Focus expected to shift in 2021 proxy season
Skip to main content
pilogo-NEW
Subscribe
  • Subscribe
  • My Account
  • login
  • NEWS
    • Asset owners and the coronavirus
    • Alternatives
    • Consultants
    • Coronavirus
    • Defined Contribution
    • ESG
    • Frontlines
    • Hedge Funds
    • Investing / Portfolio Strategies
    • Money Management
    • Pension Funds
    • People Moves
    • Private Equity
    • Real Estate
    • Searches & Hires News
    • SECURE Act
    • Special Reports
    • WorldPensionSummit
    • Ron Schmitz
      Pandemic drives faster transition for Virginia to private markets
      Mubadala Investment Co. logo
      Mubadala draws on portfolio in coronavirus fight
      T.J. Carlson
      Texas Muni reduces downside risk during pandemic, finding opportunities now
      Scott Davis
      ‘Triage plan’ at Indiana system helped stem losses
    • Varagon Capital fills new business development role
      Fitch Group in deal to acquire CreditSights
      Credit managers’ outlook still gloomy but brightening – survey
      Digital Colony picks head of Europe capital formation
    • Will Martindale
      Cardano Group chooses group head of sustainability
      Meketa hires first chief marketing officer
      Nick Horsfall
      Redington names managing directors for investment consulting team
      Marsh & McLennan Agency sets sights on Compass Financial
    • New York State Common challenges Tyson’s dual-share stock structure
      Credit managers’ outlook still gloomy but brightening – survey
      Investors call for action on COVID-19-induced humanitarian crisis at sea
      U.S. jobs worker restaurant
      Job market slipped in December as virus surge hindered activity
    • Ascensus, Empower acquire Truist record-keeping business
      PCS Retirement acquires Alliance Benefit Group-Rocky Mountain
      Shawn O'Brien
      Annuities coming to target-date funds, but not right away
      David Ireland
      Sponsors returning to questions about in-plan annuities
    • New law requires MassPRIM to increase diversity of managers, consultants
      Impact investors getting savvier, more efficient – report
      SSGA alum named head of ESG at Mirova
      Aegon moves to cut carbon from workplace DC business
    • Galina Churkina
      Building research earns honor from Aquila Capital
      Blackstone holiday video
      Blackstone would like to show you how things are done around the office
      MacArthur Foundation invests in women’s safe housing fund
      Bill Harmon
      Voya offers fee break for minority-owned firms
    • The Sun Hung Kai Properties Ltd. logo is displayed on the Sun Hung Kai Centre building in Hong Kong on Sept. 13, 2018
      SHK spins out East Point Asset Management
      Man holding a business card with Hedge Fund written on it
      Hedge funds chalk up decade’s best returns in 2020 – HFR
      New hedge fund launches surpass liquidations in third quarter
      Michael Hintz
      CQS deal with spinoff team falls apart
    • New York State Common challenges Tyson’s dual-share stock structure
      A sign on the exterior of a Northern Trust Corp. branch in Chicago on July 13, 2017
      Northern Trust to cut 500 jobs
      Wells Fargo targets $8 billion in cuts
      Maine Public Employees boosts target to alternative credit
    • A sign on the exterior of a Northern Trust Corp. branch in Chicago on July 13, 2017
      Northern Trust to cut 500 jobs
      Wells Fargo targets $8 billion in cuts
      A sign at a China Telecom Corp. store in Shanghai on Jan. 6, 2021
      Managers make further divestments from sanctioned Chinese firms
      The Chinese flag flies in front of the Liaison Office of the Central People's Government in Hong Kong on May 22, 2020
      Standard Life Aberdeen JV to open mainland China pension insurance company
    • Maine Public Employees boosts target to alternative credit
      Los Angeles City Deferred Comp narrows list to 2 in manager search
      Connecticut pension fund CIO resigns
      Arizona State Retirement looking for CIO
    • Sharmila Chatterjee Kassam
      AIF Institute hires former Texas ERS deputy CIO as executive director
      Varagon Capital fills new business development role
      SSGA alum named head of ESG at Mirova
      Capital Group hires BlackRock executive to launch ETF unit
    • Pension funds continue private equity investing spree
      Big jump in private equity AUM expected over next 5 years
      Thoma Bravo takes in $22.8 billion for 3 funds
      Jason Thomas
      Data, technology become new prized possessions
    • Ivanhoe Cambridge Inc. signage is displayed outside the company's office near Bay Street in Toronto on Aug. 29, 2011
      Ivanhoe Cambridge, PAG announce joint venture for Japan logistics investments
      Residential buildings in Hong Kong on Feb. 20, 2020
      KKR closes first Asia-Pacific real estate fund at $1.7 billion
      CPPIB in deal with Greystar to develop U.S. housing
      Global real estate investments to hit $79 billion in 2021 – survey
    • Retirement cartoon
      Hopes rising for retirement readiness in 2021
      Neal and Brady
      Retirement security could be only issue both sides accept
      Shawn O'Brien
      Annuities coming to target-date funds, but not right away
      David Ireland
      Sponsors returning to questions about in-plan annuities
    • Outlook 2021
      The top 10 stories of 2020
      The best places to work in money management
      Investment consultants
    • U.S. still a key market for investors
      Collected coverage of P&I's 2020 WorldPensionSummit
      Pedestrians pass a large advertisement on the Arndale Center shopping mall reading 'Act now to avoid a local lockdown' in Manchester, England
