France’s ERAFP has said it will now only vote in favour of a share buyback if it will not undermine the company’s ability to put itself on a trajectory compatible with the Paris Agreement on climate change.
It wants to reject a buyback if it will call into question the company’s ability to stump up the capital expenditure necessary for a transition plan aligned with a 1.5°C warming scenario.
The new criterion was decided on following an in-depth review of the civil service pension fund’s guidelines for shareholder voting at annual general meetings. It will be for ERAFP’s external managers to decide on how to implement the new criterion and other adjustments.
ERAFP, a public sector investor with a long-standing commitment to socially responsible investing, said it would continue to focus on the fight against climate change, on biodiversity and on the fight against aggressive tax planning.
However, it said that following the review its board of directors had chosen to strengthen some of its positions and to integrate several new issues.
In addition to the new criterion for approving share buybacks, the pension fund said it would now consider voting against the chairperson of the nomination committee if there was no employee representative on a company board of directors.
It said the voting instruction would also apply if targets for the proportion of women and independent directors on the board were not met, “reinforcing these requirements”.
ERAFP has also strengthened its criteria for Say on Climate resolutions, the management-sponsored shareholder votes on a company’s climate strategy. It said it did so by adding two criteria, relating to the publication of Scope 3 emissions and the consideration of a socially-just transition.
The pension fund now also wants to recommend a negative vote on a Say on Climate resolution if the company is not aligned with a 1.5°C trajectory – unless the proposed strategy is a major step forward or a meaningful engagement is made with the company and it shows significant progress.
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