Stewardship: Shareholder protection
We believe that engaging with the government, regulators and industry bodies in a timely manner will enable us to input into and shape effective policy frameworks. We ensure that we support policy makers, respond to consultations and provide advice through working groups to bring about systemic change.
Shareholder protections
We have closely monitored the growing threat to shareholder rights in 2024. Our focus is on protecting our beneficiaries against deregulation that may weaken these rights and broader investor protections.
An example of this is our engagement with the FCA on the revised UK listing rules that diluted longstanding shareholder rights. The overhaul removed voting rights on significant and related party transactions and critical safeguards around differential share structures. Throughout the consultation period, we urged the FCA to exercise caution over lowering corporate governance standards in the attempt to attract more UK listings. Our key message has been that high corporate governance and stewardship standards are the bedrock of investor confidence and therefore, should go hand in hand with an intended objective of economic growth.
The FRC review of the UK Stewardship Code is another area we have directly engaged on. Whilst we are supportive of the aim to streamline reporting we cautioned that this mustn’t happen at the cost of the progress that has been achieved through the code.
We raised serious concerns about the proposals to revise the definition of stewardship, which de-emphasises the need for investors to duly consider ‘economy, environment and society’ in their activities. We believe there is a risk that this could lead to varying interpretations of stewardship implementation and exacerbate the existing challenges around asset owner and manager alignment.
Exxon Mobil – a case of shareholder rights
Exxon tested the boundaries of shareholder rights with its decision to sue shareholders who put forward a shareholder resolution on climate. Despite the proponents retracting the resolution, Exxon continued to fight the case.
In response to concerns around the company’s treatment of its owners, we pre-declared our voting intentions within our index tracking portfolio to vote against every member of the board.
At the AGM, the re-election of the lead independent director was approved, but he received approximately 12% of votes against, the highest level of dissent against his re-election for several years.
