03 Apr 2024 3 min read

LGIM’s voting intentions for 2024

By Investment Stewardship team

Our voting intentions at upcoming shareholder meetings, including Nestle.

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Voting allows shareholders to appoint the directors that run a company, approve executive pay, agree climate transition strategies, and encourage better reporting on other environmental and social topics, among others. We believe that holding companies and boards to account for their actions through our voting is a fundamental part of being a good steward of our clients’ assets.  

In our view, transparency of our granular voting policies and how we have voted at companies’ annual and special meetings helps us to drive change, as well as hold ourselves and companies accountable. 

Sometimes, we may choose to declare our vote intention ahead of meetings, to clarify our views to the market, clients and other companies to a particular issue, resolution or outcome. The decision to do so can be undertaken as part of an escalation strategy, where we deem the vote to be particularly contentious, or as part of an engagement programme.  

Over 2024, we will be updating this blog on a regular basis to highlight our vote intentions in advance of certain shareholder meetings. For information about our voting actions and rationales, please visit our dedicated website: VDS Dashboard (issgovernance.com)    

More information about our Investment Stewardship activities, policies and engagement activities  can be found on our website: Investment stewardship & governance | LGIM Institutional    

 

Nestlé S.A.

Meeting: AGM, 18/04/2024

Summary of resolution: Resolution 7 – An Amendment to the Articles of Association regarding sales of healthier and less healthy foods

LGIM’s vote intention:  For resolution 7 (i.e. against management recommendation) 

Rationale:

We believe nutrition is an important topic for investors because it has a significant impact on the health and well-being of individuals, communities and societies. The interconnected challenges of obesity, undernutrition and micronutrient deficiencies is estimated to be 5% of global income, or $3.5 trillion, per annum.[1] Nutrition is therefore one of our global stewardship sub-themes, under the umbrella of Health.

In this shareholder resolution, which we are co-filing with other investors via ShareAction’s Healthy Markets Initiative, we are calling on Nestlé to:

  • Set key performance indicators (KPIs) regarding the absolute and proportional sales figures for food and beverage products according to their healthfulness, as defined by a government-endorsed Nutrient Profiling Model
  • Provide a timebound target to increase the proportion of sales derived from these healthier products

Further information on this resolution and our engagement with Nestlé can be found in our blog post.

We will also vote against item 1.2 (approval of the remuneration report) and item 4.3.1 (Elections of the members of the Compensation Committee – Dick Boer), due to our concerns over executive remuneration, since awards are permitted to vest for below-median relative performance, which therefore fails our ‘pay for performance’ expectations. We applied the same votes to last year’s remuneration report.

 

Apple Inc

Meeting: AGM, 28-02-2024 

Summary of resolution: Resolution 7 – Report on Use of AI 

LGIM’s vote intention:  For resolution 7 (against management recommendation)   

Rationale:   

As artificial intelligence (AI) becomes increasingly embedded in our society, LGIM believes that it presents opportunities to drive long-term value and has the potential to create significant risks, stemming, for example, from data privacy and security, regulatory compliance and workforce transitions. Importantly, we also view societal trust in AI as a material risk.

Market participants are taking steps to ensure the safe development and deployment of AI, from tech companies disclosing approaches to responsible AI principles, to regulators and policymakers increasing AI-related laws around the globe.

As set out in our current baseline expectations on AI, we believe companies should be assessing and mitigating risks associated with AI and providing transparency to the market on their approach; this applies particularly to those companies that develop AI systems and will shape the way it is used in our economy and society. 

Resolution 7 asks Apple to produce a transparency report on the company’s use of AI in its business operations and disclose any ethical guidelines that the company has adopted regarding the company’s use of AI technology. Apple has announced general plans to further develop its use of generative AI and other AI capabilities; however, the company discloses very little about its approach to managing AI-related risks, nor any principles or guidelines to inform how the company uses AI, putting the company behind its peers and increasing exposure potential regulatory and other risks.

We met with the company to discuss these topics, and it did not commit to increasing transparency and disclosures around AI at this time. Apple is among several companies that have outsized influence on the integration of AI into our economy. In line with our expectations, we believe companies like Apple should be transparent in their uses of AI and their risk management processes; therefore, we will be voting FOR this resolution.  

More information on our Investment Stewardship activities can be found on our website:

Investment stewardship & governance | LGIM Institutional

 

[1] Global Panel on Agriculture and Food Systems for Nutrition (2016) Technical Brief No.3: The Cost of Malnutrition – Why Policy Action is Urgent. London: Global Panel on Agriculture and Food Systems for Nutrition. Available at: https://glopan.org/sites/default/files/pictures/CostOfMalnutrition.pdf

Investment Stewardship team

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Our Investment Stewardship team comprises professionals with experience in areas including responsible investment, corporate governance, and public policy. The team is made up of both sector specialists and experts on ESG themes, such as sustainability, and has a global remit with members in the UK, Japan and the US. The team exercises LGIM’s voting rights globally, holding companies to account. In 2020, LGIM cast over 138,600 votes at over 14,000 meetings.

Investment Stewardship team