IN FOCUS6-8 min read

Shareholder resolutions: prepared to disagree



Andy Howard
Global Head of Sustainable Investment

Given the importance of tackling difficult sustainability issues today, it's right that the actions of all stakeholders and their representatives – from activists to asset managers – should be scrutinised.

The process of tabling resolutions at the annual general meetings of companies exists in most major markets. Shareholder resolutions provide a way for equity investors to propose business changes for consideration by all shareholders, often focusing on social and environmental topics. 

We consider them an important tool for expressing our views and expectations to investee companies, especially for areas not covered in standard AGM votes.

We take our voting responsibilities very seriously. Every resolution is a specific ask of a specific company which we assess through our own fundamental research. We cannot treat resolutions as a statement of our general stance on an issue.

Often, we support the goal a resolution might be seeking to promote, but conclude that its wording will undermine its success. The detail is critical.

We have to be mindful that some resolutions risk setting back delivery of the sorts of changes we are committed to and have detailed in our Engagement Blueprint.

Our main challenges with those resolutions are when they:

  • Target companies that are relatively advanced in tackling challenges rather than the laggards that could do most to advance change;
  • Emphasise specific actions we believe could impede delivery of goals;
  • Make demands of companies that put their business models at risk without meaningful benefits.

While we have these concerns with some shareholder resolutions, we are entirely committed to pushing companies towards more sustainable business models and holding them accountable for delivery. 

Engagements – the day-to-day conversations with company executives – are crucial. Schroders has introduced a requirement for every fund manager and analyst to undertake a number of high-quality engagements annually, ensuring the firm’s collective weight and influence is directed into driving positive change.

On voting, our support or objection will always depend on how well-focused and appropriately worded resolutions are and will be made based on a detailed understanding of a company’s business model and its progress to date on ESG issues.

Any assumption that more support for environmental and social shareholder resolutions is always better is dangerous. Our industry has to be clear that the decisions we make are in the interest of clients and all stakeholders.

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Andy Howard
Global Head of Sustainable Investment


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