Responsible Investing: using shareholder power for positive change

If we have a concern about a company we invest in on our clients’ behalf, and addressing it isn’t already on their to-do list, we can put pressure on them to take action.

We do it through shareholder resolutions, which effectively force them to discuss the issue at a public company meeting – if we can get enough support for such a move from our fellow investors.

They are a powerful tool to effect change on environmental, social and governance (ESG) issues – the cornerstones of investing for a sustainable future – and a key part of our award-winning approach to responsible investing.

Just last week ExxonMobil’s shareholders elected two climate-conscious individuals to sit on the board, and Chevron shareholders voted for the company to reduce carbon emissions. These are both monumental events showing shareholders driving significant change.

A shareholder resolution also saw commodity firm Glencore strengthen its approach to climate change. While another, which we supported, asked Barclays to set targets to phase out financial services to fossil fuel projects and companies.

Other recent examples include resolutions at the 2021 AGM of well-known investor Warren Buffett’s firm Berkshire Hathaway, calling for more climate risk reporting and greater diversity on the board.

One of the most powerful tools to drive change

Leslie Gent, Head of Responsible Investing at Coutts, says shareholder resolutions are one of the best responsible investing tools we have at our disposal.

“We want our clients to be assured that we invest their money in a responsible way – with a constant, consistent focus on sustainability,” she says.

“One of the most important ways we do that is to actively engage with the companies we hold shares in to help ensure they play their part. We hold them to account, asking them to take appropriate action when necessary to ensure they’re working towards a fair, environmentally friendly future.”

She adds, “If we see something we don’t think is right, our first move is to talk to the company in question to see if they’re willing to change it.

“While this kind of engagement is often very effective, if it doesn’t work, we might then try to drum up enough support from our fellow shareholders for a shareholder resolution.”

Leslie says one of the things that can make such a move so effective is that the issue then becomes public.

“Even when shareholder resolutions don’t pass, the fact that they were discussed in a public forum means they can put pressure on companies to address investors’ concerns and avoid more scrutiny in the future,” she says.

Our latest responsible investing voting and engagement

Coutts continues to vote as shareholders and engage with companies we hold in our client portfolios and funds to ensure they meet our high standards on sustainability.

We do this in partnership with EOS at Federated Hermes, which works with asset managers on behalf of investors to provide stewardship services.

Full details of our activity for the first three months of the year, broken down by topic, are in the charts below. Highlights include:

• we made voting recommendations at 111 shareholder meetings (1,874 resolutions)
• at 65 of those meetings we recommended opposing one or more resolutions, showing our resolve in challenging the management of these firms when we feel it’s necessary
• we engaged with 293 companies in our client portfolios and funds on 1,042 ESG issues and objectives, compared to 46 companies and 162 issues in the last quarter of last year – showing a huge increase in our engagement activity so far this year

Read more about responsible investing at coutts

When investing, the value of your investments, and the income you receive from them, can go down as well as up and you may not get back as much as you invested.

Our VOTING AND ENGAGEMENT IN NUMBERS, Q1 2021