New voting policies on cybersecurity, climate transition plans and biodiversity, and mental health for the 2023 AGM season have been announced by Railpen in its Voting Policy for 2023.

The Voting Policy set out Railpen’s engagement and voting priorities and how it will take voting decisions on behalf of the members of the railways pension schemes at domestic and international AGMs in 2023.

The global voting policy reflects Railpen’s ongoing corporate governance themes of board composition and effectiveness and alignment of incentives and shareholder rights, and risk and disclosure.

As part of Railpen’s commitment to exercising the full range of its ownership rights and building upon the more proactive approach to AGM questions taken last year it has announced that, in 2023 it will consider pre-declaring voting intentions on specific resolutions as it believes that doing so sends an important signal to the company and the market.

On the subject of climate transition, Railpen stated that it wants to ensure that its net-zero pledges are turned into real action in 2023.

The Voting Policy therefore outlines the view that a good transition plan should: set out a company’s decisions on decarbonisation and adaption in a comparable way, with clear quantification of interim targets and milestones; focus on material actions, activities and accountability mechanisms; and account for biodiversity loss, natural capital impact and social impact as key externalities.

Railpen has also urged portfolio companies to consider how they can better appraise and account for nature-related risk and redirect capital allocation decisions towards nature-positive outcomes.

Addressing cybersecurity risk, Railpen announced that it will be building on its longstanding engagement with at-risk companies on cybersecurity – both directly and as part of the UK Cybersecurity Coalition.

As part of this, Railpen will ask companies to explicitly disclose the governance and oversight structures in place to identify and manage cyber risks, as well as provide timely reporting of any breaches and the measure taken in response.

Where these risks are not deemed to be appropriately managed, Railpen will vote against the chair of the Audit Committee, or other committee, and will consider voting against the Report and Accounts.

On the subject of workforce treatment and mental health, Railpen stated that an engaged, motivated and supported workforce is vital for sustainable financial performance.

To ensure companies are focused on the mental as well as physical health of their employees, Railpen stated that it will continue to engage with portfolio companies in other jurisdictions on disclosures around, and activities on mental health, with the expectation that it will apply a voting sanction in future years where there has been insufficient progress.

Railpen head of sustainable ownership, Michael Marshall, commented: “The world is constantly adapting, and we need to ensure that we are ahead of major sustainability and governance challenges so we can effectively engage with portfolio companies on behalf of the members of the railways pension schemes.

“Laying out a clear, defined voting policy allows us to highlight our expectations of performance on key environmental, social and governance (ESG) risks in a way that is accessible to our portfolio companies, our external managers and our beneficiaries.

“In the 2023 AGM season, we will continue to exercise our votes on those resolutions where we believe our vote will have the most impact.

“We take our role in enhancing the long-term investment returns of our beneficiaries extremely seriously and doing so in a way that benefits the world around us and the needs of our members now and in the future.”

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