F&C’s annual Responsible Investment Report 2011, published today, gives a snapshot of how one of the UK’s leading responsible investors exercised its influence on environmental, social and governance (ESG) issues over a turbulent year.
F&C engaged 1,222 companies across 54 countries across a wide span of ESG issues on behalf of its clients, and exercised voting rights at over 5,300 companies.
Highlights of the year included:
- Bank pay: where we voted against management on pay proposals at many of the world’s leading financial institutions, including Citigroup, Goldman Sachs, JP Morgan Chase, Morgan Stanley, Barclays and HSBC
- Shale gas: where we engaged with companies, their financiers and regulators on the emerging risks in this fast-moving industry
- Listing standards: where we argued against the dilution of governance standards for issuers listing on the London Stock Exchange
Karina Litvack, Director of the Governance and Sustainable Investment Team, commented: “In a world facing daunting economic, social and environmental challenges, F&C believes that investors more than ever have a compelling interest in spotting hidden risks and engaging with companies and policymakers to drive change.”
Voting trends in 2011
F&C voted on all companies held in its clients’ portfolios: more than 73,000 resolutions at over 5,300 companies in 64 countries. We engaged with all of them before the vote to explain expectations, and afterwards to raise concerns.
Overall, F&C supported management in 76% of all proposals – a slight increase from 2010 (72%). This was mostly accounted for by an increase in support for resolutions related to Board elections, where we saw an improvement in practices in a number of markets including Brazil, China, South Korea and Japan.
But F&C took a harder line on pay. Having abstained on 16% of pay proposals in 2010, sending a strong warning signal that poor practices would not be tolerated, we shifted to outright opposition in 2011, voting against 20% of all pay votes globally. In the US, we opposed almost half of all ‘Say on Pay’ proposals put forward by companies – many of whom were only reluctantly putting the issue to the vote for the first time following the implementation of the Dodd-Frank Act.
Outlook for 2012
F&C’s look ahead to 2012 identifies the following issues for investors:
- Regaining the social license to operate: How will financial institutions respond to public anger at irresponsible practices?
- The Rio+20 meetings: An opportunity to reflect on a resource-constrained world: what are the implications for investors?
- Unconventional energy: How can investors and regulators keep up with the risks associated with fast-moving technologies?
- Accounting for failure: What lessons should companies learn from the costly scandals of 2011?
- Investor responsibility: Will market turbulence lessen the focus on short-term returns, and drive a greater focus on genuine long-term performance?
hsbc shale, citigroup, morgan stanley, jp morgan chase, barclays, goldman sachs, united kingdom, china, japan, south korea, united states, brazil, team, energy, corporations law, finance, say on pay, united kingdom company law, short, morgan stanley, director of the governance and sustainable investment team, citigroup inc., barclays plc, director of the governance and sustainable investment
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