Engagement and voting case studies
Read our case studies to find out how Royal London Asset Management uses its role as a shareholder to influence positive change and help deliver better long-term outcomes both for our customers and the wider world.
Royal London Asset Management uses a combination of close engagement and shareholder voting rights to encourage good management decisions in the companies it invests in, with environmental, social and governance (ESG) themes forming the focus of these activities.
Some of the topics discussed formed the basis of shareholder proposals tabled at the 2023 and 2024 annual general meetings (AGMs). Several of the topics discussed formed the basis of shareholder proposals tabled at the 2023 AGM, with a record 18 resolutions submitted for consideration.
2024 AGM shareholder proposals - voting activity snapshot
Employee working conditions
Royal London Asset Management voted in favour of a shareholder proposal requesting a report on working conditions. It’s supportive of increased scrutiny in this area given the significant allegations around Amazon’s working conditions.
Governance issues
Royal London Asset Management has previously raised concerns about Amazon’s remuneration practices. It voted against the election of Edith Cooper, who was recently promoted to chair of the remuneration committee, due to these concerns.
Royal London Asset Management also voted against the election of the current chair of the governance and nominating committee. This was to register concerns about the adoption of an exclusive forum provision without shareholder approval. Exclusive forum provisions require shareholders to go to specified courts if they want to make a claim against the company and its directors, which can limit their ability to choose their preferred court.
Ernst & Young has been Amazon’s auditor for over 25 years. With concerns over the length of time it’s been in this position, Royal London Asset Management voted against ratifying it again as auditor.
Disclosure and transparency around artificial intelligence and facial recognition technology
Royal London Asset Management voted for a shareholder proposal requesting the formation of an artificial intelligence committee as it’s supportive of further disclosure in this area.
Royal London Asset Management also voted for a shareholder proposal on the human rights impact of the use of facial recognition technology. It supports increased disclosure in this area given the potential for human and civil rights violations associated with the use of this type of technology.
2023 AGM shareholder proposals - voting activity snapshot
Tax transparency
Royal London Asset Management voted in favour of a proposal for increased disclosure on tax to help shareholders assess Amazon’s tax-related risks. This vote reinforced Royal London Asset Management’s previous discussions with the company about its disclosure approach.
Animal welfare standards
Royal London Asset Management abstained on a vote for a report evaluating animal welfare standards at Whole Foods, bought by Amazon in 2017.
Shareholders had tabled concerns about Whole Foods’ animal welfare practices. While Royal London Asset Management supports better disclosure, Amazon is considered open in its approach to this issue, promotes high standards and has shown itself quick to act in response to any identified issues in the supply chain. Royal London Asset Management also considered the proposed timeline to report on this issue was overly pressured.
Climate risk in employee pension default options
Royal London Asset Management voted against a proposal requesting that Amazon reports on how it’s protecting pension scheme members with a longer time to retirement from climate risk in the company’s default investment options. While Royal London Asset Management saw the merit of the ask, it believes that this is already the case, with employees able to choose where their pensions are invested from a large number of options.
Third-party assessment of freedom of association
Freedom of association allows workers and employers to create and join organisations of their choice without fear of reprisal. That includes joining unions and bargaining collectively for better working conditions. Royal London Asset Management voted in favour of a request for Amazon to disclose how it ensures workers’ rights in this area, particularly since there have been some significant controversies about Amazon’s labour practices and apparent anti-unionisation rhetoric at some sites.
Employee salary considerations when setting executive compensation
Royal London Asset Management voted against a proposal to take into consideration employee salaries when setting executive pay. It believes that these decisions are usually best left to the compensation committee, which has access to a greater degree of information than shareholders.
Royal London Asset Management also voted against a Board-tabled executive compensation proposal as it believes the compensation structure falls short of best practice standards, with a lack of performance-related incentive plans and a reliance on discretionary grants.
As a signatory of the Net Zero Asset Managers initiative1, Royal London Asset Management looks to influence companies to adopt emissions reduction targets and climate transition plans that support the goal of net zero greenhouse gas emissions by 2050 or earlier. Royal London Asset Management has developed a Climate Transition Assessment, which uses 12 indicators to help assess companies' climate transition plans, such as BP's (the energy business) and it expects to influence decarbonisation through this approach.
