26www.ppf.co.ukResponsible Investment Report 2019/20 27 Being active owners – continued A p Our external provider has Voting activity in 2019/20 p r o contributed to a number of Case study ach consultations on our behalf, such as the Competition and Markets Aside from climate change-related most frequently in the North American Voting on board Authority’s (CMA) Statutory audit voting activities, including shareholder region (74 per cent of resolutions), composition services market study consultation resolutions, which are covered in more where 24 per cent of our votes were in (2019), where they called for detail in the Managing climate change support of shareholder proposals. and diversity a less concentrated market, risks and opportunities section on improvements in audit quality page 33, we provide a summary of the Our most common rationale for and audit independence. Another key themes within our voting activities supporting was that the proposal Board composition and example is the Department for during 2019/20. promoted appropriate transparency, diversity is critical to company Business, Energy & Industrial accountability or incentivisation. 1 E management , so we increased Strategy’s (BEIS) consultation on xe Segregated equities voting Opposition to remuneration-related our expectations on gender c u the recommendations made by Sir t activity resolutions was our primary concern diversity within our issuers this io John Kingman in the independent For our segregated equities, our in the UK, Australia and New Zealand year. For UK companies, our n review of the Financial Reporting regions, and concerns around external provider developed Council (2019), providing support external provider voted on our behalf board structure were highest in the a board-level diversity for Kingman’s view that a stronger on 7,260 total resolutions at 643 US, developed markets in Asia and recommendation to have 30 regulator was needed to help meetings during the 2019 calendar emerging markets. per cent women on FTSE 100 improve audit quality. The UK year and opposed 15% boards and 25 per cent on Government agreed to support the of these resolutions. An overview of our voting records by FTSE 250 boards. This also proposal for a new Audit, Reporting geography and ESG issues can be extended to guidelines to vote & Governance Authority (ARGA), Our role as a responsible shareholder seen in further detail in our annual entails holding management to against the chair of any FTSE which will have enhanced powers Voting & Engagement report – L o and be accountable to Parliament.account, and we opposed one or 100 company without a woman o https://ppf.co.uk/reporting-investing- k more resolutions in over 60% of these on its executive committee. in transparently g Fixed Income investors can also Emerging engagement on UK f The UK Parliamentary Select meetings. We opposed management We believe it is important to o r engage effectively audit practices Committee explored the role connect up our engagement w ar We expect our external managers in Robust and transparent audit of shareholders in audit, and Breakdown of the 15% opposed resolutionsand voting activities, so d other asset classes (outside equity) to practices are an important agenda we are supportive of increased we wrote to 13 FTSE 100 also engage in active stewardship with item as they underline good engagement with audit committee companies, expressing companies where practicable. For governance. Recent high-profile chairs. Our external provider our concerns on gender example, an Investment Grade Credit cases of UK business failures have has already strengthened their 944diversity, and held follow-up external manager has been actively raised questions about the quality, recommendations for audit voting, conversations with a number engaging with senior executives at relevance and independence of audit committees' composition and of them. General Electric on deleveraging, audits, and strengthened calls for tenure, and auditor independence. improving accounting practices and reform. Following the collapse of Votes 1 See Catalyst, Why Diversity and disclosures to investors. They also Thomas Cook in 2019, the company’s Inclusion Matter: engaged on climate-related issues, auditors were heavily criticised 121 Financial Performance (24 June 2020) such as encouraging the company to by the UK Parliamentary Select https://www.catalyst.org/research/why- 19 diversity-and-inclusion-matter-financial- set ambitious energy efficiency targets Committee inquiry because the performance/ (accessed 03/07/20); and consider science-based carbon goodwill on its balance sheet had not AgainstAbstainedWith management World Economic Forum article reduction targets. While further been written down since 2012. by expection https://www.weforum.org/agenda/ progress is required, the company Source: EOS at Federated Hermes (external provider) 2019 2019/04/business-case-for-diversity-in- sold a majority stake in its energy and the-workplace/ (accessed 03/07/20). oilfield services subsidiary in 2019 and stepped up its disclosures. Voting against management or abstaining by ESG issue For pooled equity funds, where 5% 0% Board Other possible, we engage with our 7% 43% structure external managers in advance of Audit and high-profile votes or resolutions 8% Remuneration accounts to obtain insights on their views. Shareholder Amend articles We also discuss their voting 8% activities as part of our ongoing resolution Poison pill/ external manager monitoring and 10% Capital anti-takeover reporting processes – this includes structure and device engagement around disclosure dividends quality on voting activities, as 20% we see this as a crucial area for improvement across the industry. Source: EOS at Federated Hermes (external provider) 2019