ISS Announces 2022 Benchmark Policy Updates

Institutional Shareholder Services Inc. ("ISS") has published its 2022 benchmark proxy voting policies. The updated policies will generally be applied for shareholder meetings taking place on or after 1 February 2022.

Updates for the UK and Ireland include:

• Climate:
  • Accountability  -  For companies that are significant greenhouse gas emitters, ISS will generally recommend a vote against the board chair in cases where the company is not taking the minimum steps needed to understand, assess, and mitigate risks related to climate change to the company and the larger economy. For 2022 those minimum steps are:
    • detailed disclosure of climate-related risks, such as according to the Task Force on Climate-related Financial Disclosures; and
    • appropriate greenhouse gas emissions reduction targets.  
  • "Say on Climate"  -  ISS is codifying its framework for analysing climate action plans proposed by management for shareholder approval and "say on climate" shareholder proposals requesting that climate action plans be put to a shareholder vote. ISS will assess such proposals on a case by case basis.  
• Board Diversity: ISS is expanding the coverage of its board diversity policies to include both gender and ethnicity. Changes include an expectation that Irish companies will have at least one director from an ethnic minority background from 2024.  
• Remuneration: Aligned with the updated UK Investment Association Principles of Remuneration, the policy confirms that ESG metrics can be included as performance measures, if the measures are clearly linked to the company's long-term strategy, material to the business and are quantifiable.

This article contains a general summary of developments and is not a complete or definitive statement of the law. Specific legal advice should be obtained where appropriate.