Church gets tough on executives’ pay…

…gender diversity and climate change

On 7 February 2017, the Church Investors Group (CIG) announced that it would take a harder line on AGM voting policy in three key areas where progress is deemed to have been too slow: executive pay, gender diversity and climate change. The Press Release and the full voting policy of the CIG  are reproduced below. (A truncated version of the Press Release was issued by the Church of England, in which the Notes for Editors are omitted).

Church Investors announce harder line on AGM voting policy


The Church Investors Group has told FTSE 350 companies, ahead of this year’s AGM season, that it will take a harder line where reform in three key areas is deemed to be too slow. CIG will encourage other shareholders to hold directors to account and refuse to re-elect directors where the company is out of line with best practice.

The Church Investors Group (CIG) represents church organisations with combined investment assets of approximately £17 billion and includes the main investing bodies of the Church of England and the Methodist Church.

The CIG has tightened its voting policy in three main areas:

Executive pay

The CIG will review fairness in the workplace and will withdraw support for remuneration reports where pay ratios are not disclosed, Chief Executive pensions are excessive, or where financial services or pharmaceutical companies do not pay the living wage.

Gender diversity

CIG members will now vote against the re-election of nomination committee chairs where the board has less than 33% women and it will vote against all directors on the nomination committee where less than 25% of board directors are women.

Climate change

CIG members now vote against the re-election of the company chair when a company is making little progress to transition to a low carbon world. Companies will be measured against their scores from the Transition Pathway Initiative, a project established by the Church of England with the Central Finance Board of the Methodist Church as a founder member.

The Reverend Canon Edward Carter, Chair of the Church Investors Group, said “The best companies contribute to the common good through their products and services and the way they treat their employees. Their directors understand that if they are not doing something about fairness and about the risks facing us today, they are part of the problem and risk losing the confidence of the public and ultimately their licence to operate.”

Stephen Beer, Chief Investment Officer of the Central Finance Board of the Methodist Church, said “Church investors have long sought to address excessive executive pay and encourage the adoption of the Living Wage. Our new policy will enable us to send a clear signal to companies that we expect them to consider fairness when setting executive pay levels. We encourage the wider investment community to hold directors accountable and ensure more responsible stewardship on this critical subject.”

Carlota Garcia-Manas, Deputy Head of Engagement for the Church Commissioners and Church of England Pensions Board, said “In 2018 we will not support the re-election of the Company Chair if the company has received a low grade on the Transition Pathway Initiative, indicating a lack of awareness and action on climate transition risk. We continue to see climate change as a key issue and encourage other investors to partner with us in ensuring we hold companies accountable to the highest standards and adapting their activities to fit with the Paris Agreement.”

The full voting policy is available on the CIG website at .


Notes for editors

About the Church Investors Group The Church Investors Group represents institutional investors from many mainstream Church denominations and church related charities. Its aims are to encourage the formulation of investment policies based on Christian ethical principles, to encourage responsible business practice through engagement with company managements and to share information and views on ethical matters related to investment.

The CIG has 61 members, predominantly drawn from the UK and Ireland. Combined investment assets exceed £17bn.

About the Church Investors Group Proxy Voting Initiative As responsible investors members of the CIG seek to promote best practice standards of corporate governance at investee companies. Exercising ownership rights by voting at company AGMs is an important part of many of our members’ collective approach. Consequently, CIG members have developed a common voting policy administered by proxy voting agency ISS on a global basis. Members currently implementing the policy include the Church Commissioners for England, the CBF Church of England Investment Funds, The Church of England Pension Board, the Central Finance Board of the Methodist Church, and the United Reformed Church Ministers Pensions Trust.

During 2017 the CIG initiative did not support 60% of Remuneration Reports, and 56% of Remuneration Policies as proposed by FTSE 350 constituent companies. During the same period CIG guidelines recommended against 37% of Nomination Committee Chairs.

