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Local Pensions Partnership

PRI reporting framework 2020

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.

LPPI's service provider makes voting recommendations in line with Sustainability Proxy Voting Guidelines. These are designed for investors who are concerned with ensuring their shareholder voting aligns with an active ownership approach focussed on portfolio value preservation and the consideration and incorporation of sustainability (ESG) factors.

The RI team at LPPI review the voting recommendations made by the proxy voting provider for upcoming company meetings and take the final decision on the direction of voting.

LPPI has a watch list for company meetings due to receive significant resolutions (for example on climate change) and will review the provider's voting recommendation in detail for flagged meetings.

Where a decision is taken to divert from the provider's voting recommendation, the rationale for doing so is recorded on the voting platform in order to be available for vote reporting purposes and future reference.

 

 

12.3. Additional information.[Optional]

LPPI's Service provider makes voting recommendations in line with Sustainability Proxy Voting Guidelines which are designed for investors concerned with ensuring active ownership, portfolio value preservation and the incorporation of sustainability (ESG) factors is carried through into their proxy voting activity.

The Sustainability policy seeks to promote support for recognized global governing bodies which are promoting sustainable business practices, advocating for stewardship of the environment, fair labour practices, non-discrimination, and the protection of human rights.

The policy takes as its frame of reference internationally recognized sustainability-related initiatives such as 

  • United Nations Environment Programme Finance Initiative (UNEP FI)
  • Principles for Responsible Investment (UNPRI)
  • United Nations Global Compact, Global Reporting Initiative (GRI),
  • Carbon Principles,
  • International Labour Organization Conventions (ILO),
  • CERES Principles,
  • Global Sullivan Principles,
  • MacBride Principles,
  • environmental and social European Union Directives

On matters of corporate governance, executive compensation, and corporate structure, the Sustainability Policy guidelines are based on a commitment to create and preserve economic value and to advance principles of good corporate governance.


LEA 13. Percentage of voting recommendations reviewed (Not Applicable)


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.

LPPI 's programme for securities lending is forthcoming rather than in operation currently. 

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]


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.

16.4. Additional information. [Optional]


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%)

99 %

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]


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
90 %
Against (opposing) management recommendations
10 %
Abstentions
0 %
100%

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

0

18.4. Additional information. [Optional]


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.

19.3. Additional information. [Optional]


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.

1 Total number

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

Went to vote
0 %
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
100 %
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:

>50%
50-20%
<20%

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

LPPI co-filed a climate change related shareholder proposal intended for Exxon Mobil's 2019 AGM.  Our co-filing was in support of the asks made of the company by Climate Action 100+ lead investors.

The proposal called for the disclosure (within annual reporting from 2020) of short, medium, and long-term emissions reduction targets aligned with the Paris Agreement goal of limiting warming well below 2 degrees. 

The shareholder proposal was rejected by the company following a successful application for no action relief from the SEC and did not make it onto the ballot for the 2019 AGM.

LPPI supported all remaining votable climate-related resolutions at the Exxon 2019 AGM.

 

 

 

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

We routinely review the ESG resolutions filed by other investors where these make it onto the ballot to be voted at company meetings.

The review forms part of our decision-making on whether to give support to ESG focussed shareholder proposals at meetings where we hold votable shares.

 

20.7. Additional information. [Optional]


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
Company leadership issues|Other governance
Conducted by
Objectives

LPPI sought to hold directors accountable for significant material weaknesses in company internal controls.  

Scope and Process

LPPI voted against the re-election of the CFO and incumbent audit committee members at a Diversified Chemicals company due to material failures in internal controls relating to the construction of a new petrochemicals complex that led to substantial additional cost.

Outcomes
ESG Topic
Executive Remuneration
Conducted by
Objectives

Executive remuneration incentives are well balanced between short- and long-term pay, incentivising performance against the company's key drivers for long-term success.

Scope and Process

LPPI voted against 19% of management proposed resolutions on remuneration and supported 57% of shareholder resolutions relating to remuneration in 2019.

Example

LPPI voted against a resolution on the implementation of the remuneration policy at an industrial conglomerate.

The CEO received a significant increase to fixed pay without sufficient explanation, during a handover period to the CEO-designate.

Outcomes
ESG Topic
Human rights
Conducted by
Objectives

Companies place adequate focus upon identifying and addressing adverse human rights impacts in their operations and supply chains.

Scope and Process

In 2019, LPPI supported 85% of shareholder resolutions related to improving corporate action on human rights issues.

Each resolution was evaluated on its merits, case-by-case.

Example

At an apparel retailer, greater transparency was sought on the company's processes for identifying and assessing human rights risks in its operations and supply chain. LPPI supported a resolution seeking better and more detailed disclosure of the information needed by shareholders to gauge how well the company is managing human rights related risks.

Outcomes
ESG Topic
Diversity
Conducted by
Objectives

Diversity within management, the Board and workforce can have a positive effect on long-term value creation and reduce the likelihood of litigation resulting from discrimination affecting the company's bottom line and reputation.

Where it can be provided without undue burden to the company, reasonable disclosure of information on diversity characteristics and activities underway to promote and ensure diversity are of value to shareholders. 

Scope and Process

In 2019 LPPI supported 83% of shareholder resolutions relating to diversity and voted against management in 25 instances where board nominations failed to address an inadequacy in board diversity.

Example

LPPI supported a resolution at an electronic components manufacturer requesting the company to provide enhanced reporting on its diversity policies. Whilst the vote failed to pass by a slim margin, the company subsequently published the requested report.

 

Outcomes
ESG Topic
Climate Change
Conducted by
Objectives

Climate change poses significant financial risks to companies globally. The production and disclosure of metrics on operational carbon intensity and on targets for future greenhouse gas emissions reductions are needed by shareholders as a basis for assessing the effectiveness of the Board's governance of climate change risk management.

Scope and Process

LPPI supported 77% of climate-related resolutions in 2019.

Examples

At an industrial machinery manufacturer, LPPI supported a resolution to adopt a policy on the adoption of time-bound, quantitative emissions reductions targets.

At energy companies, LPPI supported resolutions to

  • set and publish greenhouse gas emissions reduction targets
  • report on mitigating the health and climate impacts of coal use
  • report on plans to reduce carbon footprints and align with Paris Agreement goals
  • Approve reduction targets for future fossil fuel exposure 
Outcomes

21.2. Additional information. [Optional]


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