Engagement and voting activity around BP's climate plan
BP's climate plan was approved by shareholders at the 2022 Annual General Meeting (AGM). In February 2023, BP announced changes to this plan on the back of changing political sentiment across Europe and US, with governments looking for increased oil and gas production in an attempt to lower energy prices in the short term.
BP insisted that these decisions weren't a change in strategy and stressed its commitment to reducing global emissions through further investment of up to $8bn in cleaner technologies.
However, Royal London Asset Management wasn't comfortable with the lack of shareholder consultation on the changes to the climate plan. It believed BP should have given shareholders the opportunity to vote on the new plan at the 2023 AGM.
Royal London Asset Management met BP's Chief Executive and other senior leaders to discuss its concerns about the updated climate plan and explain its voting rationale at the upcoming AGM. Due to these concerns, Royal London Asset Management voted 'Against' the re-election of the company's Chairman at the AGM, and also wrote to the Chief Executive in June 2023 to reiterate its concerns and voting rationale.
Voting activity around greenhouse gas emissions reporting and reduction
Royal London Asset Management voted 'Abstain' on a shareholder proposal around reporting on and reducing greenhouse gas emissions. While Royal London Asset Management still largely supports BP's approach, there are a number of areas where it wants further detailed disclosure. This is particularly true given the changes to the climate plan that BP announced in February 2023, and the fact that the plan wasn't resubmitted to shareholders for a vote.
Compass is a UK company providing food contract services to businesses. The company operates across 45 countries in 55,000 client locations and employs around half a million people.
Focus on diversity
Royal London Asset Management invests in Compass, and as part of its regular reviews was looking at engaging with the company on its diversity policies and practices to gain greater insight and encourage increased transparency.
The Compass board had recently established its 'people commitments'. As part of this, it identified areas where the company could make improvements on diversity – particularly in leadership, teams and diverse talent.
Royal London Asset Management met the company's group chief people officer and one of its independent non-executive directors, who is also the workforce engagement lead with a focus on building relationships with employees. The meeting aimed to understand how Compass is implementing and measuring diversity activity and engagement, specifically around ethnic minorities, and how this supports Compass's 'people commitments'.
Using data collated predominately on its US employees, Compass was able to prove that when it had more women in leadership teams, it has enjoyed more business success, and also has seen proportionately higher levels of engagement from ethnically diverse employees in the US.
In the UK, Compass is focusing on diversity related to social and economic factors and plans to look at its recruitment practices to encourage more people from different backgrounds to apply for roles. On bias and prejudice issues, the company explained that this often starts with ignorance, so it's working on addressing this through education.
Compass has also highlighted areas where it's looking to improve, such as the proportion of female senior leaders.
Outcome
Royal London Asset Management has invested in Compass for a long time and continues to see the company as a leader in diversity policies and practices. It is encouraged by what Compass is doing in terms of employee engagement and initiatives, as well as by how it's giving investors and stakeholders greater visibility, including through publishing more information on its progress. Royal London Asset Management sees this increased transparency as a welcome sign that Compass is genuinely committed to diversity within its workplace.
Purpose:
To meet the new Chairman and discuss strategy, governance and sustainability issues.
Outcome:
Royal London Asset Management was generally impressed by the Chairman's knowledge and experience in the retail sector, including his full grasp over the main challenges and opportunities facing Greggs. To get to know the business, he spent time serving up sausage rolls at the company's stores in Manchester. Across the retail sector, there has been a dampening of demand and increased challenges on employee wage bills, which are difficult to navigate. However, Greggs has a strong workforce culture and maintains long retention levels amongst its employees. The Chairman aims for Greggs to have market-leading sustainability reporting and identified that diversity will remain a key feature during recruitment drives.
Purpose:
To discuss Royal London Asset Management's votes against the company's remuneration plan and subsequent press statements.
