PLSA Corporate Governance Policy and Voting Guidelines 2018
Members of the Pensions and Lifetime Savings Association have a clear interest in promoting the success of the companies in which they invest. As a consequence of this, we have long considered that one of our prime functions is to support members in engaging with investee companies. Our efforts are directed towards maximising the long-term returns of pension schemes’ assets, irrespective of the potential for short-term discomfort.
Our ‘Corporate Governance Policy and Voting Guidelines’ provide our members with examples of good stewardship practice and recommendations for key votes at the Annual General Meetings of their investee companies, on subjects such as executive pay, the re-election of directors and the approval of the annual report. The recommendations, which are agreed in consultation with the PLSA membership, are based on our members’ interest in ensuring that companies are run in a sustainable, accountable fashion that generates returns for investors over the long-term while also behaving in a responsible manner and supporting the interests of wider society.
Our wider work on corporate governance and stewardship informs our annual review of the guidelines. For example, in 2017 we produced guidance for pension funds on the economic implications of climate change, highlighting research showing that failure to mitigate global temperature increases will have devastating environmental, social and economic consequences. Political and economic developments designed to combat climate change will affect the viability of business models across a wide range of sectors. The paper recommended that pension funds question their asset managers on how they are engaging with investee companies over the impact of climate change, including their use of their votes at company AGMs.
As such, this year’s PLSA AGM voting guidelines also includes an additional section on sustainability. The guidelines recommend that where shareholder attempts have failed to encourage companies in relevant sectors to provide a detailed risk assessment and response to the effect of climate change on their business, they should not support the re-election of the chair.
For more information on the guidelines, please contact Caroline Escott, Policy Lead for Investment and Stewardship, via [email protected]