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AGM Voting Out in the Open

5th May 2015 | Pre Meeting Transparency by LGS Australia - a Pointer to the Future

Local Government Super has become the first pension fund in Australia’s growing $A1.8t retirement savings sector to adopt public disclosure of all its voting intentions in advance of company AGMs


The launch of a new share-voting website will significantly increase transparency of the funds voting and stewardship activities around annual meeting resolutions.


Disclosure will include company proposals for consideration by shareholders and LGS voting intentions in real time. Where the fund votes against a proposal due to concerns that it may lead to a loss of shareholder value, they will disclose why there was a change of position.


“We engage with companies on a range of environmental, social and governance (ESG) issues to ensure we are addressing potential risks across our investment portfolio.” CEO Peter Lambert said in announcing the initiative.


“Voting at shareholder meetings forms a key element of this engagement and is an important element of our ownership rights as long-term investors.”


“An essential part of this process is sharing our voting decisions with our members and the general public. In doing this, we are raising awareness of where we invest our members’ savings and how their rights as ultimate beneficiaries of the shares are being honoured.”


LGS holds shares in most of Australia’s ASX200 Index and 500 of the worlds largest listed companies and is a long-term member of the influential Australian Council of Superannuation Investors (ACSI) which provides local and international pension funds with ESG research, advisory services and voting recommendations for ASX listed companies.


The fund is also an active signatory to global ESG umbrella group, the Principles for Responsible Investment (PRI)


LGS has also been at the forefront of ESG and climate stewardship amongst asset owners and superannuation (pension) funds in Australia, winning a slew of local and international awards for its leading positions on sustainability and incorporation of climate and carbon risks into its investment.


For the second time since 2012, they have led the prestigious AODP Global Climate Index that measures how effectively the top 500 international asset owners, managers and sovereign wealth funds undertake climate risk management.


Along with Australian Ethical Fund, LGS was also one of only two Australian pension funds to co-file and publicly declare support for the successful ‘Aiming for A ‘climate resolution put to the BP AGM in late April and the similar resolution due to go before Shell annual meeting on the 19th of May in The Hague.


Pre declaration in advance of AGMs is still relatively rare amongst asset owners and managers with many having policies that preclude disclosure.


However, signs of change emerging particularly around climate-based issues.  In an unprecedented shift, between late January and mid April 2015 over 100 pension funds, asset owners and managers from ten countries including 30 UK local authority pension funds went public pre-declaring their support for the climate resolutions before BP and Shell.


The giant Norwegian sovereign wealth fund added to the momentum taking the opportunity in the days immediately prior to the BP annual meeting to announce a major change in policy:


“We consider the shareholder requisitioned resolution to support our own focused efforts in this area. Climate, and possible financial risk connected to this, has been an important part of our responsible management for many years,” a statement released by Norges Bank Investment Management said.


“This is the first time we publish our voting intention prior to the annual shareholder meeting. We will publish our voting intentions for a selected number of companies and for certain fundamental issues that we emphasize in particular. This is in-line with our strategy plan where it states that we will make our voting intentions public before the annual shareholder meetings to increase transparency, and encourage initiatives to strengthen the vote execution chain.”


The LGS decision is another indicator that transparency can work both ways. Not disclosing votes or only publishing a voting record well after a meeting stands in contrast to where some of the leaders amongst asset owners are now going.


Various shareholders have sought to influence voting outcomes at annual meetings over the years. Responses to this initiative may well be determined by whether other asset owners and managers support or oppose LGS & NBIM voting recommendations in specific cases.

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