Pension funds and other institutional asset owners have significant influence when it comes to voting in companies’ annual general meetings (AGMs). The consequences of their voting decisions can have a profound impact on company share prices and long-term objectives, especially in the context of climate change.
When institutional asset owners vote in AGMs, their decisions can shape corporate governance practices, executive compensation structures and strategic initiatives. By supporting or opposing board appointments, shareholder proposals, and environmental resolutions, investors are sending powerful signals to company management, other shareholders, and the broader market about their expectations and concerns.
The significance of climate change in this context cannot be overstated. Institutional asset owners’ votes on climate-related issues can drive companies to address environmental risks, adopt sustainable practices and transition to a low-carbon economy. By supporting resolutions related to climate change mitigation, such as setting emissions reduction targets or disclosing climate-related risks, asset owners signal their commitment to addressing long-term environmental challenges.
Last month the Church Commissioners, which manages the Church of England’s £10bn (€11.5bn) endowment fund, announced it would vote against all directors at the AGMs of Exxon, Occidental Petroleum, Shell and Total, in response to their failure to meet climate change objectives. For instance, the Shell AGM at the end of May was disrupted by climate change protesters who attempted to storm the stage but were quickly stopped by security. Fossil Free London later claimed responsibility for the protest.
The impact of these voting decisions on share prices can be twofold, however. In the short term, the announcement of institutional support for specific proposals or resolutions can affect market sentiment and lead to share price fluctuations. Companies that demonstrate strong environmental performance and proactive climate risk management are increasingly attracting investors concerned about sustainability, potentially resulting in higher share prices over the long term.
For more on this year’s AGM season see here
Venilia Amorim, Editor, IPE.com