Voting with purpose to make sure firms do the right thing

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WHEN people think of Environment, Social and Governance matters, they usually associate the terms with climate change, equal pay or regulatory compliance.

But how are these issues addressed by companies that we invest in, so that change really happens? By voting.

A vote is a powerful element of responsible investment; it gives investors the chance to encourage companies to move in the right direction. As a shareholder of a company, you gain the right to vote at the company’s annual general meeting.

Rathbones has the ability to submit votes as representatives of our clients, which is known as proxy voting. Proxy voting at Rathbones is overseen by a committee of investment professionals from across the business.

This voting committee is supported by a stewardship team and an external proxy voting consultant. In 2021, we voted on 11,934 resolutions on issues such as diversity on boards, executive bonuses, board independence and Say on Climate votes.

We vote in line with management recommendations far more often than we vote against them, because we seek to invest in companies that already have sound corporate governance. However, sometimes management do not appear to be aligning with our values and at this point we are prepared to vote against to help drive positive change.

In 2021, Rathbones led an investor collaboration to urge FTSE 350 Index companies to meet their modern slavery reporting obligations. We expect these companies to identify and address slavery in their supply chains. Using our influence and working with non-governmental organisations, we identified 61 laggard companies and encouraged them to achieve full compliance.

If they did not, investors resolved to consider voting against the annual report and accounts at the next AGM, which is not desirable for companies. By the end of 2021, 59 of the 61 companies had become compliant.

Voting is an active choice that really can lead to purposeful change with shareholders and stakeholders ensuring companies are accountable to do the right thing.

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