abrdn publishes 2023 voting priorities

abrdn will for the 2023 proxy voting season prioritise executive remuneration and cost-of-living in the UK, diversity on US-boards, “Say on Climate” advisory votes and climate laggards.

These priorities form part of its updated Listed Company ESG Principles & Voting Policies, which provides views on best practice across numerous sustainability topics and details of its voting approach and key voting policies for shareholder meetings taking place in 2023.

Executive remuneration and cost-of-living in the UK

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. 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 may make this a factor in voting decisions at relevant AGMs.

Diversity on US-boards

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.

‘Say on Climate’ advisory votes

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.

Maximising the impact of our 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.

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.”

Active Ownership and Sustainability considerations are a driver of our investment process, investment activity, the client journey and corporate influence. Proxy voting is an integral part of our active ownership approach, and we seek to exercise voting rights in a manner in line with our clients’ best interests. We believe that voting is a vital mechanism for holding boards and management teams to account and is an important tool for escalation and shareholder action.