Active asset manager Allianz Global Investors (AllianzGI) announced that it has made several amendments to its AGM voting policy, including the introduction of a policy to vote against companies that do not link executive compensation to ESG targets, along with more expansive diversity expectations for portfolio companies.

Under the new policies, AllianzGI stated that it expects large-cap European companies to include ESG KPIs in their executive remuneration policies, and that it will vote against pay policies if they are not included, beginning in 2023. The firm’s new voting rules also target expanded ethnic diversity, setting expectations for UK and US companies to follow a diversity approach that extends beyond gender.

Matt Christensen. Global Head of Sustainable and Impact Investing at Allianz Global Investors, said:

“As an active investor, exercising our voting rights is one of the most powerful tools we have to effect change. In keeping with our desire to shape a more sustainable future with measurable positive outcomes, we want to ensure that our investee companies align their executive remuneration policies with ESG KPIs and we will vote against those that don’t.”

The new policies were announced with the publication by AllianzGI of its annual analysis of its AGM voting record, and highlighted some of its engagement and voting activities in key focus areas including executive compensation, environmental and social factors, and the promotion of high quality boards.

AllianzGI disclosed that in 2021, it voted against nearly half (47%) of all compensation-related management proposals, increased the number of engagements with investee companies seeking improvements in compensation plans, and introduced a policy to scrutinize generous pay proposals for companies receiving substantial state aid, recording high numbers of layoffs, or announcing dividend cuts resulting from the COVID-19 pandemic.

On the environmental front, AllianzGI developed voting guidelines mapping out its expectations for companies to provide clear targets and milestones and to commit to reporting annually, in response to the trend of companies tabling resolutions seeking shareholder consent on their climate strategies. The company stated that it will begin applying more rigorous benchmarking going forward as ‘say on climate’ resolutions become more prevalent.

To promote high quality boards, AllianzGI noted its votes against companies in which directors or committees were not sufficiently independent, based on long tenure of directors, or those who are representatives from major shareholders.  

The announced policies and voting record analysis follows a series of moves by AllianzGI aimed at increasing its sustainable investment and engagement focus, including shifting €70 billion of AUM to its sustainable investment offering, establishing a new stewardship strategy guiding engagement with companies on the climate transition pathway towards a low carbon economy, and restructuring its sustainable investments team, including the creation of a dedicated Sustainability Research & Stewardship team.