On the go: The £31bn Railways Pension Scheme has outlined its expectations for portfolio companies on how they deal with key corporate governance and sustainability issues in its updated voting policy.
RPMI Railpen is particularly interested in how the companies in which it invests handle climate reporting, workplace treatment, health and safety, and the Covid-19 pandemic.
The updated voting policy revealed that Railpen expects portfolio companies to incorporate material information about climate-related issues into their financial statements.
Where they have not done so, or where inconsistencies exist between narrative reporting and financial disclosures, Railpen may vote against the report and accounts, the audit committee chair or the auditor’s reappointment.
Caroline Escott, senior investment manager at Railpen, noted that the scheme “has long considered climate change as being financially material to our portfolio and the outcomes for beneficiaries”.
“We need companies to discuss climate-related issues in their narrative reporting and their financial accounts and make the climate assumptions they use clear,” she said.
Railpen also recognised that how a company supports and treats its workforce can offer insight into its corporate culture, which can be an important factor for sustainable financial performance.
It expects boards to communicate the importance of the workforce, including details of activities undertaken and any material outcomes. This should include disclosures around work undertaken to secure employees’ health and security through the pandemic.
Railpen will support boards that successfully and safely steer companies through the crisis in a way that demonstrates an awareness of the wider workforce’s experiences at this time.
It will also scrutinise corporate behaviour towards employees, customers, suppliers and other stakeholders. Where Railpen does not believe that there has been fair treatment or a genuine commitment to delivering such treatment in the future, voting sanctions will be actioned accordingly.
Michael Marshall, head of sustainable ownership at Railpen, said that though companies have faced numerous new challenges in the past year, this has made scrutiny of their operating practices even more important. He added that companies and directors will be held to account for their behaviour through this period.
He explained: “A thoughtful voting approach, alongside constructive engagement with portfolio companies, supports our objective of enhancing long-term investment returns for beneficiaries.
“The updates we have made to our 2021 global voting policy will allow us to continue to exercise our voting rights systematically, consistently, and in a way that is in beneficiaries’ best interests.”
This article originally appeared on mandatewire.com
