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ACTIAM

PRI reporting framework 2020

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You are in Direct - Listed Equity Active Ownership » (Proxy) voting and shareholder resolutions

(Proxy) voting and shareholder resolutions

LEA 12. Typical approach to (proxy) voting decisions

12.1. Indicate how you typically make your (proxy) voting decisions.

Approach

Based on

12.2. Provide an overview of how you ensure that your agreed-upon voting policy is adhered to, giving details of your approach when exceptions to the policy are made.

In most cases, ACTIAM votes by proxy and voting are executed by a service provider, based on our own voting policy. On a few strategic occasions, ACTIAM may attend AGMs in person.

We make sure our voting policy is adhered to by conducting an annual voting audit, and by disclosing all votes through a tracker on our website. Also we are increasing our insight, monitoring and pro-active decision-making in our proxy voting activities around our focus themes by working with (external) databases like proxy insight.

To increase the impact of our active ownership activities related to our 7 financial material drivers, ACTIAM will link voting choices to engagement activities in two ways. First, ACTIAM has more stringent requirements for companies in sectors considered to be high-impact in terms of our drivers. Specifically, when it comes to supporting management proposals at general meetings, ACTIAM applies additional sustainability requirements in relation to board structure, elections of directors, remuneration, risk management and corporate restructurings.

Secondly, ACTIAM will periodically evaluate how engagement companies are responding to our engagement efforts and how the companies are progressing on the issues identified during engagement. ACTIAM may withhold support for management resolutions when companies are insufficiently responsive or making progress too slowly.

ACTIAM may also file or co-file shareholder resolutions in instances where companies have proven to be insufficiently responsive to regular shareholder dialogue. In 2019, we co-filed two shareholder resolutions asking mining company BHP to suspend its membership of trade associations not lobbying in line with the Paris Climate Agreement.

 

12.3. Additional information.[Optional]

ACTIAM has outsourced the implementation of its voting policy to an external service provider. To be able to check progress on and alignment with the voting policy, ACTIAM has incorporated checks and balances. These checks consist of the following: (1) instant reporting on missed voting-cases including explanation; (2) half-yearly reporting from Sustainalytics on casted votes; (3) yearly check on the in-control statement; (4) yearly check on 45 companies that are randomly picked by ACTIAM; and (5) preview voting advice of 60 selected engaged companies.


LEA 13. Percentage of voting recommendations reviewed

13.1. Of the voting recommendations that your service provider made in the reporting year, indicate the percentage that was reviewed by your organisation, giving the reasons.

Percentage of voting recommendations your organisation reviewed

Reasons for review

13.2. Additional information. [Optional]

To further link voting and engagement ACTIAM, as of 2018, ACTIAM analysts are contacted by our service provider to preview voting advice of 60 selected engaged companies. In such cases, ACTIAM may apply stricter voting criteria, write a dedicated letter to a company before or after the AGM, or discuss voting decisions in engagement meetings.


LEA 14. Securities lending programme

14.1. Does your organisation have a securities lending programme?

14.2. Describe why your organisation does not lend securities.

This has not our business focus/is not included in our strategy.

14.4. Additional information. [Optional]


LEA 15. Informing companies of the rationale of abstaining/voting against management

15.1. Indicate the proportion of votes participated in within the reporting year in which where you or the service providers acting on your behalf raised concerns with companies ahead of voting.

15.3. Additional information. [Optional]

If we have severe concerns, we will always engage with a company and thus raise those concerns ahead of voting. This is not necessarily linked to the AGMs of those companies. Also we have a list of selected companies where we specifically try to link voting and engagement activities.


LEA 16. Informing companies of the rationale of abstaining/voting against management

16.1. Indicate the proportion of votes where you, and/or the service provider(s) acting on your behalf, communicated the rationale to companies for abstaining or voting against management recommendations. Indicate this as a percentage out of all eligible votes.

16.2. Indicate the reasons why your organisation would communicate to companies, the rationale for abstaining or voting against management recommendations.

16.3. In cases where your organisation does communicate the rationale for abstaining or voting against management recommendations, indicate whether this rationale is made public.

16.4. Additional information. [Optional]

If we have severe concerns, we will always engage with a company and thus raise those concerns. This is not necessarily linked to the AGMs of those companies. Also we have a list of 60 selected companies where we specifically try to link voting and engagement activities. ​Occasionally, when the rationale for abstaining or voting against management recommendations is communicated, ACTIAM also makes it public through examples on its Annual Report. For example, in 2019 ACTIAM reported its rationale for voting against a poorly structured remuneration plan of US technology company.


LEA 17. Percentage of (proxy) votes cast

17.1. For listed equities in which you or your service provider have the mandate to issue (proxy) voting instructions, indicate the percentage of votes cast during the reporting year.

