annual review indst 2024 public - Flipbook - Side 35
Annual Review 2024
Q&A: Key updates to global voting policy
guidelines
Richard Adeniyi-Jones
Theme co-lead:
Human Capital
Dana Barnes
Themes: Executive
Remuneration, Human and
Labour Rights
Each year we update our global voting policy
guidelines, which inform the recommendations we make
to our clients. Going into 2025, we identified several
focus areas, including company culture, executive
remuneration and climate change.
Q. How do we consider the oversight of company
culture by boards and directors? Have we made any
updates to our voting policies in relation to this?
A. In our view, creating an inclusive culture can be linked
to positive company performance through outcomes
such as lower attrition and a more productive and
fulfilled workforce. We encourage companies to put
in place effective board oversight and management
structures across the employee lifecycle. Therefore,
we seek to hold boards accountable for more effective
oversight of human capital across all levels of a
company’s workforce.
We believe that boards and directors are ultimately
responsible for the culture of a company, and should
therefore have effective oversight of an inclusive culture
and diversity across all levels of the company’s workforce.
Where we believe that companies are failing to do so,
we will seek to engage on the topic, and potentially
recommend votes against directors who we identify as
being most responsible for the topic.
As part of last year’s voting policy review process, we sought
to raise our minimum criteria in areas where board progress
has been slower, such as in Japan and South Korea. We also
harmonised our committee independence guidelines for all
countries across Asia and Global Emerging Markets (GEMs).
We now encourage all companies to have a fully
independent audit committee (where one is present), and
majority independence of the nomination and remuneration
committees (where present), with an independent chair and
no executives on the committee.
As part of our updates for 2025, we are adjusting how
we escalate our voting approach on gender diversity for
companies in the Asia/GEMs region. In most markets,
where we would like to recommend votes against
directors for insufficient progress on gender diversity,
we will target the nomination committee chair and
members, including independent directors on the
committee. This marks a shift from our previous
approach of targeting executives, and aligns more
closely with our approach in other regions, which seeks
to hold the nomination committee accountable for the
task of increasing board independence.
We believe that boards and directors
are ultimately responsible for the
culture of a company.
In some markets, where there is a lack of disclosure or
the appropriate committees, we will adopt a more caseby-case approach. For European countries, we are aware
of the upcoming EU Women on Boards Directive, which
requires that, by mid-2026, every company listed on a
stock market within the EU needs to have at least 40%
female non-executive directors, or a female
representation of executive and non-executive directors
of at least 33%. We will engage with companies on this
topic ahead of the Directive’s implementation, and will
look to update our voting policies accordingly ahead of
the 2026 voting season.
Q. We have also seen increasing demand from
investors to hold boards and directors accountable
for strategy decisions and company performance.
How do we integrate this into our voting approach?
A. We generally consider strategic decisions and
capital allocation as part of our ongoing assessments
of boards and directors. However, in certain markets we
continue to integrate capital allocation as part of our
formal assessment when recommending votes on
director elections.
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