The Transition Pathway Initiative (TPI) The TPI is an asset owner-led and asset manager-supported global initiative which identifies companies’ preparedness for transition to the low carbon economy, supporting efforts to address climate change. Launched in January 2017, academically-robust and publicly available online, it is now supported by over 25 global asset owners with more than £5 trillion/$6.5 trillion combined AUM.*


This policy has been developed following consultation with members of the £17bn Church Investors Group and will be applied by participating members at all meetings in 2018 [1]. It is designed to promote best-practice standards of corporate governance and reflect the values of our members. The Guidelines are administered by ISS and the below details where our guidance defaults away from their standard analysis.

STANDARD PROPOSALS Political Donation Authority Resolutions: Voting activity will challenge donations to political parties which may be seen as political in nature, or excessive. New or Amended Articles of Association: Voting activity will challenge changes / new articles where the proposed change is detrimental to shareholder rights.

ELECTION OF DIRECTORS In terms of director election CIG supports local market best practice. Over and above this, the guidelines challenge: • The re-election of combined Chair and Chief Executive; • Executive or connected chair; • Overcommitted Directors; Poor Board/Committee Attendance, and • Where a controlling shareholder exists, there should be sufficient safeguards in place to allow the Directors to operate independently of that shareholder.

EXECUTIVE REMUNERATION POLICIES, REPORTS AND NON-UK EQUIVALENTS Remuneration structures should incentivise the generation of sustainable, long-term, shareholder value and reflect our members’ values. CIG will challenge the resolution if the current / proposed remuneration scheme(s) breaches any of the following five principles • Remuneration schemes should not breach accepted local-market good practice • Short term incentive awards should not exceed 100% of base salary for ‘on target’ performance and/or 200% as a maximum award. Companies should disclose ‘maximum’ and ‘target’ award levels. • Possible awards for short term performance should not exceed possible long-term awards. • Disclosed ‘Non-financial’ metrics should be incorporated into variable remuneration schemes. • Companies should be able to demonstrate that the remuneration of the workforce as a whole, has been taken into account when determining executive remuneration. Within the FTSE350 this will require both the disclosure of a remuneration ratio and equitable treatment of staff in terms of pensions.

COMMITTEE MEMBERSHIP Votes will focus on the re-election of the relevant committee chair. However, where there are multiple issues or repeated issues over a number of years, this may be extended to the entire committee.

• Nomination Committee: CIG support efforts to increase the diversity of company boards and senior management. Negative votes will be applied where we do not consider sufficient progress has been made on this issue. • Audit Committee: CIG seek to promote the independence of auditors. We will consider negative votes where there are concerns over: the level of non-audit fee; the lack of a regular tender process; and/or where there is an historic unresolved accounting issue. • Remuneration Committee: Negative votes will be considered when proposed Remuneration Reports breach a number of the above principles and/or where we intend to vote against a Remuneration Report for two or more consecutive years.

To reflect our wider stewardship priorities our voting activity will address any concerns about poor disclosure of the steps taken to address the risks and opportunities relating to climate change.

SHAREHOLDER PROPOSALS Shareholder resolutions are considered by CIG members on a case-by-case basis in line with their wider investment and stewardship priorities.

SUPPORTING ENGAGEMENT PROGRAMMES Engagement is seen a primary driver for change particularly in terms environmental and social issues. Negative vote outcomes will be considered where we have had an unsatisfactory response to our engagement or where we still believe significant concerns remain.

CORPORATE TRANSACTIONS Decisions and voting on transactions will be made on a case-by-case basis following discussions with the relevant fund managers.

INVESTMENT COMPANIES Investment companies are subject to difference governance requirements and norms. As such our approach to voting at these companies is based upon the Association of Investment Companies (AIC) governance guidelines.

Voting Guidelines correct as of January 2018.

Reference 1: The CIG members who participate in the initiative are: The Church Commissioners for England, the CBF Church of England Funds, the Church of England Pensions Board, the Central Finance Board of the Methodist Church and the United Reformed Church Ministers Pension Fund.

Cite this article as: David Pocklington, "Church gets tough on executives’ pay…" in Law & Religion UK, 7 February 2018,

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