Votes cast (to the nearest 1%)

96.4 %

Specify the basis on which this percentage is calculated

17.2. Explain your reason(s) for not voting on certain holdings

17.3. Additional information. [Optional]

In total, at meetings of 113 companies votes were not casted due the following reasons:

- at 59 meetings, the votes were rejected due to issues with Power of Attorney (PoA) in place

- at 28 meetings, the votes were not voted due to ballots for the meetings appeared after the voting deadline

- at 6 meetings, the votes were not processed due to a technical issue with the Beneficial Owner documentation

- at 6 meetings, the votes were not executed due to custodian not providing voting services for the Austrian market

- at 3 meetings, the votes were rejected due to discrepancy in the number of shares

- at 3 meetings, the votes were not processed as trading occurred after the voting deadline

- at 2 meetings, the votes were rejected with custodian providing insufficient explanation on the cause of the rejection

- at 6 meetings, the votes were not processed for other (technical) issues


LEA 18. Proportion of ballot items that were for/against/abstentions

18.1. Indicate whether you track the voting instructions that you or your service provider on your behalf have issued.

18.2. Of the voting instructions that you and/or third parties on your behalf have issued, indicate the proportion of ballot items that were:

Voting instructions
Breakdown as percentage of votes cast
For (supporting) management recommendations
87.7 %
Against (opposing) management recommendations
11.8 %
Abstentions
0.5 %
100%

18.3. In cases where your organisation voted against management recommendations, indicate the percentage of companies which you have engaged.

24.3

18.4. Additional information. [Optional]

As a responsible investor, ACTIAM will tend to favour shareholder resolutions seeking policies, measures or disclosures that will have a positive impact on investee companies' social, environmental and ethical performance. We have a detailed policy on shareholder proposals based on our Fundamental Investment Principles. ACTIAM will normally vote in favour of shareholder proposals aimed at improving the company's governance and encouraging the company to implement policies and measures that may prevent a possible conflict with ACTIAM's Fundamental Investment Principles. ACTIAM will vote against shareholder proposals that might lead to the opposite. Just as with standard agenda items, all shareholder proposals will be analysed on a case-by-case basis.

To increase the impact of our active ownership activities related to our focus themes of climate, land and water, ACTIAM will link voting choices to engagement activities in two ways. First, ACTIAM has more stringent requirements for companies in sectors considered to be high-impact in terms of our focus themes. Specifically, when it comes to supporting management proposals at general meetings, ACTIAM applies additional sustainability requirements in relation to board structure, elections of directors, remuneration, risk management and corporate restructurings.

Secondly, ACTIAM will periodically evaluate how engagement companies are responding to our engagement efforts and how the companies are progressing on the issues identified during engagement. ACTIAM may withhold support for management resolutions when companies are insufficiently responsive or making progress too slowly.

To further link voting and engagement ACTIAM, as of 2018, ACTIAM analysts are contacted by our service provider to review the voting advice of 60 selected engaged companies. In such cases, ACTIAM may apply stricter voting criteria, write a dedicated letter to a company before or after the AGM or discuss voting decisions in engagement meetings.

Note that, the percentage in question LEA 18.3 reflects the ratio of number of engaged companies versus the number of companies where we voted against management recommendations. These engagement do not (necessarily) result from the voting outcome/recommendation. In other words, our engagements are not per se related to voting activities. 


LEA 19. Proportion of ballot items that were for/against/abstentions

19.1. Indicate whether your organisation has a formal escalation strategy following unsuccessful voting.

19.2. Indicate the escalation strategies used at your organisation following abstentions and/or votes against management.

19.3. Additional information. [Optional]

If voting is unsuccessful, there are several steps that ACTIAM can take. These steps are part of an wider escalation strategy if active ownership activities are not leading to the expected result. These may include starting a new or addressing the issue in a running engagement, making a public statement, (co)filing a shareholder resolution or speaking at a shareholder meeting. Also, as a tool of last resort, ACTIAM can decide to reduce its exposure or exclude the company from investment. For more on our voting policy and other instruments, see: https://www.actiam.com/48df26/siteassets/4_verantwoord/documenten/en/actiam_sustainable-investment-instruments.pdf and https://www.actiam.com/48dc92/siteassets/4_verantwoord/documenten/en/actiam-voting-policy_201911.pdf


LEA 20. Shareholder resolutions

20.1. Indicate whether your organisation, directly or through a service provider, filed or co-filed any ESG shareholder resolutions during the reporting year.

