23 avril 2024 Wilma Rix Corporate Governance - Environment and Climate Change - ESG

PIRC Shareholder Voting Guidelines updated for 2024 AGMs

PIRC (Pensions & Investment Research Consultants), the independent shareholder advisory body, has updated its Shareholder Voting Guidelines for AGMs held in 2024. Changes made are incremental and focus on facilitating shareholder engagement and ensuring company accountability on climate and ESG issues in particular.

The new recommendations address three areas of ongoing interest to investors, as follows.

Virtual-only general meetings

  • PIRC previously encouraged hybrid shareholder meetings but has now hardened its position and states that it will recommend opposition to the election of the Chair if a meeting is held as a virtual-only meeting without sufficient justification. This is on the basis that PIRC regards virtual-only facilities as an undue restriction on shareholders' rights to participate.
  • PIRC traditionally takes a more restrictive view than other proxy advisors, such as the Investment Association's IVIS, ISS and Glass Lewis, on a number of issues, particularly related to share capital management. On this topic, however, PIRC is in line with other guidance for UK general meetings which also heavily discourages the use of virtual-only shareholder meetings.

Approval of management Say on Climate resolutions

  • PIRC already considers whether to support Say on Climate resolutions put by issuers by assessing aspects of the company's Climate/Transition report. Key factors evaluated are:
    • the responsibility of the Chair for the climate strategy;
    • the presence of at least one director with adequate climate skills;
    • the provision of climate-related training for directors;
    • the company's stance on membership in anti-climate change lobbies;
    • a well-defined timeframe for the climate strategy; and
    • detailed scenario planning for a 1.5 degrees Celsius target, with quantified emission reduction targets across all Scope 1, 2, and 3 emissions, complemented by a commitment to net zero.
  • For this year, PIRC has stated that it may oppose any resolutions to approve climate strategies and targets if the company's Climate/Transition report is not included within the annual report and accounts (e.g. if it is published in a separate sustainability report). PIRC wishes to emphasise the importance of integrating climate-related disclosures directly into the core financial reporting documents so that shareholders can rely on them and hold companies accountable at AGMs.
  • This change will be of limited relevance to the market as the number of Say on Climate resolutions has fallen significantly over the last couple of years. In addition, UK-incorporated issuers are now in any case required to include certain climate-related disclosures in the non-financial and sustainability information statement in their strategic reports. Non-UK incorporated companies listed in London may still choose to publish any climate information separately, if their home jurisdiction permits this, as the climate reporting requirements in the Listing Rules mean companies must give information about whether and where their climate disclosures have been published but do not compel companies to include them in the annual report and accounts.

Modern Slavery Statement

  • Up to now, PIRC has collected data on compliance with the reporting requirements under the Modern Slavery Act 2015 but not made voting recommendations on the basis of this data.
  • From 2024 onwards, PIRC may recommend that investors abstain from or vote against the election/re-election of the chair of the board or the annual report and accounts, where companies have failed to comply with MSA requirements, especially where statements are not signed by a director, do not include a clear date, or lack clarity on the periodic review process or evidence no review, suggesting inadequate governance and risk management practices.

Click here for more information on PIRC.