Georgeson’s report* on its interviews with 30 global institutional investors representing $47 trillion in AUM, 83% of which are signatories of the Climate Action 100+Initiative and 80% of which are signatories of Net Zero Asset Management initiative, revealed these and other noteworthy takeaways:
ESG pay metrics—Half of respondents say they won’t vote against companies that don’t incorporate ESG metrics into their executive incentive plans. Another 20% said they will consider this on a case-by-case basis, and 30% said they will vote against companies that fail to incorporate such metrics.
- Generally, half of respondents said their preferred weighting of non-financial ESG metrics was between 20% and 30% of the overall variable weighting, while 13% each selected 10% - 20% and 30%+. Nearly one-quarter were neutral on the preferred weighting.
- The rigor of the metric was identified as the most significant concern with the use of non-financial ESG metrics by a wide margin (875), followed by metric type (63%), measurability (60%), and sector-related (20%).
Climate—Respondents were equally split (37% each) between having no strong opinion on whether companies propose a say-on-climate vote at their 2023 meeting and saying it is not important to them. A minority (26%) expressed support for companies doing so.
- Nearly two-thirds of respondents indicated they will assess shareholder say-on-climate proposals on a case-by-case basis based on the quality and disclosure of the company’s existing climate transition plan, company sector, and company track record. Just 17% said they would be more likely to support such a proposal if the company is a laggard in their sector, while 20% said they would be less likely to support a shareholder proposal and would instead target management proposals.
- The vast majority of respondents (93%) said they intend to develop more detailed climate transition plan guidelines for their portfolio companies.
Overboarding—Most respondents said they will vote against independent directors and executives (80% and 70%, respectively) based on overboarding / overcommitment concerns.
Responsiveness—A majority of respondents expect companies to respond to shareholders if a shareholder proposal that is not supported by management garners 20% or greater (but less than a majority) shareholder support.
Georgeson’sinsights based on its interviews and actual investor quotes (which add color and context to the benchmarking data) are sprinkled throughout the report.
*The “Investor Survey Insights Report” is available for complimentary download upon request here.
This post first appeared in the weekly Society Alert!