Fidelity pivots proxy voting policy towards climate change, D&I

Fidelity International has released its latest Proxy Voting and Engagement Report for Australia and New Zealand, showcasing how the firm voted in 2021 in relation to funds invested in Australian companies.

The report highlighted how number of Australian and New Zealand company meetings Fidelity voted on increased from 209 in 2020 to 251 in 2021, after the firm changed its proxy voting policy in critical areas including climate change and the shift to net zero, meeting minimum thresholds of board diversity, and using votes to support other local social issues.

Fidelity’s report showed the firm voted against management on at least one item at 36 per cent of meetings last year, 50 per cent of which were related to remuneration. The most common reason for votes against the remuneration report was a “misalignment between management incentive outcomes and stakeholders’ experience during the Covid-19 pandemic”.

“Generally, this related to companies where management were paid bonuses after the company had received taxpayer-funded wage subsidies under JobKeeper and similar programmes,” the report said.

Fidelity also supported 56 per cent of shareholder proposals, 71 per cent of which were climate-related and 33 per cent were social-related.

The report said that there was an increase in the number of shareholder proposals requesting company disclosure on climate change risks and impacts and how their strategies align with company climate plans.

“We have also seen companies in Australia follow the global trend of offering ‘Say on Climate’ votes,” the report said.

The report also highlighted Fidelity’s renewed focus on companies that have fallen short of appointing at least 30 per cent women to their boards.

“In 2021, we voted against directors at 20 Australian companies on diversity grounds,” the report said.

“But more importantly, in some instances when we communicated our intention to vote against directors, companies reacted positively by committing to change and appoint female members to their board and/or committed to developing policies that ensure appropriate board gender diversity in future.”

In the report, Fidelity also highlighted their local engagement with social expectations, after sending out letters to its larger ASX holdings in July 2020 detailing the proper approach to executive pay decisions during the Covid-19 pandemic.

“A key point of emphasis was that we expect companies that took emergency government support under wage subsidy schemes such as JobKeeper to cancel short-term bonuses for their executive key management personnel,” the report said.

“From an ethical and reputational perspective, we think it is important that support from the wider community should be appropriately acknowledged and reflected in senior executives’ variable pay outcomes.”