Our takeaways from the 2022 proxy season
- R&CoBZ voted for all the stocks the bank owns in the Mosaique funds as well as for stocks within client mandates (unless a client opted-out of voting).
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This meant that the bank voted at annual general or extraordinary meetings of 45 companies with a total of 816 proposals (708 came from management, 63 from shareholders and 45 were "non-voting items").
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Overall, the bank voted "for" in 82% of the proposals and "against" for the remaining 13%, in 5% the Bank withheld its votes or non-voting items were on the agenda.
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The top three regions were the US (46% of proposals), followed by Europe (29%) and China (24%).
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Regarding sectors, top three among total votes cast were Industrials (e.g., Epiroc and Otis), Consumer Cyclical (e.g., Nike and Amazon) and Communication Services (e.g., Tencent and Comcast).
The Bank's voting decisions and research are based on the proxy voting recommendations from ISS (Institutional Shareholder Services). The bank’s equity analysts assess and analyze ISS’s recommendations by also collaborating with the research teams of other asset and wealth management business lines across R&CoBZ as well as our equity research partners at Redburn. To comply with the guidelines of the ISS, companies must commit to the "triple bottom line": Focusing on profit, people and the planet. Besides board independence and its composition, another factor that is closely monitored is compensation and how it is aligned with environmental, social & governance ("ESG") targets. ISS also supports shareholder proposals which aim to progress environmental and social issues, thus leading to a positive transformation of businesses.
Looking ahead
The shift in voting practices is expected to continue in 2023 and should be examined in the context of the related underlying shifts that are currently happening in the corporate world. Changes are underway in both:
- “What” companies are supposed to address (including a growing number of ESG issues); and
- “Who” companies are supposed to address (reflecting a shift toward multistakeholder capitalism in which companies are placing a higher priority on serving the long-term welfare of constituents, beyond shareholders).[3]
A highly visible example of a business which recently came under shareholder criticism is Nike (see Case study).
The geopolitical tensions and regulatory changes of 2022 caused a decrease in shareholder activism from the post-pandemic surge of 2021. This was captured by Ernst&Young in its 2022 shareholder activism proxy season review report: In the 12 months ended June 30 2022, 331 new activism campaigns were initiated globally, a decline of 8% from the prior year. This is the lowest recorded campaign activity since 2017, when there were just 303 campaigns. The US still leads the global activity, but Europe's activity remained strong despite the war in Ukraine. This year brought new regulatory changes and potential changes in the future. Activists are beginning to focus more on ESG and are shifting away from short activism, finding new partners in private equity.
