On the go: The Association of Member Nominated Trustees has updated its red line voting policies to reflect industry and regulatory changes since the campaign was first launched in 2016.
In 2015, the AMNT developed its red line voting programme, which established standards for environmental, social and corporate governance following a 2014 recommendation from the law commission.
The new policies now expect companies to report in relation to the Taskforce on Climate-related Financial Disclosure recommendations.
There is also a requirement that any corporate lobbying will be done in alignment with the Paris Agreement, stated AMNT.
The trustee body noted that many fund manager policies that deal with climate change focus on supporting shareholder resolutions on the issue. Only a small minority of companies face such resolutions, so it is essential that climate change voting policies are applied to all companies as the issue requires global action, AMNT argued.
Another additional red line policy was the introduction of requirements in relation to the Modern Slavery Act, and the red line on labour breaches now includes human rights considerations.
One key example of this is the gender diversity target, which has increased to 33 per cent from 25 per cent and now includes a requirement for at least one of four specified board positions to be held by a woman, the AMNT said.
There is also a new linkage of chief executives’ pay to sustainability targets including climate change, and a new red line regarding the alignment of CEO pension contributions with the ones of the company’s workforce.
On audit committee expertise, the trustee body introduced a limit on non-audit fees in relation to audit fees, which now stands at 50 per cent, and there is an additional requirement for a breakdown of the fees.
Janice Turner, co-chair of the AMNT and founder of the Red Lines Voting Campaign, said: “When we launched our red line voting policies, trustees were astonished by the refusal of many fund managers to reflect the wishes and instructions of their clients.
“The intransigence and obfuscation from some did not reflect well on an industry that receives fees to serve its clients”
She explained that it has been an “ongoing struggle but things are moving in the right direction”.
She added: “My belief is that the process will accelerate further, particularly since new regulations have made it more and more imperative that pension schemes adopt a voting policy in order to hold their fund managers to account.”
Turner urged trustees to “take responsibility and to continue to hold their fund managers and consultants to account to ensure best practice”.
“We have reached a critical point in terms of ESG and stewardship, and it is AMNT’s hope that these red line voting policies will play an important role in helping trustees fulfil their new regulatory responsibility, particularly those who don't yet have a voting policy.”
