New report also shows four key ‘social’ topics emphasized during off-season engagement
NEW YORK & LONDON, January 30, 2023 — A series of in-depth interviews with 62 ESG analysts at 30 institutional investment firms has revealed a renewed focus on climate transition policy and four key socially-themed topics for the 2023 Annual General Meeting (AGM) season.
Georgeson’s 2023 Institutional Investor Survey Insights Report reveals findings from conversations with institutional investors with a combined sum of $47 trillion in assets under management globally, including in the UK, Europe, the US and Asia.
93% (58) of those interviewed said that their companies were in the process of developing more detailed climate transition policy guidelines.
However, only 25% (16) of those surveyed said that they considered 'Say on Climate' resolutions to be important, with 37% (23) saying they were 'not important' and a further 37% (23) saying they had 'no strong opinion'.
Additionally, only 30% (19) said their organisations would act against companies that do not incorporate ESG metrics into executive incentive plans. As many as 50% (31) said that they would not act against companies that do not incorporate ESG metrics at this time, while 20% said that they would take the issue on a case-by-case basis.
Kiran Vasantham, Head of Investor Engagement in the UK/Europe, Georgeson, said: “By ramping up their climate risk investment strategies and voting policy guidelines, many asset managers are making a clear statement of intent to respond to asset owners’ demands over decarbonisation.
“Despite the additional pressure that the climate transition policy guidelines will bring, investors are still not united in applying measures or mandating ESG metrics on climate resolutions such as the voluntary ‘say on climate’.
“Interestingly, despite the active off-season engagement, we may see an increased focus on four key areas of ‘social’ resolutions related to human capital management, human rights, diversity and supply chain issues during the 2023 AGM season.”
70% of ESG analysts (43) interviewed by Georgeson said that human capital management was the most important of four socially themed topics raised during this year's off-season engagement followed by diversity, equity and inclusion at 63% (39), human rights at 43% (27) and supply chains at 20% (12).
Georgeson’s report noted that in cases where a proposal fails and is not supported by management — but does have 20% or more shareholder support — investors will expect to see companies issue a formal response to shareholders addressing their concerns.
Other statistics from the report include:
- 87% (54) of analysts cited 'rigour of metrics' as a key concern when assessing the quality of non-financial ESG benchmarks in remuneration. Other concerns include types of metrics (39 or 63%) and measurability (37 or 60%).
- 77% (48) of those surveyed said they would not oppose companies with a lack of diversity among executive directors. However, the topic is growing in stature, and investors are increasingly looking to scrutinize companies on the issue.
- 53% (33) of those surveyed said that they encouraged companies to incorporate social-related metrics — including employee health and safety, worker engagement and customer satisfaction — as a short-term goal tied to an executive's annual bonus.
Download Georgeson’s full Institutional Investor Survey Insight Report.