T. Rowe Price released updated Proxy Voting Guidelines for the 2024 proxy season, as well as investment policy statements on biodiversity and human rights. Notable changes to the proxy voting guidelines (compared to last year’s guidelines) applicable to US (among other) companies relate to T. Rowe’s approach to ESG shareholder proposals and include:
- T. Rowe will rely primarily on the board’s written response to proposals in the proxy statement in its analysis of the proposal in lieu of the perspective of its internal Responsible Investment team and industry research analysts (as was formerly the case per the 2023 guidelines).
- Having observed significant improvements in the quality and quantity of companies’ political activity disclosure, T. Rowe’s support for shareholder proposals on this topic will be selective.
- T. Rowe will rarely support proposals requesting Scope 3 emissions reduction targets due to the complexity of the topic and the fact that such a directive may impact the company and its shareholders adversely financially.
- For non-Scope 3-related proposals seeking adoption of a reduction target, it will look to the board’s written response in the proxy (new to this year’s guidelines, as noted above), as well as other factors including company-specific materiality; the disclosure framework being requested; its prior engagement with the company on environmental matters; the views of its Responsible Investment team; the identity of the proponents, if available, and their stated intentions; and the degree to which the proposal is prescriptive or unrealistic.
- Its evaluation of social-related proposals will be subject to many of the same factors as noted above for non-Scope 3-related proposals (as relevant), including the board’s written response in the proxy.
In discussing the factors it considers in its vote decision-making on shareholder proposals, the 2024 guidelines, like the 2023 guidelines, note the importance of the shareholder proponent’s identity, among other considerations. However, in a subtle but significant change, the 2024 guidelines indicate that “some” shareholder resolutions —rather than “most,” as noted in the 2023 guidelines—are “submitted out of a sincere desire to improve the company’s practices for the benefit of shareholders and other stakeholders.”
This post first appeared in the weekly Society Alert!