ISS proposes proxy voting policies for 2022

Institutional Shareholder Services Inc. (ISS), a proxy advisory firm, is proposing new voting policies on board diversity and say-on-pay votes for Canadian companies.

ISS opened the comment period on proposed changes to its benchmark voting policies for 2022.

For Canada, the proposals include requiring at least one woman on the board of most public companies for 2022, along with the expectation that large firms will have at least 30% women on their boards.

It has also proposed changing the minimum support threshold for triggering a responsiveness analysis on management say-on-pay proposals from 70% to 80%. ISS said the the change would align with recommendations from the Canadian Coalition for Good Governance (CCGG).

Internationally, ISS has proposed policy changes on gender diversity requirements for companies in the U.S. and Japan, along with ethnicity considerations for companies in the U.K. and Ireland.

Voting policies involving climate-related risk, transition plans and disclosure are another key focus for for the 2022 proxy season.

In several markets, the firm is proposing to adopt a new climate-related board accountability policy that’s “based on expectations from many investors that high emitting companies should assess, mitigate, and report on their climate change risks and targets.”

This includes a policy to recommend voting against the re-election of directors at heavy polluters if the company isn’t providing adequate disclosure — such as disclosures that adhere to the recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD) — or if the company hasn’t set GHG reduction targets.

Additionally, ISS is proposing new policies to codify its analytical approach to climate-related disclosures and voting issues.

“For company climate transition plans presented for shareholder approval, the completeness and rigour of the plans will be assessed case-by-case, including considering the quality of disclosures, the rigour of targets, whether targets are science-based, the existence of external verification, and a range of other information,” the firm said.

Shareholder proposals requesting “say on climate” votes will also be analyzed on a case-by-case basis, it added.

The proposals are out for comment until Nov. 16.

James Langton

James is a senior reporter for Advisor.ca and its sister publication, Investment Executive. He has been reporting on regulation, securities law, industry news and more since 1994.