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
Learn more about Schroders’ approach to sustainability and ESG
Find out more about our sustainability impact. Your Relationship Manager will also be delighted to answer your questions about our sustainable investment approach.
Felix was also a guest on the Investor Download podcast speaking about the food and water crisis. You can listen to the episode by clicking the play button at the top of the page.
This document is issued by Schroder Investment Management Australia Limited (ABN 22 000 443 274, AFSL 226473) (Schroders). It is intended solely for wholesale clients (as defined under the Corporations Act 2001 (Cth)) and is not suitable for distribution to retail clients. This document does not contain and should not be taken as containing any financial product advice or financial product recommendations. This document does not take into consideration any recipient’s objectives, financial situation or needs. Before making any decision relating to a Schroders fund, you should obtain and read a copy of the product disclosure statement available at www.schroders.com.au or other relevant disclosure document for that fund and consider the appropriateness of the fund to your objectives, financial situation and needs. You should also refer to the target market determination for the fund at www.schroders.com.au. All investments carry risk, and the repayment of capital and performance in any of the funds named in this document are not guaranteed by Schroders or any company in the Schroders Group. The material contained in this document is not intended to provide, and should not be relied on for accounting, legal or tax advice. Schroders does not give any warranty as to the accuracy, reliability or completeness of information which is contained in this document. To the maximum extent permitted by law, Schroders, every company in the Schroders plc group, and their respective directors, officers, employees, consultants and agents exclude all liability (however arising) for any direct or indirect loss or damage that may be suffered by the recipient or any other person in connection with this document. Opinions, estimates and projections contained in this document reflect the opinions of the authors as at the date of this document and are subject to change without notice. “Forward-looking” information, such as forecasts or projections, are not guarantees of any future performance and there is no assurance that any forecast or projection will be realised. Past performance is not a reliable indicator of future performance. All references to securities, sectors, regions and/or countries are made for illustrative purposes only and are not to be construed as recommendations to buy, sell or hold. Telephone calls and other electronic communications with Schroders representatives may be recorded.