      COVID-19 puts new opportunities and risks on the agenda - WPS panelists
      Screens display stock price information over the trading floor of the NYSE Euronext exchange in Paris
      Private assets will continue to grow in portfolios – WPS panelists
  • Data
    • Research Center
    • Searches & Hires Database
    • Searches & Hires News
    • RFPs
    • Charts / Infographics
    • Sponsored Research
    • Trackers
    • Q2 2020 searches and hires overview report
      Q2 2020 money manager M&A activity summary
      Q2 2020 legal overview report
      Q1 2020 searches and hires overview report
    • San Jose Federated commits $11 million to real estate fund
      Essex Pension Fund on the lookout for private debt manager
      Lexington Contributory wants large-cap equity manager
      Fort Lauderdale fund scouting for large-cap manager
    • San Jose Federated commits $11 million to real estate fund
      Essex Pension Fund on the lookout for private debt manager
      Lexington Contributory wants large-cap equity manager
      Fort Lauderdale fund scouting for large-cap manager
    • International Small Cap Manager Services
      Financial Expertise
      Passive Index Manager Services
      Emerging Markets Equity Investment Management Services
    • U.S. fixed-income returns post another positive year
      Nasdaq delivers an impressive year
      U.S. dollar's recent decline continues
      Hedge funds warming up to financial sector, remain long U.S. equities
    • Institutional Investors: Shared Expectations, Divergent Paths
      Global Investor Study 2016
      Workplace Financial Wellness
    • U.S. Endowment Returns Tracker
      Pension Fund Returns Tracker
      Earnings Tracker
      Corporate Pension Contribution Tracker
  • Insights
    • Opinion
    • White Papers
    • Industry Voices
    • Letters to the Editor
    • Partner Content
    • Publisher's Update
    • Retirement cartoon
      Hopes rising for retirement readiness in 2021
      view gallery
      25 photos
      Cartoons depict a year like no other
      view gallery
      25 photos
      2020 in editorial Cartoons
      Consultants cartoon
      Seeking an investment consultant? Caveat emptor
    • Climate change and emerging markets after Covid-19
      An Asset Owner's Guide to Multi-Manager Portfolio Management
      Research for Institutional Money Management
      The Future of the U.S. Dollar - Dominant currency or one of many?
    • Michael McNally
      Commentary: New ‘investment-plus’ test poses risks to private equity investors
      Adam Waterous
      Commentary: Institutions urged to act now on opportunities created by current global oil disruption
      Ron Lagnado
      Commentary: Straw man critiques don’t hold up in face of real world success
      Robert Raben
      Commentary: What the asset management industry must do to bolster diversity
    • Writer using a typewriter
      OCIO industry needs to adopt GIPS
      Writer or journalist workplace. stock illustration
      Even as it assails China, Trump administration emulates it
      Skeptical of Main Street support for proxy adviser proposal
      Focus on manager diversity pushes asset owners’ to walk the talk
    • Sponsored Content By iShares
      ETFs are becoming a cornerstone of insurance equity portfolios
      Sponsored Content By Aberdeen Standard Investments
      Taking a passive approach to the hedge-fund universe
      Sponsored Content By World Gold Council
      Gold: the most effective commodity investment
      Sponsored Content By iShares
      For institutional investors, ETFs can make meeting liquidity needs easier
    • Help us help you by supporting quality journalism
      You Must Believe in Spring
      Everything Must Change
      Tomatoes & Investments
  • Multimedia
    • Videos
    • Webinars
    • Polls
    • Slideshows
    • Charts / Infographics
    • watch video
      1:24
      U.S. stocks were 2020’s comeback kid
      watch video
      1:23
      Outlook 2021
      watch video
      1:52
      Buy gold's pullback?
      Coronavirus and the S&P 500: 2020
    • Getting Back to Normal: How to Creatively Manage Fixed Income Portfolios in a Rising Rate Environment
      What might a Biden DOL and SEC mean for retirement plans?
      Staying on target with target-date funds
      The Institutionalization of Retail Part Two: A Webinar Series from P&I Content Solutions and Chestnut Advisory Group
    • POLL: Retirement issues in 2021
      POLL: Money managers' priority in Asia-Pacific region
      POLL: Retirement issues in the presidential election
      POLL: The S&P 500 in the third quarter
    • view gallery
      9 photos
      Coronavirus and the markets
      view gallery
      22 photos
      The 1,000 largest retirement funds: 2020
      view gallery
      10 photos
      Outlook 2020
      view gallery
      10 photos
      2019 as seen through the eyes of Roger
    • Graphic: U.S. stocks were 2020's comeback kid
      U.S. fixed-income returns post another positive year
      By the Numbers
  • Events
    • Conferences
    • Webinars
    • Defined Contribution Spring Virtual Series
      DC Investment Lineup Virtual Series
      ESG Investing Virtual Series
      Private Markets Virtual Series
    • Getting Back to Normal: How to Creatively Manage Fixed Income Portfolios in a Rising Rate Environment
      What might a Biden DOL and SEC mean for retirement plans?
      Staying on target with target-date funds
      The Institutionalization of Retail Part Two: A Webinar Series from P&I Content Solutions and Chestnut Advisory Group
  • Careers
  • Research Center
MENU
Breadcrumb
  1. Home
  2. GOVERNANCE
January 11, 2021 12:00 AM

