The Investment Association (IA) has said climate and diversity will be the top of the agenda for investment managers this AGM season.
The priorities were among a full list of the IA’s expectations of companies, and the areas mentioned are those that managers see as critical for companies’ long-term value, IA stated.
The Institutional Voting Information Service (IVIS) will analyse UK-listed companies disclosure on the issues, the IA said, which should “provide information to help shareholders reach a decision on how to vote at company AGMs.”
See also: – Exclusive comment from the IA’s Sarah Woodfield on the priorities for AGM season
The IA added climate is one of the biggest risks to a companies’ long-term stability and companies not reporting on all four pillars of the Task Force on Climate-related Financial Disclosures (TCFD) will earn an amber top from the IVIS.
In terms of diversity, IVIS will begin issuing a “red top” where FTSE 100 companies do not meet the Parker Review target of having one ethnically diverse board member. There will be an “amber top” for FTSE-250 companies that do not disclose the ethnic diversity of their boards or do not have an action plan to achieve the Parker Review targets by 2024.
FTSE smaller companies can expect IVIS to “red top” them this year if women represent 25% or less of the board and 25% or less of their executive committee. The current red top approach for companies on the FTSE 350 is an expectation women represent at least 33% of the board and 28% of the executive committee and their direct reports.
Last week, ESG Clarity reported the number of women on FTSE 350 boards and executive committees has climbed steadily over the past year, with FTSE 100 women’s board representation now standing at 39.1%, up from 36.2% at the beginning of 2021. The FTSE 250 made similar progress with women’s representation now standing at 36.8%, up from 33.2% at the beginning of 2021.
See also: – AGM season: All eyes on climate votes – ESG Clarity
Commenting on today’s announcement Andrew Ninian, director of stewardship and corporate governance at the IA, said: “Investment managers want to support companies to deliver long-term, sustainable returns on behalf of savers and pensioners up and down the country. Climate change and the transition to net zero is not an issue which can be left for future management teams or boards, investors wish to see the actions the current leadership will be taking, and investment managers will be watching closely this AGM season to ensure they are doing just that.
“While good progress has been made with greater female representation on boards and in senior leadership across the FTSE, investment managers now want to see this positive momentum include ethnic minority representation on boards, and are calling on all FTSE 100 companies to meet the Parker Review target this year.”