Outcome:
Royal London Asset Management outlined its issues over Ocado's value creation plan (VCP), which awards directors based on a single performance metric with limited performance criteria, the ability to 'bank' the awards, and a disconnect between pay and performance. It discussed the company’s US-style pay scheme and competitor compensation, as well as its approach to pay with employees. Overall, Royal London Asset Management wasn't encouraged by Ocado’s responses and continues to hold concerns over the company's long-term incentive framework.
SSE (Scottish and Southern Energy) is an energy utility company that helps produce and distribute gas and electricity to our homes. It's one of the largest producers of wind power in the UK and has committed to become 'net zero by 2050' – which means that by 2050 the amount of greenhouse gas emissions produced by SSE will be equal to the amount it removes from the atmosphere.
Royal London Asset Management's Responsible Investment team has been champions of SSE's strategy to move to wind power and reduce its reliance on coal and gas, which will have a big benefit for our climate. However, it has also been talking to SSE about the just transition – what the company is doing to make sure that its transition to lower carbon energy considers any social impact, like job losses or making energy bills unaffordable.
What action did the engagement drive?
Together with the Friends Provident Foundation, an independent charity working towards a fair and sustainable economic system that serves society, Royal London Asset Management's Responsible Investment team met representatives from SSE to check its progress on net zero and a just transition. Following this, SSE agreed to publish a formal just transition strategy, the first company to do this globally.
We see this as a great example of how engagement can lead to positive outcomes for society.
Engagement with Shell's chairman
In the lead-up to Shell's 2023 Annual General Meeting (AGM), Royal London Asset Management met the chairman to discuss progress on the company's climate transition plans and reiterate its requests for improvements. Shell confirmed it expected to meet its 2030 targets, although it may not be a completely smooth or straight journey.
AGM voting activity
Shell noted Royal London Asset Management's request for transparency around the cost of carbon credits. Carbon credits are a mechanism that incentivises companies to reduce greenhouse gas emissions.
Royal London Asset Management also urged the company to disclose all its emission reduction targets to facilitate assessment of how these align with the Paris Agreement – the 2015 legally binding international treaty on climate change. This disclosure request included targets for emissions directly generated by Shell's activities (known as Scope 1 emissions), but also emissions associated with activities that it is indirectly responsible for (known as Scope 3 emissions). This could include, for example, suppliers in the value chain and employees' emissions when commuting. These Scope 3 emissions typically account for the majority of an oil and gas company's carbon footprint so need tackling to meet the aims of the Paris Agreement1.
At the 2022, AGM Royal London Asset Management voted 'Abstain' on Shell's energy transition strategy (what it calls 'Powering Progress'). It didn't believe the measures outlined in that strategy went far enough and also wanted to see the company's progress on specific issues that would make Shell more robust. At the 2023 AGM, Royal London Asset Management noted the company's considerable investment in scaling up technology that can help with emissions reductions. But in the absence of further progress against the asks in 2022, Royal London Asset Management voted 'Against' on the equivalent 2023 proposal.
AGM follow-up engagement
Following the AGM, in June 2023 Royal London Asset Management met Shell’s Head of Scenario Modelling. The key takeaway from this meeting was that the company's most ambitious decarbonisation scenario, based on realistic changes in government policies and people's attitudes, showed a rapid reduction in the demand for natural gas. But Royal London Asset Management wasn't clear about the link between Shell's climate modelling and its decision to continue growing its natural gas business.
Lobbying activity
Royal London Asset Management took part in Shell's Capital Markets Day in June 2023 – an annual event that gives investors and shareholders the chance to meet the company's management and find out more about its strategy. The key takeaway from the event was that Shell's energy transition strategy, 'Powering Progress', would drop investments in its power generation business. Shell also claimed that it had already reduced oil output by 1-2% as a result of selling its shale business. However, in Royal London Asset Management's opinion this goes against supporting an actual world emission reduction as the oil was still being produced by another organisation rather than actual production being stopped.
Royal London Asset Management wrote to Shell's Chairman following the Capital Markets Day announcements, reiterating its asks of the company including transparency around carbon credits and disclosure of emissions reduction targets. Additionally, Royal London Asset Management joined the World Benchmarking Alliance's engagement with oil and gas companies and is co-leading engagement with Shell on what it's doing to address the social challenges of a low-carbon transition – known as a 'just transition'. (The World Benchmarking Alliance is an organisation focused on methodologies to identify sustainable business behaviour).
