Governance systems and director remuneration are clearly likely to remain high-profile issues around the world as investors rediscover their responsibilities as engaged owners of companies.

This formal channel for dialogue is also used to tackle environmental and social questions – but in very different ways around the world.

  • In the USA, investors often submit sustainability-based resolutions to the AGMs of companies and campaign to have them accepted
  • This practice is very rare in Europe although European investors are increasingly voting on such resolutions for their US holdings
  • In Europe, some investors bundle sustainability disclosure into their voting decision on the acceptance of the report and accounts

There are a number of reasons why these differences have arisen (including different legal frameworks, the physical distance between companies and investors and the greater amount of constructive dialogue between companies and investors on sustainability issues).

As many analysts combine sustainability research with corporate governance responsibilities, it appears likely that this formal channel for communication will continue to be used.

However, companies are likely to prefer a process of less formal constructive dialogue to the black-and-white AGM resolutions and voting process.

This reinforces the incentive for companies to initiate such communication and dialogue.