Across the globe, investors today face a landscape where their engagement and proxy voting decisions receive more attention — and are under greater regulatory scrutiny — than ever before. Whether on climate, compensation, or human capital issues, increased transparency around proxy voting has led to far greater scrutiny of investors’ engagement than in the past. And regulators and other standard-setters are upping their expectations for investors’ proxy voting policies, including expecting an enhanced focus on the most significant votes.

To meet its customers’ needs in this changing environment, Glass Lewis is constantly adding new tools to its ESG and Stewardship solution sets. Most recently, we developed the Glass Lewis Controversy Alert to flag the most high-profile issues at shareholder meetings, allowing customers to focus on these issues and make better-informed voting decisions. The alerts cover companies across the globe, leveraging Glass Lewis local teams’ expertise and knowledge to identify material issues that are often complex and nuanced. And they filter through the tens of thousands of shareholder meetings annually to highlight only the most controversial E&S issues that are garnering increased attention, as well as the governance issues that have long been the hallmark of Glass Lewis research. In addition to summarizing the issue, each alert refers the reader to other potentially relevant proposals, as well as relevant voting recommendations and Glass Lewis’ thorough, unbiased Proxy Paper research and analysis of the issue.

Investors and asset managers increasingly face the challenge of being effective stewards of companies across the globe, including making thousands of proxy votes in dozens of markets each year. Particularly for investors and asset managers that are committed to being active owners, whether under the UN PRI Active Ownership framework or otherwise, staying on top of the most controversial and important issues at these meetings is both critically important and a daunting challenge. A second set of eyes — particularly one with a local presence to stay on top of emerging issues in each marketplace — can help ensure that important votes are not missed. Glass Lewis Controversy Alerts pick up those key votes on the most important and high-profile issues — the ones that stakeholders will evaluate — allowing investors to give the issue focused attention, engage as appropriate, and to make sure their voting policy produces the right vote decision.

In addition, Glass Lewis Controversy Alerts can help investors and asset managers meet increasing regulatory expectations around proxy voting. In Europe, under SRD II and related national instruments such as the UK Stewardship Code, these expectations include considering and disclosing explanations of key votes on the most controversial issues. Specifically, asset managers and investors subject to SRD II requirements must, on a comply-or-explain basis, annually disclose how their engagement policy has been implemented, including an explanation of the most significant votes. Many Glass Lewis customers utilize the reporting functionality of the Viewpoint voting platform to disclose all their votes. Those that want to focus on and provide additional explanation of significant decisions can utilize Glass Lewis Controversy Alerts to filter down and ensure they are thoroughly considering and explaining their vote rationale where it matters most.

Regulatory expectations around proxy voting have also increased substantially in the United States. In 2019 guidance, the U.S. SEC told investment advisers to consider whether certain types of matters warrant “a more detailed analysis than what may be entailed by application of

[their] general voting guidelines, to consider factors particular to the issuer or the voting matter under consideration.” Many investors give special consideration to corporate events, shareholder proposals, and contested director elections — Glass Lewis Controversy Alerts can help highlight the most controversial of these unusual items, as well as pinpointing the most controversial votes on the vast number of more routine ballot items at companies’ annual meetings, allowing investors to hone in on those that require “company-specific evaluation.”

The SEC’s guidance should also be understood in light of the agency’s recent announcement that its examination program will be “enhancing its focus on climate and ESG-related risks.” In particular, the SEC advised that it will be “examining proxy voting policies and practices to ensure voting aligns with investors’ best interests and expectations, . . . in light of intensifying physical risks associated with climate change.” Glass Lewis Controversy Alerts highlight the most significant E&S votes investors confront today, allowing them not just to manage reputational risk around these issues, but also to consider whether those votes warrant company-specific evaluation beyond application of the investor’s voting policy. With the current Biden Administration and SEC focus on climate and ESG-related risks, using Glass Lewis Controversy Alerts to help identify key issues can help investment advisers meet the SEC’s expectations in this area.

Glass Lewis Controversy Alerts, along with Proxy Paper research and the voting and reporting tools of the Viewpoint platform, help Glass Lewis customers navigate the increased stakeholder and regulatory expectations in today’s world of proxy voting and engagement.