1 Scope 3 Emissions - (unglobalcompact.org.uk) (opens in new window)
Some of the topics discussed formed the basis of shareholder proposals tabled at the 2023 and 2024 annual general meetings (AGMs). Several of the topics discussed formed the basis of shareholder proposals tabled at the 2023 AGM, with a record 18 resolutions submitted for consideration.
2024 AGM shareholder proposals - voting activity snapshot
Employee working conditions
Royal London Asset Management voted in favour of a shareholder proposal requesting a report on working conditions. It’s supportive of increased scrutiny in this area given the significant allegations around Amazon’s working conditions.
Governance issues
Royal London Asset Management has previously raised concerns about Amazon’s remuneration practices. It voted against the election of Edith Cooper, who was recently promoted to chair of the remuneration committee, due to these concerns.
Royal London Asset Management also voted against the election of the current chair of the governance and nominating committee. This was to register concerns about the adoption of an exclusive forum provision without shareholder approval. Exclusive forum provisions require shareholders to go to specified courts if they want to make a claim against the company and its directors, which can limit their ability to choose their preferred court.
Ernst & Young has been Amazon’s auditor for over 25 years. With concerns over the length of time it’s been in this position, Royal London Asset Management voted against ratifying it again as auditor.
Disclosure and transparency around artificial intelligence and facial recognition technology
Royal London Asset Management voted for a shareholder proposal requesting the formation of an artificial intelligence committee as it’s supportive of further disclosure in this area.
Royal London Asset Management also voted for a shareholder proposal on the human rights impact of the use of facial recognition technology. It supports increased disclosure in this area given the potential for human and civil rights violations associated with the use of this type of technology.
2023 AGM shareholder proposals - voting activity snapshot
Tax transparency
Royal London Asset Management voted in favour of a proposal for increased disclosure on tax to help shareholders assess Amazon’s tax-related risks. This vote reinforced Royal London Asset Management’s previous discussions with the company about its disclosure approach.
Animal welfare standards
Royal London Asset Management abstained on a vote for a report evaluating animal welfare standards at Whole Foods, bought by Amazon in 2017.
Shareholders had tabled concerns about Whole Foods’ animal welfare practices. While Royal London Asset Management supports better disclosure, Amazon is considered open in its approach to this issue, promotes high standards and has shown itself quick to act in response to any identified issues in the supply chain. Royal London Asset Management also considered the proposed timeline to report on this issue was overly pressured.
Climate risk in employee pension default options
Royal London Asset Management voted against a proposal requesting that Amazon reports on how it’s protecting pension scheme members with a longer time to retirement from climate risk in the company’s default investment options. While Royal London Asset Management saw the merit of the ask, it believes that this is already the case, with employees able to choose where their pensions are invested from a large number of options.
Third-party assessment of freedom of association
Freedom of association allows workers and employers to create and join organisations of their choice without fear of reprisal. That includes joining unions and bargaining collectively for better working conditions. Royal London Asset Management voted in favour of a request for Amazon to disclose how it ensures workers’ rights in this area, particularly since there have been some significant controversies about Amazon’s labour practices and apparent anti-unionisation rhetoric at some sites.
Employee salary considerations when setting executive compensation
Royal London Asset Management voted against a proposal to take into consideration employee salaries when setting executive pay. It believes that these decisions are usually best left to the compensation committee, which has access to a greater degree of information than shareholders.
Royal London Asset Management also voted against a Board-tabled executive compensation proposal as it believes the compensation structure falls short of best practice standards, with a lack of performance-related incentive plans and a reliance on discretionary grants.
As a signatory of the Net Zero Asset Managers initiative1, Royal London Asset Management looks to influence companies to adopt emissions reduction targets and climate transition plans that support the goal of net zero greenhouse gas emissions by 2050 or earlier. Royal London Asset Management has developed a Climate Transition Assessment, which uses 12 indicators to help assess companies' climate transition plans, such as BP's (the energy business) and it expects to influence decarbonisation through this approach.
