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Proxy voting: why it matters for you and your clients
As a large investor, we have a voice that can help your clients' pension and ISA savings work harder.
We aim to use this influence when we engage with policymakers and the companies we invest in, collaborate with stakeholders and other organisations, and use our voting rights. We do this through our asset manager, Royal London Asset Management.
Proxy voting and why we do it
Holding shares in a company typically offers the right to vote at the company’s annual general meeting, a mandatory yearly gathering where investors can vote on how the company is run.
These voting rights help us hold boards to account and encourage better management of key areas such as climate change and other environmental, social and governance (ESG) issues.
With our voting, we prioritise:
- topics and initiatives that we believe will support a company’s long-term growth
- potential risks that could affect a company’s future profitability.
We do this to try to:
- manage financial risks that could affect your clients' pension and ISA savings
- grow their money over the long term
- help play our part in positively shaping the future as a vital part of how we look to support a healthy economy, environment and society.
Proxy voting transformed: what a difference a decade makes
Over the past decade, voting practices have evolved. 10 years ago, voting was often procedural. The emphasis tended to be on compliance, minimal standards and trying to stay out of the spotlight. While governance mattered, it was typically restricted to board structure and pay. And voting against management was relatively rare, something seen as an extreme option.
Today, the world has moved on. Voting has shifted from an operational function to a real tool for accountability. It’s now often the most visible part of stewardship efforts – a fundamental part of active management that is closely scrutinised by companies, clients, the media and wider society.
The new issues of the day
Climate change, biodiversity loss, human rights and workforce practices are no longer peripheral concerns. They sit squarely within the governance remit, testing board oversight, strategic resilience and, ultimately, accountability for outcomes.
Engagement in an age of instability
It’s likely the next decade will see another shift as an era of political volatility and changing regulations reshapes the landscape in which companies operate. This could make voting decisions increasingly complex.
Recently, it’s been harder to advance shareholder proposals in the US – a trend we’re now experiencing the first signs of in the UK. Climate-specific proposals also appear to be decreasing.
This makes aligning strategies to the long term, strong board oversight and credible disclosure even more important. It’s vital that board directors are held accountable for their decisions. Despite a shifting political, regulatory and investment backdrop, we are committed to our approach to responsible investing and stewardship. The landscape we operate in may change, but one thing does not: our approach that puts your clients at the heart of everything we do.
Our approach to proxy voting
People-powered: the team at the heart of our approach
Royal London Asset Management’s Responsible Investment team reviews every single vote to make sure informed, consistent and principles-based judgement take precedence.
Each vote needs careful judgement to balance sometimes competing priorities and manage long-term risk. We base this primarily on our voting principles but also consider opportunities to reinforce our company engagement activities and contribute to real world customer outcomes.
Commitment to transparency
For several years, Royal London Asset Management has written directly to companies to explain the reasons behind its votes.
There’s been a notable increase in responses from companies in recent years, often showing appreciation for the transparency and consistency of our views – even if our opinions differ.
Since 2015, Royal London Asset Management has also published every voting decision, including the rationale for why it voted against management. This voting record offers a transparent insight into how we implement our policies and beliefs.
Why this matters for you and your clients
As a mutual, customer-owned business, our focus stays where it should: on outcomes for your clients, our customers.
ESG issues could affect your clients’ investments and therefore their future wealth.
So voting is a vital part of how we look to support your clients’ financial outcomes. But voting is also how we aim to support a healthy economy, environment and society and is just one of the ways we approach stewardship. Find out how else we engage with companies and other organisations to support your clients’ outcomes.
