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The Latest Australian Proxy Advisors' Policy Updates Explained

22 September 2022

The Latest Australian Proxy Advisors' Policy Updates Explained

As issuers and investors are gearing up for the Australian 2022 main proxy season over the next few months, this article provides a summary of the most recent voting policy updates of the four proxy advisors' – Glass Lewis, Australian Council of Superannuation Investors (ACSI), ISS and Ownership Matters. Some of these updates were covered in a previous article we published in February 2022, ahead of the Australian 2022 mini proxy season.

Glass Lewis:

Environmental and Social Risk Oversight

Glass Lewis believes that companies should ensure boards maintain clear oversight of material risks to their operations, including environmental and social (E&S) risks. Insufficient oversight of these risks can present direct legal, financial, regulatory, and reputational risks that could serve to harm shareholder interests. Beginning 2023, Glass Lewis will generally recommend voting against the governance committee chair, or equivalent, of S&P/ASX 300 companies that fail to provide explicit disclosure concerning the board’s role in overseeing material E&S issues.

ESG Performance Measures in Remuneration

Regarding recent trends to include specific ESG measures into remuneration, Glass Lewis believes that specific ESG measures in executive variable remuneration plans, when used appropriately, can enable clear line of sight by executives and shareholders into a company’s ESG strategy, aspirations and targets. Whilst Glass Lewis strongly supports the inclusion of material ESG risks into a company’s long-term strategic planning, it does not prescribe incorporating ESG metrics into remuneration, which should depend on each company’s unique circumstances. Where companies do adopt ESG measures, Glass Lewis believes it is critical that shareholders are provided with sufficient disclosure to enable an understanding of how these criteria align with company strategy.

Say on Climate (SOC)

Glass Lewis has published its views on the increasing emergence of SOC proposals around the world – whereby companies materially exposed to climate risk provide investors with an advisory vote on the company’s management of climate-related risks and opportunities.

Whilst Glass Lewis is broadly supportive of companies providing robust disclosure of their climate strategies, it maintains some concerns with the SOC vote. Glass Lewis believes that setting the company’s business strategy, including its climate strategy, should be a function left to the board under its fudiciary duty to shareholders. A SOC vote that allows shareholders to opine on the company’s long-term climate strategy may be abdicating some of this responsibility. As such, when a management-sponsored SOC proposal seeks approval of climate transition plans, Glass Lewis expects companies to provide information regarding the board’s governance of the SOC vote, as well as engage with investors before and after vote.

Glass Lewis will evaluate the quality of the climate transition plans under a SOC proposal on a case-by-basis, recognising that SOC votes are relatively new, resulting in a lack of standardisation or best practices. Absent such standards, Glass Lewis expects companies to provide robust disclosure of their climate plans aligned with the recommendations of the Taskforce on Climate-related Financial Disclosure (TCFD).

Glass Lewis’ overview on SOC votes can be found here.

Virtual Shareholder Meeting Provisions

Since the introduction of the Corporations Amendment (Meetings and Documents) Act 2022, with effect from April 2022, companies are able to hold hybrid shareholder meetings (partly physical, partly virtual) and, if their constitutions expressly permit it, virtual-only shareholder meeting can be held. Due to concerns that virtual-only meetings could be held in a manner that prevents shareholder participation, Glass Lewis will only support constitutional amendments allowing virtual-only meetings where:

  1. The board has provided reasonable assurance that virtual meetings will allow for reasonable shareholder participation;
  2. The board has demonstrated that virtual meetings are not intended to replace in-person meetings where in-person meetings are practical; and
  3. Where e board is majority independent and free from other governance concerns, providing additional assurance in relying on the board’s recommendation.

Glass Lewis will typically oppose such constitutional amendments where these conditions are not reasonably satisfied.

The above policy updates are included in Glass Lewis’ 2022 voting policy for Australia (published in August 2022), which can be found here.


First Nations Peoples

ACSI’s new policy on engagement with First Nations peoples highlights the material financial risks companies and investors face as a consequence of poor engagement and cultural heritage practices and provides guidance on good practice. ACSI expects companies to engage in good faith and work to build constructive, fair and long-term relationships with First Nations people. ACSI’s Company Engagement with First Nations People policy can be found here.


Where companies face material climate-related risks, ACSI expects companies to adopt a science-based risk assessment and TCFD reporting framework. ACSI expects companies to demonstrate how they are integrating these risks and opportunities into their governance, strategy and risk management processes. In line with ACSI’s Climate Change Policy, where companies consistently fall short of ACSI’s expectations, ACSI may recommend against directors on a case-by-case basis, focusing on the individual directors most accountable for oversight of climate-change related risks (e.g. Chairs, Chairs of the Risk and Sustainability committees or similar). ACSI supports the provision of a SOC policy, and therefore, this will be the primary focus for ACSI’s engagement and analysis.

Sexual Harassment

ACSI expects companies to proactively prevent and respond effectively to sexual harassment. ACSI expects visible leadership from the board and senior management, to create a culture of trust and respect. Directors must prioritise and embed good company culture within their organisations, and act immediately where there are instances of misconduct or unethical behaviour, but also establish systems for proactive risk identification and mitigation.

Modern Slavery

ACSI has provided more detailed guidance on meaningful action and disclosure in relation to modern slavery. ACSI believes that each company will face a different set of risks and opportunities, which is why it is important for companies to have robust processes to identify, prevent, respond, assess and disclose adverse human rights impacts and modern slavery risk. ACSI expects companies to implement mechanisms to avoid causing or contributing to adverse human rights impacts and modern slavery in their own operations, and understand and mitigate the risks of adverse human rights impacts and modern slavery in their supply chains.


ACSI guidelines reinforce the importance of all forms of diversity and promoting a workforce that reflects the the diverse demographic and society in which a company operates. ACSI encourages companies to advance gender diversity at executive level and to disclose the actions that they are taking to achieve this, by:

  1. Pledging to achieve gender balance (40:40:20) in executive leadership by 2030.
  2. Declaring measurable medium and long-term gender targets for 2023 and 2027.
  3. Making the plan public.
  4. Reporting annually on performance against targets.

For ASX300 boards with one or zero women directors, ACSI will recommend a vote against at least one of (i) the Chair of the board; (ii) the Chair of the Nominations Committee; (iii) a member of the Nominations Committee or (iv) the longest-serving director seeking re-election.

Where a company has zero women directors, ACSI may also make recommendations to vote against any newly appointed male directors. ACSI also included a section on racism and other forms of discrimination, which states the importance of establishing a safe and inclusive working environment for all.

Virtual Technology use at AGMs

ACSI supports hybrid model for AGMs and has an expectation that the use of technology should not compromise shareholders’ ability to actively participate in AGMs.

ACSI’s latest voting policy (published December 2021) can be found here.



ISS will generally vote against the chair of the nomination committee or chairman of the board (or other relevant directors on a case-by-case basis) if the company is a large Australian listed entity and included in the S&P/ASX300 Index, and the board does not comprise at least 30% percent female representation. For any company, ISS will recommend against when there are no women on the board.


ISS supports proposals allowing hybrid shareholder meetings, but recommends against proposals that will permit the company to convene virtual-only shareholder meetings. ISS will also recommend against proposals where the proposed wording in a company’s amended constitution is ambiguous, and nevertheless creates an ability for the company to convene virtual-only meetings outside exceptional circumstances.

ISS’ latest voting policy for Australia (published December 2021) can be found here.

Ownership Matters

There were no key policy updates published by Ownership Matters since February 2022.

OM’s latest voting policy (published in February 2022) can be found here.

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