20.2. Indicate the number of ESG shareholder resolutions you filed or co-filed.

2 Total number

20.3. Indicate what percentage of these ESG shareholder resolutions resulted in the following:

Went to vote
100 %
Were withdrawn due to changes at the company and/or negotiations with the company
0 %
Were withdrawn for other reasons
0 %
Were rejected/not acknowledged by the company
0 %
Total 100%

20.4. Of the ESG shareholder resolutions that you filed or co-filed and that were put to a vote (i.e., not withdrawn), indicate the percentage that received approval:

0 >50%
3 50-20%
1 <20%

20.5. Describe the ESG shareholder resolutions that you filed or co-filed, and the outcomes achieved.

  • BHP Group Limited & BHP Group Plc: The proposal is calling for BHP to amend its constitution to allow shareholders to submit non-binding resolutions that would express an opinion or request information on the way in which directors exercise their management powers > proposal was rejected as 20.7% (London) and 10.2% (Sydney) of shareholders voted in favour.
  • BHP Group Limited & BHP Group Plc: The shareholders are asking BHP to suspend its membership in industry associations, such as the Minerals Council of Australia (MCA), COAL21 and the Business Council of Australia (BCA), whose actions oppose initiatives on climate change. The resolution went to vote with 24.0% (London) and 29.8% (Sydney) of shareholders voting in favour, but the vote was not valid as it was conditional on the proposal above being approved by the required majority. 

20.6. Describe whether your organisation reviews ESG shareholder resolutions filed by other investors.

ACTIAM recognises and supports the strong contribution that shareholders make to shaping general meeting agendas by filing proposals. As a responsible investor, ACTIAM will tend to favour shareholder resolutions seeking policies, measures or disclosures that will have a positive impact on investee companies’ social, environmental and ethical performance. ACTIAM will normally vote in favour of shareholder proposals aimed at improving the company’s governance and encouraging the company to implement policies and measures that may prevent a possible conflict with ACTIAM’s principles. ACTIAM will vote against shareholder proposals that might lead to the opposite. ACTIAM has developed its own guidance regarding ESG issues, derived from our Fundamental Investment Principles and Fundamental Material Drivers.

20.7. Additional information. [Optional]

ACTIAM supported 64.3% of 1.421 resolutions filed by shareholders.


LEA 21. Examples of (proxy) voting activities

21.1. Provide examples of the (proxy) voting activities that your organisation and/or service provider carried out during the reporting year.

ESG Topic
Executive Remuneration
Conducted by
Objectives

Disclosure of metrics for executive compensation

Scope and Process

The company engaged with shareholders on the executive compensation practices and in 2018, it continued the dialogue, but decided not to introduce many changes. The most significant changes were announced in 2017, and included modifying the long-term award (LTIP) mix to be more performance-based, adding the S&P 500 Total Return Index to the LTIP Performance Share Peer Group, and strengthening the CEO’s ownership requirement. The short-term incentive under the pay programme includes health, environment and safety metrics. However, the company does not fully disclose all the metrics in that area, such as the specific target performance goals. In addition, under the current LTIP, the company utilises only one performance metric – total shareholder return. Given these concerns, ACTIAM voted against the approval of the compensation of the company’s named executive officers (approximately 7 percent of the votes cast were vote against the approval).

Outcomes
ESG Topic
Climate Change|Sustainability reporting
Conducted by
Objectives

Formation of climate change committee

Scope and Process

A shareholder proposal asked the board to establish a new board committee on climate change to evaluate the company's strategic vision and responses to climate change and better inform board decision making on climate issues. The proponent believed that an independent committee would better provide focused fiduciary oversight of climate related risks and opportunities and should include board members with climate change expertise in areas such as policy, carbon pricing, renewable energy, adaptation and climate science. As the committee would increase the overall level of oversight and disclosure of climate-related issues, we voted in favour of the proposal.

Outcomes
ESG Topic
Political spending / lobbying
Conducted by
Objectives

Disclosing of political contributions and expenditures report

Scope and Process

The proposal asks the company prepare and semi-annually update a report that discloses the company’s: policies and procedures for making electoral contributions and expenditures with corporate funds (both direct and indirect), including the board’s role (if any) in that process; and monetary and non-monetary contributions or expenditures that could not be deducted as an ‘ordinary and necessary’ business expense under section 162(e)(1)(B) of the Internal Revenue Code, including (but not limited to) contributions or expenditures on behalf of candidates, parties, and committees and entities organized and operating under section 501(c)(4) of the Internal Revenue Code, as well as the portion of any dues or payments made to any tax-exempt organisation (such as a trade association) used for an expenditure or contribution that, if made directly by the company, would not be deductible under section 162(e)(1)(B) of the Internal Revenue Code. The proposal does not include lobbying spending.
In our view, the increased disclosure regarding political spending process, policies and expenditures, in particular, the disclosure of expenditures to trade associations, would be beneficial for shareholders and would improve the overall accessibility of the company’s spending. Therefore, ACTIAM voted in favour of this proposal.

