Further to our recent report :”PRI Wants US Signatories to Support More E&S Proposals,” the PRI released “Making Voting Count,” aimed at providing guidance to its 3,600 institutional investor signatories on how to develop and apply high-level proxy voting principles, which the PRI characterizes as a principle stewardship tool and effective means of promoting adherence to its Principles. The paper is important (and thus a strongly suggested read) in helping companies understand potential changes and trends in institutional investor voting practices.
Key snippets and takeaways include:
Proxy voting principles - Voting principles should reflect the investor’s investment beliefs informed by beneficiary preferences, portfolio risks, the portfolio’s contribution to risks in the “real world,” and the PRI’s Active Ownership 2.0 framework.
Proxy voting & Escalation – Proxy voting is an important stewardship tool that helps communicate shareholders’ views to companies and others, builds engagement, facilitates accountability, and – when aligned with voting principles – should be viewed as a complement to engagement rather than an escalation.
Investors should support all shareholder proposals that are consistent with, and oppose only those that are contrary to, their voting principles.
Escalation actions to further progress on an issue when previous efforts have been unsuccessful may include filing a shareholder proposal, voting against the election of directors, proposing directors for election, and litigation.
Disclosure - Investors’ voting principles should be publicly disclosed so that companies and shareholder proponents understand their investors’ positions and to inform their engagement activities.
Investors’ voting records should be publicly disclosed as soon as possible after each vote.
The PRI also recommends investors publicly disclose their voting intentions in advance - particularly for high-profile or controversial votes, and their rationale for voting decisions - particularly where a vote counters management recommendations; the investor abstains from voting; or the vote would be perceived as contradicting the investor’s principles even if the investor believes it does not.
See PRI’s release and additional information & resources on our Institutional Investors, Sustainability/ESG, and Shareholder Proposals pages.