As the 2022 AGM (Annual General Meeting) season draws to a close, BNP Paribas Asset Management (‘BNPP AM’) reviews its voting and looks at the key governance trends.
• In the first half of 2022, BNPP AM voted at 1,608 general meetings globally, including 48% in Europe and 29% in North America, with the balance mainly in Asia.
• As an active shareholder, BNPP AM opposed 33% of resolutions, unchanged from 2021, underscoring its demanding voting policy.
• The highest level of opposition was for executive remuneration, with 61% of votes against or abstaining.
• This year, BNPP AM has further strengthened its climate expectations by implementing a ‘Say on Climate’ resolution assessment grid, as well as incorporating new biodiversity requirements.
Remuneration and climate were the two key themes of the 2022 AGM season
With 61% opposition, marginally ahead of last year’s 60%, remuneration was a key area of opposition. BNPP AM requires complete and transparent disclosure of corporate remuneration policies; they must align with long-term company performance and include non-financial objectives related to social and environmental issues. BNPP AM also opposed 39% of resolutions relating to financial operations and 36% of those relating to the appointment of directors.
This year, climate remained the centre of attention. BNPP AM initiated the filing of four resolutions at US companies, requiring their climate lobbying activities to be aligned with the objectives of the Paris Agreement.
Collaborative dialogue resulted in the withdrawal of three resolutions ahead of the AGMs following the companies’ commitments to comply with the request for the publication of a report. The outcomes of ‘Say on Climate’ resolutions have also been to the fore. Of 34 such resolutions on which BNPP AM voted, it supported 24%, compared to 71% last year. This significant drop in support resulted from the implementation of an analysis grid, clarifying and strengthening BNPP AM’s requirements.
Strengthened voting policy
BNPP AM reassesses its governance and voting policy annually to adapt it to new sustainability issues and challenges. In 2022, BNPP AM further strengthened its climate expectations with the implementation of a ‘Say on Climate’ resolution assessment grid. In accordance with its adherence to the Climate Action 100+ initiative and the Net Zero Asset Managers initiative (‘NZAM’), BNPP AM considered whether companies had:
- published all greenhouse gas emissions related to their activities (scope 1, 2 and 3 where applicable);
- set short- and medium-term goals and targets to achieve net zero greenhouse gas emissions by 2050 at the latest, in line with global efforts to limit warming to 1.5° C; and
- reported on their governance, strategy, risk management, metrics and climate objectives, in line with TFCD standards.
BNPP AM has also incorporated new requirements related to biodiversity preservation this year, in line with its roadmap published in 2021. BNPP AM expects companies to assess and report on their main environmental impacts and nature dependencies, starting with those in high-impact sectors, and focusing primarily on deforestation and water-related issues.
In instances where companies failed to meet these expectations, BNPP AM opposed the re-election of directors, discharge or approval of accounts. 1,231 of such resolutions were opposed at 216 companies for environmental or social considerations, the vast majority of which (1,144) were for climate or biodiversity reasons.
Michael Herskovich, Global Head of Governance & Engagement at BNPP AM, comments: “Voting and dialogue with companies are at the heart of our strategy as a sustainable investor, and the AGM season is an important opportunity for us to make our voice heard regarding the energy transition, environmental protection, equality and inclusive growth. This year, remuneration returned to the forefront of investors’ concerns, after being less of a focus amid the economic challenges faced during two years of the pandemic. Furthermore, the systematic integration of environmental and social considerations in our demanding approach to voting led us to oppose more than 1,200 resolutions.”
BNPP AM’s 2022 Voting Policy is available here.