Outcomes
ESG Topic
Other governance
Conducted by
Objectives

Improving indepence of auditor company

Scope and Process

We noted that the current auditors of the company, Ernst & Young, had been serving the company for 21 years. We view a period of 20 years or more as damaging to independence of the auditor company and therefore we voted against extending the term of the auditor.

Outcomes
ESG Topic
Human rights|Water risks
Conducted by
Objectives

Improve disclosure on risk management related to human right to water

Scope and Process

ACTIAM voted in favour of a proposal seeking the board of a company to report on its due diligence process to identify and address risks related to the human right to water throughout its operations. In its annual report, the company names fresh water access as a potential risk factor of a natural or human cause that is out of the company’s control and that could disrupt its operations. Furthermore, the company’s CSR report includes metrics such as concentration in discharges to surface water and total amount of oil discharged to surface water. Although the company seems to be sufficiently addressing the water management issues and has in place the relevant commitments to water preservation, the increased disclosure of risks related to water scarcity and wastewater management related to the human right to sufficient, safe, acceptable, physically accessible and affordable water for personal and domestic uses, would enhance the understanding of the company’s long-term vision.

Outcomes
ESG Topic
Climate Change|Sustainability reporting
Conducted by
Objectives

Aligning GHG Reductions with Paris Agreement

Scope and Process

ACTIAM voted in favour of a proposal asking the company to report on how it can reduce its carbon footprint in alignment with greenhouse gas reductions necessary to achieve the Paris Agreement’s goal of maintaining global warming well below 2 degrees Celsius. ACTIAM believes the enhanced disclosure concerning this issue could serve in shareholders interest, adding some meaningful information to understanding of the risks and opportunities in a carbon-constrained environment.  Although the proposal did not get the majority vote, the company responded in a public statement that they, as an efficient and socially and environmentally responsible producer, is well-positioned to compete in any supply-and demand scenario, including one with reduced GHG emissions in line with the goals of the Paris Agreement.

Outcomes
ESG Topic
Executive Remuneration|General ESG
Conducted by
Objectives

Adoption of environmental and social metrics in management compensiation

Scope and Process

ACTIAM voted against the remuneration reports of multiple companies. In this particular case, the company stated in its remuneration report that the CEO’s remuneration is reasonable and that he has waived his participation in the bonus and long-term incentive schemes due to his significant personal shareholding in the company. While this ensures his and shareholders’ interests are aligned, there are no environmental or social metrics that could incentivise management to adopt a more responsible attitude. We believe that voting against the remuneration report is an efficient way to highlight the issue and voice our concerns.

Outcomes
ESG Topic
Health and Safety
Conducted by
Objectives

Disclosure on the impact of sugar and the company’s products on public health

Scope and Process

The shareholders of the company requested a report containing feedback from independent and nationally recognised scientists and scholars on the company’s sugar products marketed to consumers, especially children. The company is subject to increased taxes on the sale of sugar-sweetened beverages introduced by states and countries could lead to decreased consumer demand which in turn could adversly impact the company’s operations and profitability. Therefore, in light of obesity epidemic as well as potential reputational and financial risks faced by the company, ACTIAM believes that shareholders would benefit from the disclosure on the impact of sugar and the company’s products on public health. Consequently, ACTIAM voted for this proposal.

Outcomes
ESG Topic
Shareholder rights
Conducted by
Objectives

Right to act by written consent

Scope and Process

ACTIAM voted in favour of a proposal to enable shareholders to act on important issues in lieu of a special meeting and will enhance shareholders rights. ACTIAM noted that this proposal specifies a reasonable threshold of support (majority of shareholders) that will prevent abuse of the right.

Outcomes
ESG Topic
Human rights
Conducted by
Objectives

Implement informed consent relating to proposed fracking activities 

Scope and Process

ACTIAM voted in favour of a proposal requesting a review of the fracking process to confirm that Free, Prior Informed Consent (FPIC) was given by the native population and title holders on whose lands the company intends to undertake fracking. In ACTIAM's view, although the company provides convincing arguments on how it carries out a thorough due diligence process prior to acquiring the consent from the native title holders, the proponent successfully cast some doubts on whether the company has addressed the native title holders’ concerns and abide the FPIC. Therefore, a review of the process should provide shareholders with more understanding of the company’s actions.

Outcomes

21.2. Additional information. [Optional]

At shareholder meetings, ACTIAM explicitly votes when it comes to socially responsible and sustainable issues based on ACTIAM's Voting Policy. This policy is based on the ACTIAM Sustainability Policy and recognized international "best practice" guidelines for corporate governance. The voting policy focuses primarily on proposals submitted by shareholders as these agenda items are - much more than the proposals submitted by management - about the impact of policies related to the environment, human rights or ethical principles. 


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