BNP Paribas Asset Management (BNPP AM) announced today a set of new expectations for companies as part of its 2024 Governance and Voting Policy, including a new requirement for companies to integrate climate-related criteria into executive compensation plans.

The new policies were announced with the release of BNPP AM’s 2024 Annual General Meeting (AGM) season voting record. The firm revealed that it opposed 36% of resolutions, similar to the rate in 2023, including 2,163 management proposals at 332 companies for environmental and social reasons, of which 79% were due to climate or biodiversity-related expectations.

While the firm noted improvements at companies through engagement, the opposition rate was unchanged from the prior year, with BNPP AM noting that it has increased its expectations.

Michael Herskovich, Head of Voting and Corporate Governance at BNP Paribas Asset Management, said:

“During this season, we have maintained a high rate of opposition on environmental and social issues and have seen improvements through engagement with investee companies. As a result of this process, we have been able to strengthen our expectations of the companies in which we are invested every year.”

Under its new voting policy, BNPP AM said that it will now require companies in energy, utilities, industrials and materials sectors, as well as companies identified as high greenhouse gas emitters, to integrate a climate component in executive remuneration policies, with the expectation to be extended to all companies by 2026. The firm added that the climate component must be “measurable, quantifiable, and relevant to the company’s sustainable development strategy.”

BNPP AM also said that it is raising its threshold expectation for board diversity, with a new requirement for at least 40% female representation on boards in Europe, North America, Australia, New Zealand and South Africa.

Rachel Crossley, Head of Stewardship, Europe at BNP Paribas Asset Management, said:

“Voting is a central fiduciary duty and core to BNPP AM’s sustainability strategy. During the 2024 season we have reinforced our stance on combatting climate change, protecting nature, and promoting equality and inclusive growth. While climate criteria are increasingly being introduced to executive compensation plans in Europe, this is not the case in North America. Even in Europe, however, the criteria are often opaque and are not sufficiently quantified. We will continue to press for greater transparency and specificity on these and other sustainability metrics, that are science-based and tied to corporate strategy.”