UK – The National Employment Savings Trust (NEST) has set its policy on voting and engagement, outlining an approach that will emphasise accountability, transparency and pay restraint.
The defined contribution scheme, launched as part of the UK's auto-enrolment reforms, also echoed the Universities Superannuation Scheme (USS) and Railpen in stressing the importance of a functional relationship with auditors.
USS last week said it would oppose any move to reappoint audit firms that had been working for companies for longer than 15 years, while NEST said it would consider supporting shareholder motions to rotate auditors and put the position out to open tender.
The scheme also stressed that it was likely to oppose the re-election of an audit committee chairman where it deemed an audit had not provided "meaningful" information of use to shareholders.
Discussing its approach to shareholder engagement, NEST trustee Sharon Darcy said the onset of soft compulsion marked a "quiet shareholder revolution".
"Many of our members will have a keen interest in ensuring companies are profitable and sustainable for the long term and by doing so provide increased security and prosperity for our members in retirement," she said.
The scheme also said it would argue in favour of clear pay structures, opposing the introduction or continuation of multiple remuneration schemes and supporting pay committees that considered executive pay not only against external benchmarks but also company-internal ones.
Pay restraint has garnered increasing attention in recent years.
Trade Union Share Owners, backed by a number of UK unions, recently said it would support a company-wide 20:1 pay ratio for investee companies.
NEST also argued in favour of splitting chief executive and chairman roles, and said it would oppose the re-election of any board members where it doubted their independence.
The fund also highlighted the importance of clear reporting, both of financial and non-financial data.
The guidelines said: "There should be more emphasis on key non-financial metrics, such as on people, community and the environment, being subject to verification, validation and assurance by an independent third party."
CIO Mark Fawcett said the scheme aspired to have in place a world-class responsible investment approach.
"The publication of our voting policy lets companies, fund managers and our members see what's important to NEST and how we want to work with them for the future – which is collaboratively, constructively and to achieve great outcomes for our members," he said.
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