Shareholder resolutions – One size does not fit all

Our overarching aim is to influence companies to improve their practices, thereby securing long-term shareholder value and managing Environmental, Social and Governance (ESG) risks and opportunities in the best interest of our clients, as required as part of our fiduciary duty.

Active ownership is a key part of our responsible investment strategy

Active ownership through engagement and voting shall ensure that our investments comply with DNB’s Group Standard for Responsible Investments. Our overarching aim is to influence companies to improve their practices, thereby securing long-term shareholder value and managing Environmental, Social and Governance (ESG) risks and opportunities in the best interest of our clients, as required as part of our fiduciary duty.

We engage with companies both reactively and proactively either directly or through investor collaborations. As highlighted by academic research, collaborative engagements can lead to both increased risk-adjusted returns and sustainability.

Voting is both a responsibility and an opportunity and improves our investment decision information

The ability to raise shareholder proposals and to vote on raised proposals provides an opportunity to flag important risks and signal a desire for change – all while pushing companies to adopt best-in-class ESG practices.

Companies should have sustainable business models and practices. An important element of this is having strong corporate governance. Furthermore, we expect companies’ Board of Directors to ensure their companies can deliver long-term value creation by addressing material risks and opportunities associated with sustainability. As a minimum, the companies should operate in accordance with generally accepted guidelines for responsible business.

Our guidelines build on best practices

Our voting guidelines state that we shall vote at all Norwegian company AGMs where we have holdings, and we have adopted a systematic approach to determining which global companies’ AGMs we will vote at. Factors considered in this regard include: large holdings, major part of our active portfolios and strategically important items, including those focusing on ESG topics.

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Rising number of credible E&S shareholder resolutions – a continued trend

Shareholder resolutions have traditionally primarily addressed on questions of corporate governance. As an increasingly important tool for investors, we are continuing to see credible shareholder proposals related to E&S factors. In 2019, we saw resolutions submitted to address social issues outpaced environmental issues, and so far in 2020 this trend continues. So far, there are very few resolutions put forward in Norway. This could be a consequence of tight relationships and dialogues between shareholders and management/Board in Norwegian companies.

E&S proposals tend to focus on company’s operations and their impacts, for instance climate change strategy and human rights policies. However, for E&S proposals it may be challenging for investors to apply a set of standardised voting decisions as these proposals address broad and complex issues with a multiple of stakeholders involved. Therefore, we employ an individual analysis and evaluation of each proposal, considering credibility, local adaption, industry, and company-specific considerations to ensure we make the correct voting decision.

It is also important to note that, despite the rise of E&S proposals, a significant number are withdrawn before reaching a vote. The withdrawal is often due to shareholder dialogues with the company beforehand, where companies agree and commit to the proposals in some form before the annual general meeting. Dialogues and engagement before the annual general meetings (AGM) are just as important as the actual AGM, and we look to do this whenever possible.

So far this year, we have voted at five AGMs on shareholder resolutions on the topic of climate change. Though climate is still an important focus of shareholder resolutions, proposals covering social topics have received increased attention as a result of COVID-19. So far, we have voted at nine company meetings on topics related to social factors. We support ESG shareholder proposals that enhance long-term shareholder and stakeholder value while aligning the interests of the company with those of society at large.

In short, voting activity, including shareholder proposals, is a key part of the active ownership work. The implementation of our voting guidelines must take into consideration each company’s unique situation and is an integrated part of the continuously ongoing company dialogues.

Disclaimer: Nothing contained on this website constitutes investment advice, or other advice, nor is anything on this website a recommendation to invest in our Funds, any security, or any other instrument. The funds mentioned may not be available in the markets you represent. The information on this blog is posted solely on the basis of sharing insight to make our readers capable of making their own investment decisions. Should you have any queries about the investment funds or markets referred to on this website, you should contact your financial adviser.

Active ownership is a key part of our responsible investment strategy

Voting is both a responsibility and an opportunity and improves our investment decision information

Our guidelines build on best practices

One size does not fit all

We prioritise voting at general meetings where we can have an impact

Rising number of credible E&S shareholder resolutions – a continued trend