Annual ISS Voting Update Impacts Canada, Japan Policies

ISS Governance has updated its benchmark proxy voting policies, which will be applied at shareholder meetings taking place on or after 1 February, 2024. The firm reviews and updates its benchmark voting policies annually, based on assessment of emerging issues, regulatory changes, and market trends, incorporating also relevant academic research, and feedback from market participants. Updates include a change to ISS’ board diversity policy for Canadian S&P/TSX Composite Index constituents, which will recommend a vote against or withhold from the chair of the nominating committee if the board has no racially or ethnically diverse members, or if the company has not provided a formal, publicly-disclosed written commitment to add at least one racially or ethnically diverse director by the next AGM. The update follows a broadening of disclosure requirements on board diversity for publicly traded corporations in Canada in 2020. Also, ISS’ Japan benchmark policy will reinstate application of the ‘return on equity’ policy, temporarily suspended in 2020 due to pandemic-related considerations, meaning it will recommend votes against re-election of executives for underperformance in terms of capital efficiency. ISS Governance, which provides shareholder meeting research and recommendations, voting policy choices and workflow solutions for institutional investors, is a unit of the recently merged ISS STOXX business owned by Deutsche Börse Group.

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