Nuveen, the $1.3 trillion AUM investment manager of TIAA, anticipates a turning point this year, in which investors will shift focus in their proxy voting and engagement efforts to accountability on climate and ESG issues, moving attention past transparency issues to focus on real-world environmental and social (E&S) impact.
In it’s newly released 2022 Proxy Season Preview, Nuveen highlights a series of key trends that it anticipates will drive this year’s investor agenda. In addition to a renewed push on ESG accountability, Nuveen also says to expect an increase in the number of ESG-focused shareholder proposals following proxy-related rule changes at the SEC, and for those proposals to contain a sharper degree of specificity around expectations for strategies and real-world outcomes and impact.
Key accountability issues drawing investor focus would include policies, business strategies, oversight structures, incentive pay aligned with ESG issues, and setting clear ESG-related commitments with relevant KPIs, according to the report.
Amy O’Brien, Global Head of Responsible Investing at Nuveen, said:
“In the maturing ESG landscape, investors increasingly recognize that reporting does not automatically generate impact, which in turn, is resulting in a greater focus on accountability as the bridge. We expect this proxy season to place greater emphasis on corporate strategies and ultimate environmental and social objectives.”
The preview report also indicates that the current proxy season could signal a shift in focus in director election trends, to be more closely aligned with E&S performance, as investors continue to integrate ESG into the investment and stewardship processes.
Nuveen highlights a series of key factors driving these trends, including a successful push by investors over the past few years for ESG transparency, along with the rapid growth in the investor’s own ESG commitments. In particular, Nuveen notes that the “rise of net zero commitments from asset owners and asset managers suggests investors may be prepared to translate newly enhanced ESG transparency into investment decision-making, including voting against directors where companies’ carbon footprints are clearly misaligned with the investors’ strategies for achieving net zero.”
Peter Reali, Global Head of Stewardship at Nuveen, said:
“Stewardship has become an essential tool in the responsible investing toolkit ─ a way for shareholders to push for real change. This proxy season will demonstrate a continued evolution in the depth and scope of those efforts as investors grapple with evaluating companies’ near-term practices against environmental and social impacts that may take years to materialize.”
Click here to view Nuveen’s 2022 Proxy Season Preview.