Stewardship – Discussion


Gilshan: We need to re-frame some of this. We talk about levers or tools, but some of them are shareholder rights. You have the right to attend an annual general meeting. Making a statement is not seeking public- ity. It is saying: “I have engaged, or engagement is ongoing, but I would like to escalate that through attending an annual meeting.” I wish investors would use these rights fully to make change. Chapman: Voting against directors is a powerful and underused tool, rather than raising a shareholder resolution where the threshold for it to pass is higher. If you don’t believe that the transition plan is ambitious enough, then the unitary board structure in the UK means that you can vote against the board. Gupta: Why do companies feel that share- holder resolutions are against them? You are a shareholder; you have rights and are putting across your point of view. Why is it considered so negative? It should be used as a tool that investors have. Chapman: We have talked about the futility of engagement, but we should celebrate situations where it has worked. Engage- ment is about persistence, it’s not a one and done issue. Microfiber plastics in the oceans is a sig- nificant problem, with one million met- ric tons entering the seas every year, affecting the feeding patterns and repro-


Effective stewardship should be demon- strated irrespective of how your capital is


invested. Claudia Chapman Head of stewardship, regulatory standards division


Financial Reporting Council


The ability for owners to influence managers depends upon good transparency on their


practices. Simon Rawson, Director of corporate engagement & deputy chief executive ShareAction


duction of marine organisms as well as human health. Every time you wash your gym kit, 700,000 of these particles are discharged into wastewater. First Sentier Investors led an engagement with 30 other inves- tors to engage 13 washing machine manu- facturers. They also engaged with govern- ments, with France passing legislation from January 2025 where new washing machines have to be fitted with filters that capture these fibers. The coalition’s other successes include convincing Grundy and Electrolux to pro- duce machines that have these filters fit- ted as standard. Bishop: This feels less controversial. Nobody disagrees with not putting plas- tics in the ocean, so it is easier to sign up to versus issues that feel more politically charged. Marks: It is an interesting point because language matters. We were talking about the US. Right-wing politicians in the US may not find it controversial to talk about nature conservation, but if you say re-wilding… We need to think about the language and the way we have the conversation. In our everyday conversations, we think about who you are talking to and how they will receive it. As investors, we need to bring that mindset: what outcome are we seek-


ing? What’s the approach we want to take? How will we understand the milestones along the way? Gilshan: Sometimes a lot of the outcomes we look at are often through the lens of the company, such as CEO pay. We should look at these outcomes through the lens of beneficiaries and other stakeholders, such as employees and customers.


Coal Pension Trustees outsources its engagement function. What do you look for in people to represent you? Bishop: We use managers to engage with companies, but it doesn’t mean we cannot engage with companies ourselves. We see it as our role to engage with our asset managers. It is about efficiency. We can compare them and tell them that these are the areas you are doing well in, and these are the areas you are not. We do not often engage with individual companies, although we have tried to sup- port a few more resolutions, but we are resource constrained. Chapman: Choosing managers who align with your investment objectives and phi- losophy and then checking that is being followed, that is your stewardship role. Bishop: Then we escalate concerns within those relationships. We have withdrawn voting rights from managers and added voting rights to those we previously with-


Issue 125 | July-August 2023 | portfolio institutional | 43


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