Today, we publish an asset manager perspective where we explain our approach to shareholder proposals on sustainability. We recommend evaluating proposals according to materiality, prescriptiveness and a careful consideration of company context.
In many markets, an increasing number of shareholder proposals focus on the environmental and social aspects of companies’ activities. They can raise a wide variety of issues, ranging from climate scenario analysis or supply chain due diligence to the use of recyclable packaging.
“We have to make decisions on issues put forward in shareholder proposals that are often wide-ranging and have complex root causes. We therefore need to make considered, analytically based voting decisions,” says Chief Corporate Governance Officer Carine Smith Ihenacho.
So far in 2020, we have voted on 187 shareholder proposals on sustainability. Many of these resolutions are part of well-founded initiatives aimed at improving the target company’s sustainability and financial performance. Shareholder proposals on sustainability often address central economic, environmental and societal challenges, and over time they have been instrumental in spurring adoption of more responsible business practices at companies.
“However, some shareholder proposals focus on tangential issues or attempt to micro-manage company boards. Investors need a robust method to differentiate the quality of proposals when voting for or against them”, says Ihenacho.
We hope our perspective on sustainability proposals can provide companies, fellow shareholders and other interested parties with additional insight on how we analyse and vote on such proposals.