• The Pensions and Lifetime Savings Association (PLSA) publishes its 2024 Stewardship and Voting Guidelines

PLSA publishes stewardship and voting guidelines for 2024

The Pensions and Lifetime Savings Association (PLSA) has published its stewardship and voting guidelines for 2024.

The Guidelines, which set out stewardship and voting recommendations to pension schemes and similar investors, have been updated generally to reflect the 2024 version of the UK Corporate Governance Code published by the Financial Reporting Council (FRC) and accompany guidance.

In addition, the following key changes have been made to the Guidelines since the previous version.

• Cybersecurity. Investors should encourage companies to explicitly disclose their structures for managing cybersecurity risks and report any breaches. Good company behaviour includes identifying vulnerabilities, putting policies in place in case of an attack, and putting a cybersecurity training policy in place.
  
  The PLSA will recommend voting against a company’s annual report if its disclosure on cyber risk is particularly poor. It will also recommend voting against the re-election of the audit committee chair or the re-appointment of the auditor if cyber risks are not being sufficiently well managed.

• Artificial intelligence. The PLSA recommends that investors ensure that companies are accountable for their social impacts by aligning with evolving industry good practice on AI. Good company behaviour includes implementing data anonymisation when using AI, taking a “zero-trust approach” to AI tools and putting in place a governance framework for the acceptable use of AI.
  
  The PLSA will recommend voting against the re-election of a director if there is evidence of “egregious conduct” around the development and deployment of AI.

• Biodiversity. The Guidelines now place significant emphasis on biodiversity. Good company behaviour includes producing a summary of biodiversity impacts caused by its activities, listing focussed and measurable goals and objectives, developing strategic and monitoring plans, and creating a database of relevant data on biodiversity indicators.
  
  The PLSA recommends that investors consider supporting resolutions that encourage companies to address biodiversity loss. It also recommends considering voting against directors if efforts to address drivers of biodiversity loss are insufficient. It also recommends considering voting against the re-election of directors if the company makes insufficient efforts to mitigate agricultural commodity-driven deforestation.

• Social factors and workforce. The Guidelines contain a new and extensive section on social factors to accompany existing provisions on the workforce. The PLSA lists social factors as including health and safety in supply chains, modern slavery, product quality and safety, customer privacy and data security, community engagement and impact on local businesses.
  
  The Guidelines set out numerous examples of good company behaviour in relation to social factors, including investing in the current workforce, building socially responsible relationships with suppliers, reporting through the Workforce Disclosure Initiative, and clearly referring to and using credible social risks mitigation measurement frameworks.

• Dual-class share structures. The Guidelines now explicitly state that companies should adopt single-class share structures on IPO or as soon as possible after. If a company does not include a sunset provision in its dual-class share structure, it should ensure the structure is subject to approval, at least every seven years, from a majority of each share class voting separately.
  
  The PLSA recommends voting against the governance committee chair (or equivalent) if a company puts in place a dual-class share structure without a sunset clause of seven years or less from the date of IPO.

Access the PLSA’s Stewardship and Voting Guidelines for 2024 (opens PDF)

Access the PLSA’s Stewardship and Voting Guidelines summary for 2024 (opens PDF)