BNP Paribas Asset Management (‘BNPP AM’) continued to implement its ambitious voting policy during the 2023 Annual General Meeting season, with an average opposition rate across all resolutions of 37%, up from 33% in 2022.
BNPP AM’s level of opposition has risen consistently in recent years, reflecting one of the strictest approaches in the industry and supported by a strategy of ongoing corporate dialogue throughout the year.
55% Of Executive Compensation Resolutions Rejected
Resolutions relating to executive pay levels were the most contested, with BNPP AM rejecting more than one in two. Although compensation practices have become more transparent and the integration of ESG performance criteria is increasingly widespread, BNPP AM nevertheless continued to see variable remuneration being paid without performance requirements, along with an excessive catch-up effect compared to 2022, which was marked by declining remuneration due to the impacts of the pandemic.
Executive compensation plans should be aligned with long-term corporate performance and include relevant and demanding extra-financial objectives.
48% Of Director Appointment Resolutions Rejected, Mostly For Diversity Reasons
Earlier this year, BNPP AM strengthened its voting policy by increasing the minimum thresholds required for female board membership to 35% in Europe and North America, and to 20% in Latin America, Asia and the Middle East[1].
In accordance with its policy, BNPP AM opposed the election of all male directors when these requirements were not met, leading to a significant increase in opposition to such resolutions (48% in 2023 compared to 36% in 2022).
BNPP AM is convinced that investors have a crucial role to play in increasing female representation on decision-making bodies, and expressed its view by voting against nearly half of the resolutions relating to the appointment of directors.
The number of climate resolutions initiated by corporates fell sharply, with BNPP AM voting on 19 in 2023, compared to 40 in 2022. This decrease in the number of ‘Say on Climate’ resolutions is attributable to multiple factors.
Several companies have opted for a vote every three years, while this is a practice limited to selected European markets, primarily France and the United Kingdom. BNPP AM opposed more than half of these resolutions, and noted a focus on Scope 3 emissions.
BNPP AM additionally demonstrated a significant level of support for shareholder resolutions on environmental (88%) and social (96%) issues, designed to improve company performance.
ESG Issues Core To BNPP AM’s Voting Strategy
In line with its commitment to the Climate Action 100+ initiative and its Net Zero roadmap, BNPP AM expects companies to achieve net-zero emissions by 2050 at the latest, underpinned by credible decarbonisation strategies and intermediate targets.
In terms of biodiversity, BNPP AM requires companies to assess and report on their main impacts and dependencies on nature, starting with those in high impact sectors, with priority given to deforestation and water-related issues. Failure to meet these requirements will result in the rejection of ordinary resolutions such as the re-election of directors, or the discharge or approval of accounts. BNPP AM opposed more than 1,000 resolutions for these reasons.
Michael Herskovich, Head of Voting and Governance at BNP Paribas Asset Management, comments:
“In the first half of the year, BNPP AM voted at more than 1,600 AGMs worldwide. Voting is an important component of our dialogue with the companies in which we invest on behalf of our clients, as well as being an integral part of our investment management processes.
This is why it is essential to maintain this high point of shareholder democracy, where dialogue is established between managers, individual shareholders and institutional investors. We advocate hybrid AGMs, with the same rights for those who vote remotely and in person.”
