Active ownership: how we're using our votes in annual meetings in 2022
Our shareholder voting rights are used to encourage companies to equip themselves for long-term sustainable growth.
Schroders has set out its voting and engagement priorities in a letter sent to thousands of companies around the world.
As a business we exercise our right to vote on important issues at annual meetings and urge businesses to take action throughout the year.
Last year we voted at more than 7,000 annual general meetings. We take our voting very seriously and – as an investment firm with close to one trillion US dollars under management – we believe this is one of the most powerful ways in which we can act in the best interests of our clients.
Holding boards to account
We are increasingly of the view that board directors should assume greater accountability for sustainability matters as they are responsible for the longer term success of the company.
We will consider voting against the re-election of directors where this is not happening.
In our letters to the chairs of around 2,500 companies globally we have warned that we are most likely to vote against the re-election of directors over:
We will be more likely to vote against directors, including board chairs or members of certain committees, when we believe that the company is not taking what we consider to be sufficient action on climate change.
Auditor independence or quality
We will be more likely to vote against the audit committee chair of companies where we have persistent or serious concerns around the audit, auditor or other matters relating to auditor independence and audit quality.
Gender or ethnic diversity
In the UK, Europe and North America, we expect larger companies to have at least 33% female board directors and for smaller companies we expect at least 20% female board representation. We will vote against the governance and/or nominations committee chair where we have concerns about insufficient gender diversity on the board. In the UK and North America, we will also expect companies to have at least one non-white director.
We are more likely to vote against the compensation committee chair where we have persistent or particularly serious concerns about executive pay practice at the company.
Oversight of staff and culture
We are more likely to vote against directors, including the board chair or lead director in exceptional cases, where we deem the board to have failed in its responsibility for oversight of culture and human capital.
We will, of course, take into account our experience of the company and its size when making these decisions. For example, we recognise that smaller companies face greater resource and financial constraints.
Our commitment to more purposeful engagements with companies
In addition to our voting activity, we are committed to undertaking greater and more purposeful engagement with companies.
This is why we also shared what we have called our “Engagement Blueprint”, which we published last month on the active ownership section of our website.
We manage assets on behalf of institutional and retail investors, financial institutions and high net worth individuals across a diverse range of products including equities, fixed income, multi-asset, alternatives and real estate.
Where we can, we use our influence to encourage boards to manage their companies in a sustainable way throughout the year.
This in turn helps us ensure that our clients benefit from better quality returns. After all, we have seen growing evidence that better ESG performance is associated with improved share prices.
Although the document outlines our six priority engagement themes, which we first published last year, we also expect to engage with companies on other material areas affecting their businesses.
In essence, we want to make sure companies are doing all they can to equip themselves for long-term sustainable growth.
Schroders’ active ownership priorities
We urge businesses to take action throughout the year.
Our focus areas for this year were first published in December 2021:
- Natural capital & biodiversity
- Human rights
- Human capital management
- Diversity & inclusion
- Corporate governance
This article is issued by Cazenove Capital which is part of the Schroders Group and a trading name of Schroder & Co. Limited, 1 London Wall Place, London EC2Y 5AU. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority.
Nothing in this document should be deemed to constitute the provision of financial, investment or other professional advice in any way. Past performance is not a guide to future performance. The value of an investment and the income from it may go down as well as up and investors may not get back the amount originally invested.
This document may include forward-looking statements that are based upon our current opinions, expectations and projections. We undertake no obligation to update or revise any forward-looking statements. Actual results could differ materially from those anticipated in the forward-looking statements.
All data contained within this document is sourced from Cazenove Capital unless otherwise stated.