Focus expected to shift in 2021 proxy season

Human capital management issues, social justice issues likely to reappear

Hazel Bradford
  • Tweet
  • Share
  • Share
  • Email
  • More
    Reprints Print
    Scott Stringer
    Photo: Michael Brochstein/ZUMA Wire
    Scott M. Stringer feels certain investors will turn against directors that ignore ESG.

    Considering the unusual year preceding it, the 2021 proxy season could see more surprises for and from institutional investors on ESG issues, and for the directors of companies in which they invest.

    The 2020 proxy season saw some ESG-related shareholder proposals gaining traction compared with previous years, but the COVID-19 pandemic is expected to spur more gains and more focus on emerging issues like employee health and safety, and human capital management.

    The racial and social justice issues that made headlines in 2020 are also expected to crop up in shareholder proposals for companies to do more to promote diversity and inclusion, and to be more transparent about it. Directors of companies that ignore those calls also risk their own seats, said New York City Comptroller Scott M. Stringer, who last year called on S&P 100 companies to publicly disclose the composition of their workforces by race, ethnicity and gender, in their 2021 Equal Employment Opportunity Commission reports. For unresponsive companies, Mr. Stringer said his office may consider submitting shareholder proposals or factoring it in evaluations of directors standing for re-election this proxy season. Mr. Stringer serves as investment adviser, custodian and trustee of the $211 billion New York City Retirement Systems.

