April 28, 2021 Okapi Partners’ April 2021 Proxy Advisory Alert

Proxy Advisor & Institutional Investor 2021 Proxy Voting Policy Updates

Proxy advisory firms (ISS and Glass Lewis) and several large institutional investors recently announced updates to their proxy voting guidelines for the 2021 proxy season. Trends this year reflect institutional investors’ increased focus on board diversity, human capital management and climate change.

Specifically, investor and proxy advisory firm expectations are shifting to greater board oversight of these issues. Many investor policies were updated in 2021 to call for greater gender, racial and ethnic diversity on boards, as well as oversight of ESG risks and opportunities.

ISS will begin highlighting boards with no racial or ethnic diversity, while State Street will begin voting against boards at S&P 500 companies where the race and ethnicity of board members aren’t disclosed. Beginning in 2022, ISS as well as State Street and Alliance Bernstein, will begin voting against directors where the board does not have any racial or ethnic diversity.

A number of investors, including Goldman Sachs Asset Management (GSAM) and Fidelity Management & Research, have adopted new policies for 2021 addressing companies lacking requisite board gender diversity. This policy has already been in place for ISS and Glass Lewis, as well as investors such as BlackRock and State Street.

Board oversight of ESG risks is also becoming a major topic of consideration. Glass Lewis, T. Rowe Price and BlackRock adopted new policies that have to potential to hold boards accountable where they feel the board has failed to exercise “sufficient oversight” with regard to material ESG risk factors.

Many of the more noteworthy changes for 2021 can be found in our full report available below.