Engagement and voting activity around BP's climate plan
BP's climate plan was approved by shareholders at the 2022 Annual General Meeting (AGM). In February 2023, BP announced changes to this plan on the back of changing political sentiment across Europe and US, with governments looking for increased oil and gas production in an attempt to lower energy prices in the short term.
BP insisted that these decisions weren't a change in strategy and stressed its commitment to reducing global emissions through further investment of up to $8bn in cleaner technologies.
However, Royal London Asset Management wasn't comfortable with the lack of shareholder consultation on the changes to the climate plan. It believed BP should have given shareholders the opportunity to vote on the new plan at the 2023 AGM.
Royal London Asset Management met BP's Chief Executive and other senior leaders to discuss its concerns about the updated climate plan and explain its voting rationale at the upcoming AGM. Due to these concerns, Royal London Asset Management voted 'Against' the re-election of the company's Chairman at the AGM, and also wrote to the Chief Executive in June 2023 to reiterate its concerns and voting rationale.
Voting activity around greenhouse gas emissions reporting and reduction
Royal London Asset Management voted 'Abstain' on a shareholder proposal around reporting on and reducing greenhouse gas emissions. While Royal London Asset Management still largely supports BP's approach, there are a number of areas where it wants further detailed disclosure. This is particularly true given the changes to the climate plan that BP announced in February 2023, and the fact that the plan wasn't resubmitted to shareholders for a vote.
Compass is a UK company providing food contract services to businesses. The company operates across 45 countries in 55,000 client locations and employs around half a million people.
Focus on diversity
Royal London Asset Management invests in Compass, and as part of its regular reviews was looking at engaging with the company on its diversity policies and practices to gain greater insight and encourage increased transparency.
The Compass board had recently established its 'people commitments'. As part of this, it identified areas where the company could make improvements on diversity – particularly in leadership, teams and diverse talent.
Royal London Asset Management met the company's group chief people officer and one of its independent non-executive directors, who is also the workforce engagement lead with a focus on building relationships with employees. The meeting aimed to understand how Compass is implementing and measuring diversity activity and engagement, specifically around ethnic minorities, and how this supports Compass's 'people commitments'.
Using data collated predominately on its US employees, Compass was able to prove that when it had more women in leadership teams, it has enjoyed more business success, and also has seen proportionately higher levels of engagement from ethnically diverse employees in the US.
In the UK, Compass is focusing on diversity related to social and economic factors and plans to look at its recruitment practices to encourage more people from different backgrounds to apply for roles. On bias and prejudice issues, the company explained that this often starts with ignorance, so it's working on addressing this through education.
Compass has also highlighted areas where it's looking to improve, such as the proportion of female senior leaders.
Outcome
Royal London Asset Management has invested in Compass for a long time and continues to see the company as a leader in diversity policies and practices. It is encouraged by what Compass is doing in terms of employee engagement and initiatives, as well as by how it's giving investors and stakeholders greater visibility, including through publishing more information on its progress. Royal London Asset Management sees this increased transparency as a welcome sign that Compass is genuinely committed to diversity within its workplace.
Purpose:
To meet the new Chairman and discuss strategy, governance and sustainability issues.
Outcome:
Royal London Asset Management was generally impressed by the Chairman's knowledge and experience in the retail sector, including his full grasp over the main challenges and opportunities facing Greggs. To get to know the business, he spent time serving up sausage rolls at the company's stores in Manchester. Across the retail sector, there has been a dampening of demand and increased challenges on employee wage bills, which are difficult to navigate. However, Greggs has a strong workforce culture and maintains long retention levels amongst its employees. The Chairman aims for Greggs to have market-leading sustainability reporting and identified that diversity will remain a key feature during recruitment drives.
Purpose:
To discuss Royal London Asset Management's votes against the company's remuneration plan and subsequent press statements.
Outcome:
Royal London Asset Management outlined its issues over Ocado's value creation plan (VCP), which awards directors based on a single performance metric with limited performance criteria, the ability to 'bank' the awards, and a disconnect between pay and performance. It discussed the company’s US-style pay scheme and competitor compensation, as well as its approach to pay with employees. Overall, Royal London Asset Management wasn't encouraged by Ocado’s responses and continues to hold concerns over the company's long-term incentive framework.
