Your money has a voice

How do pension funds engage with companies?

Every year, companies will hold annual general meetings (AGMs) where all shareholders, like pension funds are invited to have their say on the company’s future direction.

How do AGMs work?

All shareholders like us, are entitled to a vote on each proposal put forward by the company, as well as an opportunity to submit questions to the board. We get a say on a wide range of topics from routine votes on director elections and pay and audit through to the less common votes like company mergers and acquisitions and climate change emissions targets. The results of the vote are usually a good indicator on shareholder satisfaction but, for Nest, it’s about ensuring the companies are aligned to our responsible investment objectives and they’re instilling practices that will mean they’re more likely to be fit for the future.

Why we think they’re important

AGMs offer a unique opportunity for investors to have a say in how companies are run. We believe that making use of our vote is an essential part of stewardship and that it’s our responsibility to ensure the companies we invest in are sustainable and profitable. One of the best ways to bring about change is by having a seat at the table and using our voice.

Our recent activity 

In 2023 so far, we’ve been focusing on areas including pay, climate change, natural capital and diversity in the workplace.

Oil and gas

We publicly voted against the re-election of the BP chair, along with almost 10% of their shareholders: signalling a clear sign of no confidence. This came after shareholders were not given a chance to vote on the rolled back emissions targets that were announced by BP. 

Similar opposition was also voiced at Shell’s recent AGM, as we are concerned that both companies are transitioning too slowly towards net zero emissions.

We’ve also voted in favour of shareholder resolutions at some of the big US banks, including Wells Fargo, Goldman Sachs and Bank of America – we wanted to highlight the need for greater clarity on fossil fuel investing phase outs.

Diversity 

We’ve challenged big names in recent years where we’ve seen a lack of diversity, including Lloyds Banking Group and IAG. We’ve called for increased minimum requirements for gender diversity to 30% in the boards of US companies, as well as a requirement for at least one board member to be from an ethnically diverse background for companies in the S&P 500 and the FTSE 100. Nest believes promoting diversity of gender, ethnicity and thought can improve company performance and reputation as well as enhancing socio-economic conditions for many people.

Remuneration 

One of the key topics in Nest’s voting decisions was remuneration of board composition, which included Vodafone, Ocado and General Motors. In all three cases, we wanted to see remuneration align with shareholder interests and we continue to champion this cause amongst others.  

Looking ahead... 

As the need for greater transparency from investors grows, we’ll be making sure we play our part by voting in line with our values and beliefs and continuing to make our voting records publicly available.  

You can find summaries of how we voted in the past here: How we've voted | Nest Pensions

Published 21 June 2023