How ABN AMRO votes as a responsible shareholder

At a company’s annual general meeting, shareholders can vote on issues like board appointments, remuneration and dividend payments. But shareholders can also propose their own resolutions, on sustainability for example.

For an asset manager, there are several ways to influence company strategy – and the direction of our economy at large. One is deciding which companies to invest in on behalf of clients. But maybe the most direct way is using your right to vote at shareholder meetings. As ABN AMRO aims to accelerate the sustainability shift, voting with social and sustainable ambitions in mind can move companies to lower their emissions, respect human rights and improve their governance.

Socially Responsible

On behalf of its clients, ABN AMRO aims to be a socially responsible investor. ABN AMRO Investment Solutions votes in line with its voting guidelines, which generally support proposals on environmental and social objectives. In 2022, ABN AMRO Investment Solutions attended 1,936 shareholder meetings, and voted in 90 percent of them.

“Our clients invest for economic gain, as all investors do, but they also demand that the companies they invest in operate in a futureproof manner,” explains Vincent Triesschijn, Global Head of ABN AMRO’s ESG & Sustainable Investment Team. “Generally, they want companies to be prepared for the energy transition and to operate in a socially responsible way”.

Engagement

Besides voting, ABN AMRO Investment Solutions wields its influence in collaborative engagement efforts through its engagement partner. Engagement can range from sending formal letters or emails to attending meetings with a company’s management. This is an effective way to kickstart positive change on environmental, social and governance issues.

While engagement mostly focuses on long-term dialogue, voting has the most direct impact. In 2022, ABN AMRO Investment Solutions voted against management proposals over 20 percent of the time.

“At first glance, 20 percent may not sound like a lot. But voting against management proposals is a powerful signal”, says Margot Seeley, Sustainable Investing Analyst at ABN AMRO Investment Solutions. “It demonstrates that you’re not satisfied with, for example, a company’s decarbonisation plan. Even if the resolution in question doesn’t get a majority of votes, by voting against management proposals. you’re making your voice heard as a shareholder.”

Shell, for instance, put its energy transition progress to a shareholder vote. ABN AMRO Investment Solutions recognises the more stringent emission reduction targets Shell has set. However, in line with its voting policy, ABN AMRO Investment Solutions voted against this resolution as the onus is on Shell to explain in more detail how its actions will help it to achieve its goals. Overall, ABN AMRO Investment Solutions wants specifics on how Shell's plans align with International Energy Agency scenarios and Paris goals.

Margot continues: “Other market participants will start reflecting on the resolution in question and might join us in voting against the resolution at the next general meeting. A no-vote may also provide a starting point for engaging with a company’s management. This is how you foster positive change.”

The right balance

Still, voting isn’t always easy, as there are often politics in play. Margot: “The balance between voting and engagement can involve difficult decisions. Engagement is all about dialogue, it’s a way to influence company policy, while voting against management proposals can stifle the dialogue and disrupt the engagement process. So we try to find the right balance between engaging and voting.”

Active ownership

Only half a decade ago, Vincent’s team rarely heard questions or concerns from clients about annual general meetings or ESG-related resolutions. But times have changed. “Clients want to know how we voted on certain resolutions, especially those related to climate. And they want us to discuss sustainability topics with companies.”

It comes down to being an active owner. “We believe it’s our fiduciary duty to engage and vote”, Margot says. “We want to enable companies to transition into a net-zero economy. If companies are not prepared to make this shift, that’s not good for the sustainability of their activities and their profits – and therefore not good for our clients.”

“In the end, voting and engagement are simply rational”, Vincent says. “The spotlight is often at the radical ends of the sustainability debate: companies that refuse to change, or activists disrupting meetings. But the vast majority of investors is in the middle. We do our homework and aim for a healthy balance in risk, return and sustainability. Divesting and walking away is the easy way out. Change takes time, but it’s happening. All we need to do is show our commitment to accelerate the sustainability transition in a responsible way: financially, socially and environmentally.”

More information on the voting and engagement activities can be found in the Annual voting and engagement report.