The Vancouver-based Shareholder Association for Research and Education (SHARE) has released its 2022 proxy voting guidelines, which emphasize board diversity, mine safety and emissions disclosure.
SHARE announced Friday that funds using its 2022 proxy voting guidelines would now vote against the board chair at issuers that fail to adequately disclose climate-related emissions and at issuers that fail to manage mining tailings. At Canada or U.S. issuers, funds would now vote against nominating committee chairs if their boards lack directors with diverse racial or ethnic origins.
“The target for representation of Black, Indigenous and people of colour (BIPOC) representation on boards of directors in Canada and the United States should be 20% of the board,” SHARE said in the guidelines. If the board is made up of only one gender or has no members of under-represented groups, the issuer’s diversity policy should “acknowledge that the board needs greater diversity and explain the specific steps the board is taking to achieve it.”
SHARE has also updated its guidelines to vote against the entire nominating committee if one gender represents less than 30% of directors.
As for climate-change disclosure, SHARE’s guidelines now stipulate a vote against the chair of the board at companies that fail to adequately disclose climate-related emissions, risks, plans or targets at significant emitters based on the Transition Pathways Initiative (TPI) rating of 3 or lower.
TPI was established in 2017 as a joint initiative between the Church of England National Investing Bodies and the Environment Agency Pension Fund. TPI has analyzed nearly 400 public companies and rated those from 0 (unaware of or not acknowledging climate change as a business issue) to 4, which TPI calls “strategic assessment.” Level 3 means climate change is “integrated into operational decision-making.”
Also new to the 2022 guidelines is a stipulation that funds would vote against the chair of the board at relevant companies that fail to confirm their intention to meet the Global Industry Standard of Tailings Management (GISTM).
Poorly constructed and maintained mine tailings dam structures are a significant threat to human safety, the environment and shareholders, the guidelines said. The GISTM was established after the 2019 failure of a tailings dam at a Vale mine led to the deaths of 270 people.
The GISTM requires operators to use specified measures to prevent the catastrophic failure of tailings facilities and to implement best practices in the planning phases all the way to post-closure.
SHARE said that in deciding how to apply the proxy voting guidelines, shareholders should consider the circumstances of each vote, the vote’s long-term implications and the guidelines’ principles.
“SHARE’s voting guidelines take a systems approach as well as focusing on high standards of individual firm behaviour,” said Kevin Thomas, CEO of SHARE, in a release. “The guidelines recognize the importance of economy-wide systemic issues that affect portfolio performance and each ballot item should be assessed for its impact on the economy, and the society and environment upon which economic returns depend as well as on individual firms in isolation.”
Launched in 2000 at the B.C. Federation of Labour annual convention, SHARE clients include pension funds, mutual funds, foundations, Indigenous trusts, faith-based organizations and asset managers across Canada.