Vote Reporting Group

Publicly accessible and comparable voting disclosures will highlight the voting practices of asset managers. To the extent that greater transparency improves stewardship across the industry so there should also be benefits to investee companies and the real economy through higher quality engagement and market discipline.

In addition, standardised vote reporting would complement other sustainable finance policy initiatives, such as the Sustainability Disclosure Requirements (SDR)[4], and the work of the Transition Plan Taskforce (TPT), which emphasise the role of stewardship in supporting the transition to a more sustainable future.

Finally, centralised and standardised voting disclosures would also help FCA Supervision to verify aspects of asset managers’ claims about their stewardship activity. Therefore, contributing to other initiatives that aim to reduce the potential harm of greenwashing.

• Association of Member Nominated Trustees
• BlackRock
• Border to Coast Pensions Partnership
• GC100
• Independent Advisor
• Institutional Shareholders Services  
• Investment Association
• Investor Forum
• JP Morgan Asset Management
• Lane Clarke Peacock
• Legal and General Investment Management
• Local Authority Pension Fund Forum
• Local Pensions Partnership Investments
• Minerva Analytics
• NEST Pensions
• Newton Investment Management
• Pension Protection Fund
• Pensions & Investment Research Consultants Ltd  
• Pensions and Lifetime Savings Association
• Phoenix Group
• Principles for Responsible Investment
• RailPen
• Royal London Asset Management
• Scottish Widows
• ShareAction
• State Street
• The Chartered Governance Institute
• The Chartered Governance Institute Registrars' Group  
• The People’s Partnership
• Tumelo
• UK Sustainable Investment and Finance Association 

• Department for Work and Pensions
• Financial Conduct Authority
• Financial Reporting Council
• The Pensions Regulator

Members reaffirmed their support for the goal and purpose of the group. Members were supportive of the Draft Terms of Reference and provided feedback. The Group agreed to meet every month for the next 6 months.

The Group’s objective is to publish a paper and draft vote reporting framework for consultation, followed by a final report and wider industry recommendations within 6 months of the initial consultation.

The members then identified examples of good practice and challenges faced by asset managers and asset owners.

The Chair proposed 3 subgroups be formed to develop proposals for the framework, effective categorisation and rationale disclosure. The subgroups were agreed and members encouraged to join a subgroup.

Two asset owners presented their approaches to voting and their expectations of asset managers on vote disclosures. This included examples of good practice as well as areas for improvement.

Subgroups 1, 2 and 3 fed back from their first meetings, explaining what they covered and the concerns they had. This led to a constructive discussion with each of the subgroup leads.

The FCA team presented a summary of the recent consultation and change to the annual filing requirements by the US Securities and Exchange Commission on Form N-PX.

Three asset managers of different sizes presented their approaches to voting and vote disclosures. These presentations informed the Group on the range of current market practice and prompted discussion about what areas are working and pain points.

Two organisations providing vote reporting services presented their platforms to inform the Group of current market practice on vote reporting, categorisations and rationales. Then, the FCA presented the Group with a high level draft proposal of a vote reporting framework. This was broadly well received, with some specific comments for the Chair and FCA to consider in the next draft.

The secretariat proposed that remaining points on the framework be discussed in a the sub-group and invited members with technological expertise to join. The Group was informed of the intention to publish the consultation in mid-2023.

Members discussed the long-term ownership and oversight of the vote reporting framework, the platform in which the vote reporting framework would be delivered, as well as the financing of it. The Group seemed in agreement that an industry-led ownership solution, supported with regulatory buy-in would be appropriate.

There was also discussion around the hosting of the public vote reporting platform – and whether this could be delivered through a central repository where asset owners could compare votes from several asset managers.

The Group also discussed the one-off and ongoing costs of implementing the framework and hosting the platform.

The Chair provided an update on recent engagement with industry and the general support for the direction of travel of the proposed vote reporting framework. The secretariat provided an overview of the consultation paper and governance procedures.

Members then discussed some of the feedback from wider industry, the benefits of the proposals and specific areas of the proposal which will benefit from further feedback in the consultation.

The Chair thanked members for their contributions to the designing of a vote reporting framework and to the work of the Group and the sub-groups.

The new co-Chairs welcomed members and thanked them for their engagement with the VRG’s consultation and discussion paper.

The FCA explained the background that the VRG was set up to provide an industry-led solution. The FCA provided a high-level overview of the consultation responses from which members could consider in their decision making for the vote reporting template.

Members agreed some aspects of the template, noting further targeted discussion was needed on specified elements.

There will be one more meeting of the Group in this format. The co-Chairs proposed the Group to continue with a smaller membership which is representative of industry.

The group discussed the principles of the vote reporting template, including its ownership and oversight models.

The group decided to first review the client-led uptake of the template and evaluate how well it's meeting its intended objectives through client reporting before considering the need for a public registry.

The group will continue with a reduced membership, but will continue to engage widely with asset managers, owners, proxy advisers and others. It will finalise the detail of the template, the ownership and oversight models, then deliver the template to the industry.  

The group agreed:

• that the Pensions and Lifetime Savings Association will own the vote reporting template
• to delivery timelines for the template, focusing on embedding it in 2025 and on putting the template into operation and encouraging uptake in 2026
• it will continue in its current format until the template is operational

This meeting followed a series of engagements across the industry – including asset owners, managers, consultants, proxy advisers and many others – to discuss aspects of the template, its operational feasibility and ownership structures. The chairs will continue with this engagement ahead of the group publishing a Feedback Statement. 

The Group agreed its vote reporting template and the updated principles for when a rationale is required.

The Chair highlighted progress on the PLSA’s ownership of the template and ongoing engagements with industry stakeholders, which have helped refine the Group’s template.

The Group’s members were encouraged to support embedding and socialising the template in industry.

The Group agreed upon the updated PLSA template which incorporates the Group’s agreed template. The Chairs and the PLSA acknowledged that the template’s guidance will need to provide further clarity on the interoperability of the two templates.

It was acknowledged that the Group has met its objectives. However, to support the successful delivery of the template, the Group agreed to continue a collaborative effort to ensure industry adoption of the template.

Members of the Group offered their support to Pensions UK in developing technical guidance for the vote reporting template.

The Group discussed and approved the merged template, which will be owned by Pensions UK, while noting that minor adjustments may be needed to ensure compliance with DWP statutory guidance.

Pensions UK provided an update on the technical guidance supporting the vote reporting template.

With the Group having successfully fulfilled its objectives and contributed to the development of the guidance, it was confirmed that this was the final meeting. The Group has now concluded its work.

The co-Chairs and Secretariat thanked members for their valuable contributions in developing a voluntary, comprehensive and standardised vote reporting template.