ROBECO - Wed, 08/23/2023 - 13:40

Lively AGM season highlighted in proxy voting report

Two-thirds of all shareholder meetings included votes against management in a lively proxy voting season for Robeco’s Active Ownership team.

  • Lively AGM season saw votes against managements at 65.4% of meetings
  • Anti-ESG movement and platform protests seen in more politicized season
  • Change in debate on climate and introduction of biodiversity policies

The team cast at least one vote opposing some aspect of the company’s activities at 65.4% of all the 5,176 shareholder meetings voted on behalf of clients between January and June 2023. Voting took place on 59,911 proposals – including 863 sustainability related resolutions – in 71 countries where Robeco owns shares. Many different topics, ranging from board composition, remuneration structures and sustainability topics, were covered.

It proved to be a lively voting season at which both protestors and an anti-ESG movement objecting to proposals based on environmental, social and governance factors reared their head. Some meetings even witnessed behavior bordering on violence as demonstrators made their views felt.

“The 2023 season had a set of unique trends that made our analysis more complex and required a more balanced assessment of several governance and sustainability issues,” says Michiel van Esch, Head of Voting at Robeco.

“One of these trends is the so-called Anti-ESG movement, which became more prominent in 2023. Several organizations have started filing shareholder resolutions that appear to ask for regular governance best practices, such as an independent chairman, with an underlying narrative against the ESG efforts of companies including diversity and inclusion policies, or social benefit policies. These resolutions have added to a more politized and polarized AGM season than in previous years.”

Platforms for protests

This was the first year that physical attendance was made possible for almost all AGMs after the Covid pandemic took everything online – though it proved not to be the case that ‘normality’ had fully returned.

“We also noticed that the AGM attendance itself has shifted in tone and nature,” Van Esch says. “In some cases, these meetings become a platform for protest, either on climate change, social issues, or other frustrations with companies that often face conflicting expectations from stakeholders.”

“The AGM as a platform will need some work in the future, making sure that it can remain an effective platform for exchange of thought and information, potentially for a wider set of stakeholders.”

Energy crisis dominates

The season also saw a change in tone for climate change amid an energy crisis that has led many companies to delay plans to cut emissions to achieve net zero amid a greater reliance on fossil fuels. The war in Ukraine led to a dash to gas in Europe and even a greater use of coal-fired power.

“The energy crisis and commodity prices seem to have slowed down (or at least changed) the ambition levels of several high emitting companies’ transition plans,” Van Esch says.
“Several companies loosened their ambitions, leading to varying reactions from shareholders; some were vocally disappointed, others were lenient towards management and others were not supporting transition ambitions anyway.”

Higher biodiversity focus

There was greater interest in biodiversity as a serious issue as preserving nature moves ever higher up the corporate and investor agendas. “This year, we strengthened our voting policy by introducing a voting approach focusing on biodiversity, one of our strategic sustainability topics, next to climate change and human rights,” Van Esch says.

“We expect companies to take action on mitigating biodiversity loss and for those companies that have high exposure to deforestation risk commodities to have adequate policies and processes in place to address those risks.”

ESG links to remuneration

And there were the usual arguments about executive pay, with a greater focus this year on securing more sustainability related packages, rather than the more predictable complaining about how much a CEO was paid.

“We saw an increasing number of companies continuing to introduce ESG components to their variable pay,” Van Esch says.

“In our opinion, this is a good trend, and it is encouraging that companies are often tying these to the sustainability ambitions of their overall strategy. At the same time, disclosures and measurements on many occasions should be further improved.”

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