The recent US presidential elections in autumn of 2020 showed that even well-developed democracies were not immune to controversies. The incumbent President Trump’s Twitter feed included everything from “stop the count” to his later change of heart, “count every vote”. But Donald Trump was wrong, as he often was: the democratically more important statement is “every vote counts”. This does not only apply to democratic elections, but also to votes at Annual General Meetings (AGMs) in the corporate world.
We have spoken about generating impact on the basis of active voting before; back then, we interviewed an academic expert in the field of sustainability aspects of investments.
The opinion that active voting at AGMs can create impact is currently a hot topic in academic discourse. It is easily supported whenever shareholder motions that create impact are passed. Here, too, every vote counts. Positive and sustainable changes for all stakeholders hinge on investors reminding management of its responsibilities.
The voting behaviour of Erste AM follows a holistic ESG approach. The voting guidelines of Erste AM lines up with the international Sustainability Guidelines of our voting adviser ISS. In practice, this means that Erste AM supports all shareholder motions that come with an explicit social or environmental aspect. This calls on companies to address shortcomings in the social and environmental area and to implement changes if need be. The AGM season of 2021 has largely been successful. Traditionally, May and June are when proxy season reaches its peak. Time for an initial review.
Environmental topics dominated the proxy season
Environmental topics were causing headlines, such as the proxy contest at the AGM of Exxon Mobil, where three candidates supported by the activist shareholder Engine No.1 asserted themselves over three candidates presented by management. This was due to the general dissatisfaction of investors with the way the Exxon management had (not) reacted to the climate challenges. Erste AM also supported the Engine No.1 candidates in order to nudge the group towards more sustainability and to make Exxon rethink its shortcomings with respect to a viable climate strategy.
Of course, the newly elected board members will have to prove they can influence the corporate strategy of Exxon Mobil sustainably. But a step in the right direction has been made.
Social topics were also prominently discussed
Social topics are gaining relevance as well.
In the following, we have listed a few shareholder motions on social topics that Erste AM supported at AGMS in 2021. The first two examples passed with a majority (and Erste AM’s votes) and can therefore lead to the necessary corrections of the respective companies’ ESG performances
SHAREHOLDER MOTIONS AT AGMS:
International Business Machines Corporation (IBM)
Motion: “Publish Annually a Report Assessing Diversity and Inclusion Efforts”
The impact investor NIA Impact Capital had brought a motion that committed the management of IBM to publish an annual report on its efforts with regard to equal employment opportunities (EEO). This report was to create transparency in the fields of diversity, human capital and inclusion.
The motion passed with a large majority at the AGM and was also supported by management. IBM followed the instruction to publish said report. It is publicly available and contains the assessment of management as to how the efforts of the company affect the numbers and statistics on recruiting, gender pay gap, and diversity of the staff.
Union Pacific Corporation (UNP)
Motion: “Publish Annually a Report Assessing Diversity, Equity, and Inclusion Efforts”
The AGM of Union Pacific Corporation saw a similar motion be put to vote. The NGO “As You Sow” (AYS) filed a motion to obligate the management of Union Pacific to publish an annual report on the company’s goals of inclusion and diversity. In the text that supported the shareholder motion, As You Sow pointed out that women and minorities were holding only 22% and 13% of management positions in the company, respectively, and that no comprehensive statistics on the inclusion programme of the company existed. The investors around As You Sow did point out the increased interest of all stakeholders in these data. This motion, too, was passed with a large majority, including Erste AM’s vote.
Amazon.com Inc. (AMZN)
Report: “Oversee and Report on a Civil Rights, Equity, Diversity and Inclusion Audit”
The AGM of Amazon had a number of shareholder motions to vote on again. A motion brought by the New York State Common Retirement Fund was supposed to obligate the company to scrutinise its impact on civil rights, diversity, inclusion, and their effects on the business of Amazon. Unfortunately, this motion did not carry.
That being said, with 44.2% of the votes cast supporting the motion, it was a close call. Similar shareholder motions at the 2020 AGM saw significantly less support (about 15% and 31%). The trend is therefore pointing upwards. Amazon will not be able to escape an honest discussion of its impact on civil rights, diversity, and staff inclusion for much longer.
Read the full ESGenius newsletter on social responsibility and sustainable investing: https://blog.en.erste-am.com/dossier/social-responsibility/
Prognoses are no reliable indicator for future performance.