Essential Corporate News: Week ending March 12, 2021

PLSA: Stewardship and Voting Guidelines 2021

On March 11, 2021, the Pensions and Lifetime Savings Association (PLSA) published its Stewardship and Voting Guidelines 2021 to provide practical guidance for pension scheme trustees when considering how to exercise their votes at the annual general meetings of investee companies. The PLSA notes that it has reviewed its 2020 Guidelines and focused on ensuring they remain relevant amid the challenges posed by COVID-19 and a fast moving regulatory environment.

Key changes from the 2020 Guidelines include the following:

• Virtual AGMs – The PLSA supports the provisions introduced by the Corporate Governance and Insolvency Act 2020 to ensure that AGMs can happen virtually during the COVID-19 pandemic, but given concerns about how this may reduce investor engagement, the PLSA advises voting against any motion that would make virtual AGMs permanent, rather than specifically linked to Government policy, or with a sunset clause attached. The PLSA also encourages investors to seek assurances from companies that they are looking at how to use virtual AGMs to not only protect investor engagement opportunities, but increase them.
• Good company behaviour in relation to company culture – One aspect of this involves companies being active in responding to the challenges posed by COVID-19 on the workforce. For example, were steps taken to enable working from home and/or prioritise the safety of staff, and what provisions were made to accommodate challenges caused by the coronavirus?
• Remuneration – The PLSA notes that significant pay discrepancies between a company’s senior executives and the rest of the workforce, as well as those based on gender or ethnicity, can be a signifier of wider issues with a workplace’s culture and processes. This has become particularly sensitive in the COVID era, where many companies have been make tough financial decisions relating to workforces, and made use of Government support in order to pay wages. Maximum pay-outs should remain in line with the expectations of shareholders and other stakeholders, including workers and wider society and this should take into account the impact of the coronavirus, the taxpayer funded support the company has received from Government in response to it, and the treatment of the wider workforce. When determining awards, remuneration committees should also consider how the company has been impacted by the coronavirus, the level of financial support accepted from Government, and how this might impact the perception of remuneration among stakeholders.
• Climate change – The PLSA points out that climate change is one of the prominent consideration for investors and with increasing Government regulations and more activism in this space in the run up to COP26, companies should expect that the issue will only grow in prominence in the coming years. The PLSA supports the approach of the Task Force on Climate-related Disclosures (TCFD) and would expect to see listed companies report against the TCFD framework or be making preparations to do so, and the narrative reporting should reflect the level of financial disclosures provided.

(PLSA, Stewardship and Voting Guidelines 2021, 11.03.2021)
(PLSA, PLSA strengthens Stewardship and Voting Guidelines to reflect pandemic and new climate regulations, 11.03.2021)

Home Office: Modern slavery statement online registry launched

On March 11, 2021, the Home Office announced that it has launched an online registry for modern slavery statements. The aim is to improve transparency and accessibility by bringing modern slavery statements together in one place and making it easier for users to find and compare them. The registry follows commitment from the Government to strengthen the reporting requirements under Section 54 Modern Slavery Act 2015, following a consultation in 2019 on the Transparency in Supply Chains.

All organisations are strongly encouraged to submit their most recently published statement on the registry to demonstrate that they have reported. The Home Office notes that if an organisation is required to produce a statement under Section 54 Modern Slavery Act, in future it will be mandatory for the organisation to submit its statement to the registry as part of the proposed changes to strengthen the reporting requirements to that Act. These measures require legislative change and will be introduced as soon as parliamentary time allows.

(Home Office, Government launches modern slavery statement registry, 11.03.2021)