British Columbia Investment Management Corporation (BCI) announced its new proxy voting guidelines, outlining the investment manager’s expectations regarding the governance practices of the publicly-traded companies in which it invests. According to the new guidelines, BCI will increase its focus on advocating for board diversity, addressing climate change risk, and reviewing executive compensation in the context of COVID-19 and its impact on human capital.

With over $170 billion of managed assets, BCI provides investment management services to British Columbia’s public sector. In July 2020, the investment manager released its updated ESG strategy, describing the firm’s ESG beliefs, principles, and governance, and how its overall investment strategies take sustainability factors into account across the corporation. One of the key components of the updated strategy was a focus on engagement and advocacy, seeking to influence the companies in its investment portfolios.

Among the changes made to BCI’s proxy voting guidelines is a new diversity and inclusion target for women directors to comprise at least 30% of companies boards of directors, and climate-related initiatives including supporting more prescriptive shareholder proposals on climate change, and escalating the targeting of directors for weak responses to climate change risk.

Jennifer Coulson, Vice President, ESG, Public Markets, said:

“Boards and executive management have an important role to play in promoting and fostering diversity and inclusion. We expect boards to adopt and disclose a formal diversity policy that includes targets and timelines to increase levels of diversity at the board and senior management level.”

Coulson added:

“We expect directors to oversee management’s efforts to manage climate change-related risk. BCI will consider supporting more prescriptive proposals, including those asking companies to align emission reduction targets with best practices such as net-zero by 2050.”

BCI will also focus its proxy voting efforts on executive compensation, ensuring the alignment of pay and performance, with a plan to escalate votes against company directors for poor compensation practices as part of a more holistic review of compensation considering the impact of the COVID-19 pandemic.

Coulson said:

“While we have seen progress in compensation plan design, we remain concerned that total pay continues to increase rapidly, especially in the U.S. market. COVID-19 presents additional concerns about employee safety, layoffs, and capital allocation decisions relating to dividends and share buybacks.”