    Last year's proxy season saw resolutions related to human rights and worker rights for the first time ranking as the most active issue, ahead of resolutions directly addressing climate change, according to the Interfaith Center on Corporate Responsibility, whose 300 members represent faith communities, asset managers, unions, pension funds and other socially responsible investors with combined assets of more than $500 billion.

    Momentum to build

    That momentum is expected to build in 2021. Along with several racial justice resolutions filed, the non-profit organization As You Sow created a racial justice scorecard to help shareholders "look at what companies are actually doing," said As You Sow CEO Andrew Behar in Berkeley, Calif. "What we are really working on is getting the companies on the path toward driving out systemic racism. This year we think there is enough data out there that we can establish best practices," he said.

    Matthew Sweeney, spokesman for Thomas P. DiNapoli, the state comptroller and sole trustee of the $226.4 billion New York State Common Retirement Fund, Albany, said officials there plan to scrutinize portfolio companies' responses to the COVID-19 pandemic and racial justice when voting its proxies, including holding directors accountable and voting against executive compensation.

    "These issues have had a massive impact on our society and our economy, illustrating the enormous effect ESG issues can have on portfolio companies and investment managers. As a result, the fund believes that now is the time for companies and investment managers to make meaningful changes, not just to react to recent events, but to fundamentally improve their ESG policies and performance," Mr. Sweeney said.

    Despite the pressing issues highlighted by the events of 2020, climate change will remain a top ESG concern for shareholders, some of whom are trying new approaches this year. Investor members of the Interfaith Center on Corporate Responsibility have launched a campaign to have companies align their lobbying activities with the goals of the Paris climate agreement, and to proactively lobby for climate action. With growing momentum toward a transition to a low-carbon economy, it was time to take corporate lobbying engagements to a new level, said Jake Barnett, manager of sustainable investment services for ICCR member Wespath Benefits and Investments, an agency of the United Methodist Church, Glenview, Ill., with more than $24 billion in assets.

    Taking a page from say-on-pay campaigns, As You Sow recently launched a say-on-climate campaign, asking companies to amend their bylaws to have a climate transition plan compliant with net-zero emission goals of the Paris Agreement. The kicker, Mr. Behar said, is that in addition to the companies' reports, shareholders will be asked to vote each year on that progress. "Like say-on-pay, shareholders get to grade the company," he said. Along with resolutions for specific companies, the campaign is sending letters to many more with the goal of more standardized reporting. While his organization focuses on the U.S., "this is a global movement," Mr. Behar said.

    Proxy-voting advisory firms like Institutional Shareholder Services Inc. and Glass, Lewis & Co. have also recalibrated their priorities due to the pandemic, with more focus on board diversity and board responsibilities related to ESG issues. This year, Glass Lewis said in updated proxy voting guidelines that boards of S&P 500 companies not clearly disclosing board-level oversight of ESG issues will warrant notes of concern. Next year, governance directors of companies not providing that disclosure will face recommendations opposing their election.

    Glass Lewis, ISS and many investors say they will also be scrutinizing executive pay through a COVID-19 lens. To prepare for the 2021 proxy season, JUST Capital, an independent non-profit that tracks company performance on multiple stakeholder issues, has been tracking how companies address both executive and worker wages, and the gap between the two.

    As more asset owners and major asset managers like BlackRock Inc. connect sustainability-related factors to a company's ability to generate long-term financial returns, the pressure on corporate boards is expected to increase.

    Investors are encouraged by BlackRock's recent shift to consider more direct proxy voting rather than its traditional engagement. When it comes to sustainability, "we see voting on shareholder proposals playing an increasingly important role in our stewardship efforts," BlackRock said in its latest stewardship report.

    "Given the size of BlackRock's stake at most U.S. public companies, BlackRock's support for shareholder proposals by itself can materially change outcomes and responses. In addition, other investors may join the arms race, making it even more likely that proposals will lead to change," said Richard Fields, partner and director of stakeholder engagement at law firm King & Spalding LLP in Boston.

    Activism to increase

    Shareholder activism in the upcoming proxy season is also expected to increase. A CoreData Research survey of 150 institutional investors at the end of 2020 found 91% expect more activism in the next few years, and more pressure on asset managers to join the fight.

