November 28, 2023
We use our influence as an asset owner to drive ESG improvements within our portfolio and across the broader capital markets. We believe that strong ESG practices will ultimately lead to stronger performance.
Proxy voting, an ownership right that allows BCI to participate in the decisions of public companies, is a powerful way we apply our influence. We aim to vote at the meetings of every public company in our portfolio and we publish these votes, in real time, through a transparent database on our website. We vote according to our Proxy Voting Guidelines which are updated every two years to reflect the evolving expectations we have for the public companies in our portfolio.
This voting season, from March to June 2023, was very active for us with 2,571 ballots cast globally. BCI’s support for shareholder proposals overall remained unchanged from the previous year at 59 per cent with minor increases for environmental and governance proposals and a slight drop for social proposals. This drop was largely driven by an overly prescriptive proposal filed at a dozen U.S. companies which received minimal support.
Environmental and Social Proposals
While a record number of environmental and social (E&S) shareholder proposals were filed in the U.S.; hundreds were withdrawn, indicating filers likely succeeded in getting companies to agree to the proposals’ asks. About 340 E&S proposals made it to the ballot, an increase from 300 in 2022.
Despite an increase in filing volume, average support for E&S proposals dropped to around 20 per cent this year from the high in 2021 which averaged just above 30 per cent.
Of note, there were substantially fewer governance proposals in the last two years as the focus shifted to E&S topics, with the exception of proposals seeking independent chairs and the separation of CEO and board chair roles, which doubled.
A Closer Look: Key Actions
- Imperial Oil: BCI filed our own climate-related shareholder proposal calling for increased climate risk disclosure at Imperial Oil. This was the first proposal of its kind filed by a large Canadian public sector pension investment manager going to a vote at a Canadian company. BCI was the sole filer on the proposal, which garnered the support of nearly 20 per cent of all publicly held voting shares (excluding parent company Exxon’s controlling shares).
- Meta Platforms: BCI supported a shareholder proposal asking Facebook’s parent company to set targets and publish an annual performance assessment regarding child safety impacts on its platform. The proposal won 17 per cent support, which is substantial since the founder controls 61 per cent of votes.
- Cenovus Energy: BCI supported a proposal requesting an assessment of how the company’s climate lobbying activities align with its net-zero goal. Management supported the proposal and it received 99.5 per cent support. BCI expects companies’ lobbying activities to align with their public commitments on environmental or social factors.
- Citigroup: BCI supported a proposal that asked Citigroup Inc. for a report on the efficacy of the company’s practices in ensuring its financing activities respect international standards for Indigenous Peoples’ rights. The proposal received significant support at just over 30 per cent.
The Path Ahead
Our work doesn’t stop at the ballot. After we vote, BCI directly follows up with select portfolio companies to ensure they understand our rationale and expectations. We also closely review our voting record to see how we made an impact and find areas to refine our approach. This review is an important step in preparing for any repeat shareholder proposals and will inform our biennial Proxy Voting Guideline update planned for 2025.
Proxy voting is part of a broader stewardship program at BCI, which also includes a significant focus on direct and collaborative engagement and policy advocacy work. As responsible stewards of our clients’ assets, acting as an engaged and committed investor is crucial to ensuring the long-term sustainability of our investments.