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Australian Council of Superannuation Investors (ACSI)

Service Provider Reporting Framework 2017

You are in Stewardship Services » Voting

Voting

SS 14. ESG in voting recommendations

14.1. Describe how ESG is taken into consideration in voting recommendations.

          Environmental, social and governance factors all underpin ACSI’s proxy voting recommendations. ESG is integrated through ACSI fund members’ active ownership of shares, industry collaboration on ESG issues and through company engagement and proxy voting. 

ESG considerations feed into voting recommendations through internal and external research, previous years’ voting outcomes, controversies and through ACSI’s priority issues which include; labour and human rights in supply chains, corporate governance issues, remuneration issues, climate change and board diversity.

ACSI will generally favor those proposals that result in the disclosure of information that is useful to shareholders and not overly prejudicial to their commercial interests. Resolutions should be linked to improved governance or transparency within the relevant company. A judgment on each proposal will be based on what is in the best interest of shareholders, and a thorough assessment of any potential impacts on the company.
        

14.2. Provide examples

ESG considerations feed into voting recommendations through internal and external research, previous years’ voting outcomes, controversies and through ACSI’s priority issues which include; labour and human rights in supply chains, corporate governance issues, remuneration issues, climate change and board diversity.


SS 15. Raising concerns with companies ahead of voting (Private)


SS 16. Voting model and clients’ needs

16.1. Describe the processes that are in place to ensure that your voting model takes into account the diversified needs of your clients.

          ACSI’s voting model is based on ACSI’s Governance Guidelines, which were specifically and collaboratively created by ACSI members to represent their interests. The Guidelines are used by management to arrive at their voting recommendations. ACSI’s proxy-voting recommendations are not compulsory and members can choose not to follow them depending on their internal goals.
        

SS 17. Voting against management

17.1. Describe what ESG factors and situations would trigger you to recommend voting against management.

          Environmental, social and governance factors all underpin ACSI’s proxy voting recommendations. Generally, a vote ‘against’ is triggered when the resolution is not in line with the expectations of our members, as set out in ACSI’s Governance Guidelines. 

For example, ACSI may vote against the remuneration report on the basis of lack of accountability within a company, or because of the avoidance of seeking shareholder approval.

ACSI generally recommend against board proposals/resolutions. The only places where ACSI vote against management are in remuneration-related resolutions.
        

17.2. Indicate whether you communicate the rationale to companies when you abstain or vote against management recommendations on behalf of your clients

17.3. Describe what subsequent actions you take after voting against management.

          ACSI provides analysis of shareholder resolutions on a case-by-case basis in the Australian market.
 
For all companies covered by our external research provider, ACSI generally meets with the company around the time of their AGM and writes to each company where there was an ‘against’ recommendation expressing the rationale for the vote.

Companies where there are more material concerns become Corporate Governance engagement priorities and ACSI will continue to hold face to face meetings with the company seeking a change to its practices.

ACSI will provide a copy of our voting recommendations to companies, on a confidential basis, if requested and continue engagement with all ASX300 companies going forward.
        

SS 18. Monitoring voting outcomes

18.1. Describe how you monitor voting outcomes.

          ACSI monitors the outcomes and keeps a record of all the resolutions for ASX300 companies each year. Generally, these outcomes are grouped by key topics or ESG issues, such as remuneration or board diversity, and assessed against ACSI’s objectives in these categories which could include ensuring the alignment of executive and shareholder interests and improving gender diversity on ASX300 boards.
        

18.2. Indicate whether you provide clients with recommendations for next steps.

18.3. Describe how you incorporate ESG factors in your recommendations for next steps.

          The outcomes of AGMs, particularly where there was a significant vote against, feeds into ACSI’s engagement program for the following year.  ACSI continues to engage ASX300 companies after the AGM on material ESG factors and provide feedback to our members on what the issues are and how ACSI will be proceeding.
        

SS 19. Publishing voting outcomes

19.1. Indicate whether you publish your voting outcomes.

19.2. Indicate whether you enable your clients to publish your voting outcomes.


SS 20. Mechanisms for clients to review voting recommendations

20.1. Indicate whether you have formal mechanisms in place for clients to review your voting recommendations.

20.2. Describe the formal mechanisms you have in place if clients wish to review your voting recommendations.

          ACSI provides voting recommendations to AVAS subscribers for the ASX300 to review the votes and the rationale behind the vote. ACSI does not vote on behalf of its members and members can choose not to follow them depending on their internal goals.

Individual members will often seek further discussion and clarification with ACSI on specific voting recommendations, particularly if they are in receipt of alternative reviews from other proxy voting services or investment managers.
        

SS 21. Involvement in projects to improve voting trail and obtaining confirmation

21.1. Describe your involvement in any project to improve the voting trail and/or to obtain vote confirmation.

          ACSI provides all its subscribers with a spreadsheet detailing recommendations and voting outcomes, and a mechanism for each recipient to record within that their own voting directions.

ACSI has also worked with other global voting platforms, above and beyond its own member platform, to disseminate the voting recommendations to subscribers and facilitate their voting.

ACSI has also participated in an international initiative to encourage more companies to engage in poll voting, rather than show of hands, to ensure that the economic interests of investors are more fully represented in voting outcomes.
        

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