SSE (Scottish and Southern Energy) is an energy utility company that helps produce and distribute gas and electricity to our homes. It's one of the largest producers of wind power in the UK and has committed to become 'net zero by 2050' – which means that by 2050 the amount of greenhouse gas emissions produced by SSE will be equal to the amount it removes from the atmosphere.
Royal London Asset Management's Responsible Investment team has been champions of SSE's strategy to move to wind power and reduce its reliance on coal and gas, which will have a big benefit for our climate. However, it has also been talking to SSE about the just transition – what the company is doing to make sure that its transition to lower carbon energy considers any social impact, like job losses or making energy bills unaffordable.
What action did the engagement drive?
Together with the Friends Provident Foundation, an independent charity working towards a fair and sustainable economic system that serves society, Royal London Asset Management's Responsible Investment team met representatives from SSE to check its progress on net zero and a just transition. Following this, SSE agreed to publish a formal just transition strategy, the first company to do this globally.
We see this as a great example of how engagement can lead to positive outcomes for society.
Engagement with Shell's chairman
In the lead-up to Shell's 2023 Annual General Meeting (AGM), Royal London Asset Management met the chairman to discuss progress on the company's climate transition plans and reiterate its requests for improvements. Shell confirmed it expected to meet its 2030 targets, although it may not be a completely smooth or straight journey.
AGM voting activity
Shell noted Royal London Asset Management's request for transparency around the cost of carbon credits. Carbon credits are a mechanism that incentivises companies to reduce greenhouse gas emissions.
Royal London Asset Management also urged the company to disclose all its emission reduction targets to facilitate assessment of how these align with the Paris Agreement – the 2015 legally binding international treaty on climate change. This disclosure request included targets for emissions directly generated by Shell's activities (known as Scope 1 emissions), but also emissions associated with activities that it is indirectly responsible for (known as Scope 3 emissions). This could include, for example, suppliers in the value chain and employees' emissions when commuting. These Scope 3 emissions typically account for the majority of an oil and gas company's carbon footprint so need tackling to meet the aims of the Paris Agreement1.
At the 2022, AGM Royal London Asset Management voted 'Abstain' on Shell's energy transition strategy (what it calls 'Powering Progress'). It didn't believe the measures outlined in that strategy went far enough and also wanted to see the company's progress on specific issues that would make Shell more robust. At the 2023 AGM, Royal London Asset Management noted the company's considerable investment in scaling up technology that can help with emissions reductions. But in the absence of further progress against the asks in 2022, Royal London Asset Management voted 'Against' on the equivalent 2023 proposal.
AGM follow-up engagement
Following the AGM, in June 2023 Royal London Asset Management met Shell’s Head of Scenario Modelling. The key takeaway from this meeting was that the company's most ambitious decarbonisation scenario, based on realistic changes in government policies and people's attitudes, showed a rapid reduction in the demand for natural gas. But Royal London Asset Management wasn't clear about the link between Shell's climate modelling and its decision to continue growing its natural gas business.
Lobbying activity
Royal London Asset Management took part in Shell's Capital Markets Day in June 2023 – an annual event that gives investors and shareholders the chance to meet the company's management and find out more about its strategy. The key takeaway from the event was that Shell's energy transition strategy, 'Powering Progress', would drop investments in its power generation business. Shell also claimed that it had already reduced oil output by 1-2% as a result of selling its shale business. However, in Royal London Asset Management's opinion this goes against supporting an actual world emission reduction as the oil was still being produced by another organisation rather than actual production being stopped.
Royal London Asset Management wrote to Shell's Chairman following the Capital Markets Day announcements, reiterating its asks of the company including transparency around carbon credits and disclosure of emissions reduction targets. Additionally, Royal London Asset Management joined the World Benchmarking Alliance's engagement with oil and gas companies and is co-leading engagement with Shell on what it's doing to address the social challenges of a low-carbon transition – known as a 'just transition'. (The World Benchmarking Alliance is an organisation focused on methodologies to identify sustainable business behaviour).
1 Scope 3 Emissions - (unglobalcompact.org.uk) (opens in new window)