We consider voting to be an important part of the investment process and have had a formal and considered voting policy since 1994. We have explicitly incorporated corporate responsibility disclosure and performance into our voting since 2001 – being one of the first asset managers to do so globally.
Our Corporate Governance and Corporate Responsibility Voting Policy is reviewed annually and signed off by the Aviva Investors and Aviva Group Board.
During 2017 we voted at 4,151 shareholder meetings representing 92 per cent of meetings where we had a legal right to do so (95 per cent when excluding French domiciled funds). Unvoted meetings were primarily due to additional costs associated with the vote which were not justified by the benefit delivered to clients.
We vote against items where we consider that the specific proposals are not in the best interests of our clients; where we have wider concerns with individual directors, strategy, oversight and reporting; or to reflect disappointing outcomes from prior engagements. In 2017 we voted against 12,501 management proposals (25.8 per cent) and supported 646 shareholder resolutions (55 per cent). However, 114 of these shareholder resolutions were in effect management approved items that were proposed by major shareholders (frequently occurred in China).
Here are two examples of how we’ve used our vote to create change on board diversity and climate change.
Board diversity – how we’re holding companies to account
We are proud members of the Investor Group for the 30 per cent Club, which was launched as a campaign in the UK with a goal of achieving a minimum of 30 per cent women on FTSE-100 boards and senior management by 2020. The broad based support for this initiative has led to the 30 per cent Club extending its target universe to the FTSE350.
Aviva Investors were one of the first asset managers to integrate an assessment of board diversity into our voting approach in the UK. Our voting policy focused particularly on the chairman of the nomination committee and indicated our willingness to vote against their re-election and also the approval of the report and accounts should progress on diversity be deemed inadequate.
In 2017 we voted against the report and accounts of 42 FTSE 350 companies and seven board directors due to concerns over the lack of female board representation. While this number is still higher than we had hoped, we were pleased that there were 32 companies that had sufficiently changed their board composition and diversity policies to enable us to begin supporting their proposals, having previously voted against.
In 2018 our diversity voting policy is to be applied beyond the UK to include the largest US and European companies.
Exxon — oil giant U-turn on climate
Shareholder tabled resolutions, are typically opposed by management and can span a range of topics including environmental, social and governance issues. Aviva Investors has a rich history of engaging with management on the spirit and letter of shareholder proposals and supporting resolutions where we consider them to encourage more responsible corporate behaviours.
A good example of how we’ve been doing this is Exxon Mobil corporation. Aviva Investors have been engaging with Exxon on their climate strategy for a number of years. Traditionally Exxon has been amongst the more resistant of the oil majors to publicly support robust climate change policies and provide the market with investment-relevant reporting. We have been participating in a number of collaborative initiatives to apply pressure on management to adopt a more progressive approach, including a dialogue led by the Church Commissioners of England.
There have been a number of positive outcomes from the collective engagement including Exxon finally issuing a public statement of support for the Paris Climate Accord. However, the most significant milestone occurred at the 2017 AGM where the Church Commissioners co‑filed a shareholder proposal requiring Exxon to publish an annual assessment of the long‑term portfolio impacts of global climate agreements. Aviva Investors supported the proposal along with a staggering 62 per cent of other shareholders.
In February 2018, Exxon published its first report in response to the shareholder proposal. It also issued a new energy and carbon summary report alongside its latest Energy Outlook. Their reporting now includes two degree impact assessments and also portfolio sensitivity analysis to various supply and demand scenarios such as the proliferation of electric cars. We welcome the positive steps that the company has taken thus far and are optimistic that it will intensify pressure on the remaining industry laggards to enhance their own climate approach and reporting.