    "Actively managed funds, passive strategy funds and other institutional investors are increasingly willing to make demands themselves, privately and publicly, that evoke tactics from the traditional activist toolkit," said corporate governance legal experts at Freshfields Bruckhaus Deringer LLP, in a posting on the Harvard Law School Forum on Corporate Governance.

    "This is especially true of ESG issues, where activists continue to be acutely aware of ESG weaknesses at their targets and to build bridges with institutional shareholders focused on elements of ESG or even to make ESG a focus of their campaigns," the experts said.

    Related Articles
    Critics bristle at timing of DOL actions on proxy voting and investment advice
    Senators press BlackRock on ESG proxy practices
    Public companies welcome SEC proxy rules – survey
    Recommended for You
    New York State Common challenges Tyson’s dual-share stock structure
    New York State Common challenges Tyson’s dual-share stock structure
    Investors tell social media companies to curb disinformation
    Investors tell social media companies to curb disinformation
    Wall Street rethinks campaign donations after Capitol siege
    Wall Street rethinks campaign donations after Capitol siege
    Research for Institutional Money Management
    Sponsored Content: Research for Institutional Money Management
    sponsored
    Events
     
     
    Sponsored
    White Papers
    Climate change and emerging markets after Covid-19
    An Asset Owner's Guide to Multi-Manager Portfolio Management
    Research for Institutional Money Management
    Bond ETFs show maturity during Covid market mayhem
    Global gold-backed ETFs: A popular gateway to the gold market
    The Future of the U.S. Dollar - Dominant currency or one of many?
    View More
    Sponsored Content
    Partner Content
    The Industrialization of ESG Investment
    For institutional investors, ETFs can make meeting liquidity needs easier
    Gold: the most effective commodity investment
    2021 Investment Outlook | Investing Beyond the Pandemic: A Reset for Portfolios
    Ten ways retirement plan professionals add value to plan sponsors
    Gold: an efficient hedge
    View More
    E-MAIL NEWSLETTERS

    Sign up and get the best of News delivered straight to your email inbox, free of charge. Choose your news – we will deliver.

    Subscribe Today

    Get access to the news, research and analysis of events affecting the retirement and institutional money management businesses from a worldwide network of reporters and editors.

    Subscribe
    Connect With Us
    • RSS
    • Twitter
    • Facebook
    • LinkedIn

    Our Mission

    To consistently deliver news, research and analysis to the executives who manage the flow of funds in the institutional investment market.

    pilogo-NEW
    About Us

    Main Office
    685 Third Avenue
    Tenth Floor
    New York, NY 10017-4036

    Chicago Office
    150 N. Michigan Ave.
    Chicago, IL 60601

    Contact Us

    Careers at Crain

    About Pensions & Investments

     

    Advertising
    • Media Kit
    • P&I Content Solutions
    • P&I Careers | Post a Job
    • Reprints & Permissions
    Resources
    • Subscribe
    • Newsletters
    • FAQ
    • P&I Research Center
    • Site map
    • Staff Directory
    Legal
    • Privacy Policy
    • Terms and Conditions
    • Privacy Request
    Pensions & Investments
    Copyright © 1996-2021. Crain Communications, Inc. All Rights Reserved.
    • NEWS
      • Asset owners and the coronavirus
      • Alternatives
      • Consultants
      • Coronavirus
      • Defined Contribution
      • ESG
      • Frontlines
      • Hedge Funds
      • Investing / Portfolio Strategies
      • Money Management
      • Pension Funds
      • People Moves
      • Private Equity
      • Real Estate
      • Searches & Hires News
      • SECURE Act
      • Special Reports
      • WorldPensionSummit
    • Data
      • Research Center
      • Searches & Hires Database
      • Searches & Hires News
      • RFPs
      • Charts / Infographics
      • Sponsored Research
      • Trackers
    • Insights
      • Opinion
      • White Papers
      • Industry Voices
      • Letters to the Editor
      • Partner Content
      • Publisher's Update
    • Multimedia
      • Videos
      • Webinars
      • Polls
      • Slideshows
      • Charts / Infographics
    • Events
      • Conferences
      • Webinars
    • Careers
    • Research Center