year. But in years ahead, armed with better information, climate-focused investors will be better schooled at separating serious climate action from marketing in proxy votes. And they will become more skilled at holding boards and executives to account.

“We’re seeing more and more shareholders voting in favour of climate resolutions, and we’re seeing more and more investors with clear escalation strategies,” Ms. Rohan said. “So where they’re not seeing sufficient commitment, we are seeing investors taking steps like voting against directors.”