“A positive margin of two percent emphasizes how important each vote is”

Published on: 12 March 2024

APG exercises the voting rights of its pension fund clients. In 2023, it voted at around 5500 shareholder meetings on around 60,000 proposals. Senior Portfolio Manager Tara-Jane Fraser worked with APG’s clients to strengthen their voting policies and ensure their successful implementation. “The enhanced voting policies ensure that, on our clients’ behalf, we maximize the leverage we can have on the choices companies make and ensure that voting really is a powerful tool.”


What do you consider key characteristics of APG and its clients’ voting approach?
“ESG factors play an important role in establishing our clients’ investable universes and engagement priorities. They take a holistic and integrated approach – voting is a tool that supports our engagement priorities, encourages change and ultimately informs our investment decisions. This positive feedback loop helps us maximize the effects of our stewardship activities. The enhanced voting policies ensure that, on our clients’ behalf, we maximize the leverage we can have on the choices companies make and ensure that voting really is a powerful tool”.


“Before I joined APG in January 2023, I had been working for one of APG’s external managers for a decade, where I gained a lot of experience in analyzing company practices on ESG. This involved determining their materiality and setting long-term stewardship priorities. It made me aware of how powerful a tool voting can be in holding companies to account and achieving positive change. I was drawn to APG because of its reputation on responsible investment – the clients we serve have ambitious responsible investment goals. I have been really impressed by what I have found.”

How has APG’s voting policy evolved over the past year?
“In 2023 our clients enhanced their voting policy on four themes: climate disclosure, biodiversity, human rights and tax*. For three of these themes, a failure to meet expectations, leads to a vote against the board chair**. In the case of tax, if they are up for election, we will vote against the chief financial officer or, if they are not, the chair of the audit committee. Taking voting action against these directors sends a clear signal that we are not satisfied with the current approach of the company on these topics. We saw a 15-20 percent increase in the director elections that we opposed in 2023.”

Could you elaborate on the four focus themes?
“Firstly, tax. A lot of work has gone into developing a proprietary system that helps us identify companies that are non-compliant with our clients’ tax expectations. For example, companies that do not disclose their tax strategy or have an adequate effective tax rate. To help us assess whether companies meet our expectations on human rights, where available, we use data from the Corporate Human Rights Benchmark, which APG co-founded in 2017. On climate, we expect all companies we invest in to report scope one and scope two emissions and, for companies deemed material, also scope three. If companies in high-emitting sectors do not link climate metrics to executive remuneration, we will also oppose the executive remuneration policy. Finally, for companies deemed to have a high impact on biodiversity we require effective policies in place, for example, for deforestation and animal testing and to disclose these.”

Why is voting against the chair a key tool when it comes to pushing for change?
“It is not necessarily common to vote against a board chair. Items that are typically put to the vote relate to reviewing corporate governance practices and then it is usual to target the board member responsible for the topic in question. Voting against the chair is really a means to escalate and to make a statement on other topics where there is no opportunity to vote more directly, for example, the four themes that our clients prioritize. From our perspective, the responsibility for such items ultimately lies with the chair. This approach is key as it provides us with a tool to encourage improvement on topics that lie beyond the scope of the typical AGM agenda.”

How do companies respond?
“We've been proactively telling companies that we will oppose the chair if we don't see improvement and that has been well received. Companies thank us for flagging our concerns and often indicate that it’s something they’re working on and will now prioritize. However, it is not standard practice across all markets to be able to annually vote on the chair. In such cases, we make it clear that, given the opportunity, we would have voted against the chair and explain why.”

“It’s key for us to be very transparent about what we expect from companies, but frustrating that we can’t take action if the chair isn’t up for election. As a result of this limitation, it was decided to further enhance our voting policies for 2024. How we do this will vary from one market to another, but the basic approach will be to use standard agenda items, like financial statements, that are routinely put to a vote to leverage our influence and help push for consistent changes in company practices.”

Have there been any other enhancements?
“We’ve strengthened our position on auditor tenure, particularly in Europe. We would like to make this more stringent in the U.S. too, but current rules focus on audit partner rotation rather than on requiring a change of auditor altogether. We’ve also made our expectations on remuneration more stringent.”

“We have also been thinking about how we can improve our approach to executing our clients’ voting policies. This has included reviewing our processes for pre-declaring our voting intentions – like we did with Hammerson last year –, the way we report our voting rationales to clients via their bespoke dashboards, and how we tackle shareholder proposals.”

What do you think about shareholder proposals and the recent increase in the number of filings?
“Shareholder proposals can be a really effective tool for achieving change. We co-filed three last year – at Stellantis, Toyota, and Engie – the last two successfully made it onto the agenda. One of them resulted in the company providing shareholders with more disclosure. We also supported a proposal at Starbucks in 2023 on commissioning a third-party assessment of the company’s commitment to collective bargaining rights. This was passed with 52.03% of the votes, increasing the chance of positive action being taken on this topic. A positive margin of 2% emphasizes how important each vote is and how powerful voting can be. For 2024, we are expecting an increase in shareholder proposals encouraging greater disclosure on artificial intelligence and we will be supporting a proposal requesting more disclosure at the upcoming Apple AGM.”


“It is true that we have seen a sizeable increase in the range of topics put forward by shareholders via proposals in the past few years. In our view, this increase in numbers has not necessarily correlated with quality and we continue to actively review the majority of shareholder proposals. We are conscious that companies, particularly in the US, are taking more active steps to challenge proposals in response to the increased volume - such as Exxon Mobil recently taking the parties that filed a proposal to court. We will continue to monitor this development closely as we would not want the effectiveness of shareholder proposals to be negatively affected by this trend.”



* There are differences between the voting policies of APG’s individual pension fund clients in terms of focus themes.

** Board structures vary across different markets. Broadly APG opposes the Chair of Supervisory/Non-Executive Boards in a two-tier/dual structure system and the Board Chair in a one-tier/unitary Structure.