AGM season: the moment for active share ownership
23-06-2010 | Being an active shareholder involves proxy voting and attending annual general meetings (AGMs) to raise questions and encourage continuous improvement in sustainability performance. Since this form of engagement has proven successful, Triodos has expanded its AGM activities on behalf of Triodos Sustainable Investment funds and Private Banking, adding UK AGMs in 2009 and German AGMs this year.
The Netherlands: Reed Elsevier and Wolters Kluwer on responsible paper sourcing and remuneration
At the AGMs of publishing giants Reed Elsevier and Wolters Kluwer Triodos raised questions on responsible paper sourcing (no illegal timber) and remuneration. Illegal timber operations have severe social and environmental impacts – publishers should ensure that they do not buy paper made from illegal timber. Reed Elsevier plans to bring 100% of paper in line with the UK Publishers Database for Responsible and Environmental Paper Sourcing. Unfortunately, Wolters Kluwer has not adequately addressed this issue and we have requested a meeting to discuss it further.
Triodos also suggested that both Reed Elsevier and Wolters Kluwer integrate sustainability targets into their remuneration policies. Sustainability performance is increasingly important in the assessment of a company’s long-term success. Reed Elsevier responded that sustainability targets are considered in the yearly bonus plan. Wolters Kluwer is considering linking sustainability targets to the remuneration policy in 2011. Both companies are seeking further input from Triodos.
Germany: Henkel on remuneration
Triodos attended its first German AGM on April 19. Henkel is a sustainability leader in the Household and Personal Products sector, with brands like Persil, Schwarzkopf and Fa. Henkel solicited shareholder comments on its new remuneration policy and Triodos again took the opportunity to push for a link between sustainability performance and executive compensation. According to Dr. Simone Bagel-Trah, Chairwoman of the Henkel Supervisory Board, a portion of executive pay is based on short- and mid-term sustainability targets, and the company’s 2012 sustainability goals are important incentives in the remuneration strategy.
UK: BG Group on remuneration, renewable energy and water management
BG Group is one of the largest gas companies operating in the North Sea. Triodos was invited to meet with management representatives on 11 May and attended the company’s AGM on 12 May. The topics discussed covered linking remuneration and sustainability, investment in renewable energy and water management. At the AGM, Triodos repeated its questions about remuneration and water management in order to raise awareness with the Board of Directors. BG Group’s decision not to invest in renewable energy is unlikely to change in the near future; we will continue to engage with them on this topic. The company links short-term remuneration and sustainability targets, but should be more transparent and consider long-term incentives. Regarding water management, Triodos challenged BG Group to set clear targets for reducing water use. BG Group welcomed our suggestions and ongoing dialogue.
Triodos will attend two more UK AGMs this year: Johnson Matthey (specialty chemicals) and BT Group (IT and telecommunications). Upcoming engagement will focus on biodiversity, climate change and linking executive remuneration to sustainability targets.
Note: The issues explored in this article are specifically relevant to sustainable investments on the stock market. Triodos Bank believes that our Socially Responsible Investment funds are a powerful means of promoting our values and working for greater sustainability, while enabling us to offer a complete range of attractive investment options to clients that choose to invest on the stock market.