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The Netherlands is a market which we generally consider to be among the most advanced in terms of institutional investing including attitudes to Corporate Social Responsibility (CSR). But when VBDO, the Dutch Sustainable Investment Association, looked at the voting behaviour of major Dutch institutional investors regarding 280 shareholder proposals at shareholder meetings of US companies last year, many of which concerned human rights and the environment, it found that in only 12% of cases did these investors vote in favour of the proposals.
VBDO’s analysis, published earlier this year, is based on an investigation of the voting behaviour of seven big Dutch institutional investors, among them ABP, PGGM and the railway workers’ fund SPF. The voting behaviour of asset managers of ABN AMRO, Robeco, ING and Aegon was also investigated.
The subject matter of the proposals includes adherence to international agreements such as the ILO guidelines for the rights of employees. VBDO’s report notes that ABP and Aegon voted against this proposal when it was made at the shareholder’s meeting of Du Pont.
Other proposals concern, for example, the reporting of environmental damage caused by drilling for oil in nature reserves. None of the institutional investors surveyed voted in favour when this issue came up at the shareholder’s meeting of Exxon Mobil.
“VBDO knows that these institutional investors often agree with the contents of these proposals, but are reluctant to be open about it,” says Piet Sprengers, managing director of VBDO. VBDO thinks that, because of this, the position is of these institutional investors regarding sustainability is often unclear. Sprengers continues: “When it concerns the direction of the management of a company or the rewarding of the management, these institutions are prepared to meet them head on. When it comes to sustainability, the institutions suddenly become a lot more charitable and are unwilling to offend the management.”
He cites one of the major arguments used by investors to defend their voting behavior. “They say that the proposals are not formulated clearly in that they can be interpreted in different ways. I don’t agree with this.”
The analysis highlights differences between the individual investors. “Robeco and ABN Amro vote for these proposals in 30% of cases but the others are lagging behind,” Sprengers notes. “I don’t think that Robeco or ABN Amro found the task easy – it’s just that they took the matter seriously.” He adds: “In most cases investors do not look at the details of these proposals; the explanation that the proposals are not formulated clearly is just an excuse. They don’t really know what to do with the proposals – or they don’t want to make the time to consider them properly and do the necessary research. What is perhaps most surprising is the fact that many investors have CSR-friendly investment policies but which are not followed up in terms of voting behaviour.”
Sprengers points to a lack of expertise “I believe that even the companies which advise institutional investors on voting policy lack the appropriate expertise in this field.” On a more positive note it seems that in the last two years investors are taking their voting responsibilities more seriously. “Before that they didn’t vote at all,” Sprengers says.
So how do we move the matter forward? Dialogue with the investors is key, as Sprengers explains: “These reports will help to remind them about the importance of considering the shareholder proposals. They are a very important tool to demonstrate these matters in a more scientific way. What we hope through publishing this report is that we will see an improvement this year. We certainly have regular contact with the institutional investors when we discuss their voting behaviour. That is all the influence we have at our disposal to put pressure on them to behave in a more sustainable way.”

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