But what does voting involve? How do we decide how to vote? And what issues has abrdn been voting on in 2024?

In our latest Sustainability Inspires podcast, Andy Mason and Joanna Sulc of the abrdn Investments Active Ownership team, explain all.

Holding companies to account

Shareholder voting is a powerful tool for effecting positive change on behalf of investors and the wider world. It can, as Joanna Sulc explains, enable abrdn to emphasise its views to companies, hold companies to account on their activities, and escalate any concerns that engagement hasn’t yet resolved.

To that end, the abrdn voting process requires significant resources. Alongside the Active Ownership team, dozens of equity analysts are involved in reviewing and instructing votes at the companies they cover. This also applies to stocks held in quant-only strategies. In the first eight months of 2024, there were over 5,500 general meetings of investee companies, of which around a third were fully reviewed and instructed by an analyst. 

Evolving voting policy

To manage stewardship consistently across so many companies, it’s vital to have robust and considered voting policies. As Joanna explains, voting policies are developed that reflect abrdn’s views and clients’ best interests across a wide range of company governance topics (such as executive pay and board independence and diversity) and environmental and social issues.

To keep up with best practice, updates to voting policy are also made and published annually.  For example, our policy on audit committee composition was amended following both client feedback and academic research linking audit committee independence to reduced corporate misconduct and improved quality of earnings. As a result, abrdn voted against the re-election of 88 non-independent directors across 54 portfolio companies this year. 

Policy has also been updated this year on board gender diversity to align with FCA targets for boards to have 40% female directors. To maintain proper accountability to shareholders, abrdn also has a policy to support the continuation of hybrid/in-person shareholder meetings rather than fully virtual ones. 

Keeping up with AI

A brand new topic being tabled at meetings this year has been artificial intelligence (AI). With AI technology evolving faster than regulation can respond, there is plenty that the abrdn team is looking to assess. 

That, says Andy Mason, ranges from whether companies have appropriate AI governance, oversight and ethical guidelines in place to manage risks such as the spread of misinformation – to how closely firms engage with their workforce on AI’s role within the business.

As the next voting cycle approaches, the team hope to have greater clarity on which of these areas they most need to focus on.

But as with all stewardship issues, say Andy and Joanne, a truly effective voting approach requires considered and constructive collaboration. “The key to this is how we work with companies,” says Andy, “Understanding what challenges and opportunities they face and making sure that we work in partnership.”