By voting at shareholder meetings of listed companies, we exert our influence as shareholder on the companies in which we invest on behalf of our clients. As a long-term investor, voting allows us to influence the direction the company takes on a number of fronts: strategic, financial and societal. It literally gives us a voice in important decisions by the management of companies.
As a basis for the voting behaviour, every year, together with clients, PGGM draws up the PGGM Voting Guidelines, which lay down our vision in relation to common voting items at shareholder meetings. Given the number of shareholder meetings, our voting is largely automated. The starting point is that we vote as advised by our voting service provider (ISS). These recommendations are based on the PGGM Guidelines. We actively monitor these voting activities based on multiple voting service providers and sources. We vote on the most relevant resolutions ourselves. For each company, PGGM publishes its voting record on a website.
In cases that arise, PGGM also addresses AGMs to reinforce our vote and publicly engage in debate with the companies in which we invest. This is especially the case for Dutch companies. Thanks to our scale as a relatively large investor, we have actual voting power.
PGGM also submits shareholder proposals itself or in cooperation with other investors when we want to spur a company to take action. We regard voting rights as an important part of our engagement and vice versa. Voting rights can, for instance, be used to further flesh out a topic on which engagement has been pursued, or as an escalation strategy to translate lagging engagement progress into a vote against a proposal (for example, a vote against the reappointment of a director).
Making our voice heard at British Petroleum
At the Annual General Meeting (AGM) of shareholders of British Petroleum (BP), there were two climate resolutions on the agenda, one calling for more transparency (submitted by the CA100+ partnership) and one calling for firm climate objectives (submitted by Follow This). We voted for the resolution calling for transparency and abstained from voting on the resolution calling for firm objectives. The main reasons for not voting for firm climate objectives were:
• We believe that limiting the supply of fossil fuels - which Follow This is implicitly asking for - is not the solution for the climate problem. As long as demand for fossil fuels continues, it is not worthwhile or reasonable to prohibit one or a few companies from supplying these fuels. That shifts the problem from one provider to another in a way that does not reduce emissions, but does reduce the market share of the business.
• It is unwise for any company - or for any investor, for that matter - to prepare for just one scenario, especially when the uncertainties (in terms of policy, technology and consumer behaviour) are considerable, and lie largely outside BP’s control.
Like Shell and a few other European energy companies, BP is a frontrunner in the energy sector. BP has been working on the energy transition for some time and wants to play a leading role in the process. In February 2020, the new CEO announced the new strategy: Reimagining energy, Reinventing BP. We believe that in future votes as well, BP’s management deserves investors’ trust and support in implementing this strategy.
Voting in figures
In 2019, we voted at 4,220 meetings of listed companies in which assets of our clients are invested. Based on our clients’ voting policy, over 45,000 proposals were voted on. The figure below shows in which regions and on what topics we voted in 2018.
Distribution of shareholders’ meetings by region in 2019