State Street Global Advisors recently issued its annual stewardship report. The 80-page recap details 2021 engagements, voting activity, and explains how SSGA’s ESG function is organized (and new headcount). It gives clues on what to expect in the off-season and next year. Here are some excerpts:
– Climate Transition: We are planning a targeted engagement campaign in 2022 to encourage the most significant carbon emitters that we invest in to disclose climate transition plans. SSGA is concerned about “brown-spinning” and wants to see responsible transition planning. The report highlights case studies beginning on page 39. Interestingly, SSGA supported 84% of say-on-climate proposals worldwide, but continues to have reservations that it will insulate directors from accountability.
– Board Gender Diversity: In 2022, we expect that all companies we invest in, across the globe, will have at least one woman on their board. If we do not see companies engaging on this topic, we are prepared to vote against the Chair of the board’s Nominating Committee or the board leader. Additionally, beginning in the 2023 proxy season, we will expect boards to comprise at least 30% women directors for companies in major indices in the US, Canada, UK, Europe, and Australia.
– R-Factor: We currently vote against companies that fail to improve their R-Factor score and show no signs of taking action to improve their score. In 2022, we will continue to vote against companies where we do not see action to improve their score; we will now also vote against companies that show a downward trend in their R-Factor scoring as well as those that consistently underperform their peers in the same market sector.
– 2022 Engagement Priorities: We will continue to focus on our key stewardship priorities of climate change, diversity, equity and inclusion, human capital management, and effective board leadership. This commitment is clearly demonstrated through material changes to our voting policies. In 2022, we expect to ask companies to report against the recommendations of the Task Force for Climate-related Financial Disclosures (TCFD), and we will publish our own TCFD report. This year we announced that in the upcoming 2022 proxy season we will take voting action against responsible directors if (1) companies in the S&P 500 and FTSE 100 do not have a person of colour on their board and (2) companies in the S&P 500 do not disclose their EEO-1 reports.
– Liz Dunshee