Abrdn has announced it will prioritise executive remuneration and cost-of-living in the UK, diversity on US boards, “Say on Climate” advisory votes and climate “laggards” for the 2023 proxy voting season.
The Edinburgh-headquartered asset management giant said these priorities form part of its updated Listed Company ESG Principles & Voting Policies for shareholder meetings taking place in 2023.
Abrdn manages and administers roughly £500 billion of assets and is due to report its full-year results on February 28.
“In response to the issues arising from the cost-of-living crisis, we will expect companies to focus any additional help towards those members of the workforce who need it most,” said Abrdn.
“Remuneration Committees need to take into account factors arising from the cost-of-living crisis when deliberating over executive pay outcomes.
“Discussions on executive remuneration that do not take into consideration the implications of the cost-of-living crisis for the wider workforce may indicate shortcomings in the leadership culture and we maymake this a factor in voting decisions at relevant AGMs.”
On diversity on US boards, Abrdn said: “We have increased our expectation for gender diversity on the boards of large US companies (market capitalisation of $10 billion or over) to 30% female representation.
“For smaller companies, we will continue to take this action if the board does not include at least one female director.
“In 2022 we did not support the re-election of the Nomination Committee Chairs at 51 US companies which did not meet our gender diversity expectations.”
On ‘Say on Climate’ advisory votes, Abdrn said: “We will abstain on ‘say on climate’ votes proposed by company management in 2023.
“In contrast to many advocates of ‘say on climate votes,’ we have reservations about the implications of these votes and their application.
“Although these votes are well intentioned, when shareholders support a ‘say on climate’ vote it may actually limit scope for subsequent challenge.
“Presenting the climate strategy as a standalone item also risks diminishing both the integration of climate in strategy and the direct responsibility and accountability of the board and individual directors.
“The climate plans presented under ‘say on climate’ votes are typically standalone reports, separate from financial statements or annual report and accounts.
“This can sever the fundamental link between the climate and corporate strategy, risking a lack of robust governance procedures for all vital strategic decisions.
“Additionally, the full evaluation of climate strategies demands significant resource; over a short period, this could lead to asset managers outsourcing responsibilities for evaluation.”
Abrn said it will maximize the impact of its climate engagement and voting.
“To maximise the impact of engagement and voting, we will focus our resources on encouraging improvements among our highest financed emitters and take voting action at annual general meetings of companies that we identify as climate laggards,” said the Edinburgh firm.
Andrew Mason, Head of Active Ownership at Abrdn, commented: “After several years of global upheaval and disruption, it’s more important than ever that corporates integrate the needs of their stakeholders into their business decisions.
“Our updated voting policies have been designed to ensure that companies recognise the necessity to deliver meaningful action in the areas that can have a profound impact on society.
“As an asset owner, we have a clear mandate to engage with these companies to turn conversation into action and ensure companies make good on their promises on behalf of our clients.
“Accountability is a unique and critical lever we as active owners can utilise to ensure that this happens.”