Investment Association issues publication setting out shareholder priorities for 2023

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24 Feb, 2023

The Investment Association (the 'IA') has issued a publication setting out shareholder priorities for 2023.

The shareholder priorities, which are issued annually in advance of the AGM season, outline the key areas that investment managers have identified as critical drivers of long-term value for companies:

  • Responding to climate change;
  • Accounting for climate change;
  • Audit quality;
  • Diversity; and
  • Stakeholder engagement.

The shareholder priorities have remained consistent with those of 2022.  The publication sets out:

  • the progress against each priority based upon an analysis of the 2022 AGM season;
  • investor expectations for the 2023 AGM season; and
  • The Institutional Voting Information Service (IVIS) approach to assessing companies against these expectations in 2023.

IVIS will analyse UK listed companies against these priorities and the broader IA guidelines to provide information to help shareholders reach a decision on how to vote at company AGMs, including issuing red tops – its highest warning level – and amber tops to companies where greater consideration is needed. The publication indicates that IVIS will give:

  • Red top to FTSE 350 companies where women represent 35% or less of the Board, and 30% or less of the Executive Committee and their direct reports;
  • Red top to FTSE small cap companies where women represent 25% or less of the Board or the Executive Committee;
  • Red top FTSE 100 companies that have not met the Parker Review target of one director from a minority ethnic group;
  • Amber top FTSE 250 companies that do not disclose either the ethnic diversity of their board or a credible action plan to achieve the Parker Review targets by 2024;
  • Amber top to all companies that do not make disclosures against all four pillars of Task Force on Climate-related Financial Disclosures (TCFD).

IVIS will also continue to monitor whether companies have made a statement that the directors had considered the relevance of climate and trsnation risks associated with the transition to net-zero, when preparing and signing off on the company accounts.

The Shareholder Priorities build on the Principles of Remuneration, published in late 2022 (link to IA website), which outline investment managers expectations on company executive pay and pensions.

A press release and the full publication are available on the Investment Association website.

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