Engagement priorities
Our engagement priorities promote sound corporate governance and business practices that are consistent with sustainable long-term financial returns. We determine our engagement priorities based on our observation of market developments and emerging governance practices, and evolve them year over year as necessary.
Board quality
We focus on board composition, effectiveness and accountability as a top priority. In our experience, most governance issues require board leadership and oversight. We engage to better understand how boards assess their effectiveness and performance, as well as their position on director responsibilities and commitments, turnover and succession planning, crisis management, and diversity.
Corporate strategy and capital allocation
We expect boards to be fully engaged with management on the development and implementation of the company’s strategy. Companies should succinctly explain their long-term strategic goals, the milestones that demonstrate progress, and any obstacles anticipated or incurred.
Compensation that promotes long-termism
We expect executive pay policies to use performance measures that are closely linked to the company’s long-term strategy and goals to ensure executives are rewarded for delivering strong and sustainable returns over the long-term, as opposed to short-term hikes in share prices.
Environmental risks and opportunities
Sound practices in relation to the material environmental factors inherent to a company’s business model can be a signal of operational excellence and management quality. Environmental factors relevant to the long-term economic performance of companies are typically industry-specific, although in today’s dynamic business environment some, such as regulation and technological change, can have a broader impact. Corporate reporting should help investors and others understand the company’s approach to these factors and how risks are integrated and opportunities realised.
Human capital management
In a talent constrained environment, we view a company’s approach to human capital management as a potential competitive advantage. We expect disclosure around a company’s approach to ensuring the adoption of the sound business practices likely to create an engaged and stable workforce.
Engagement priorities