If Agenda was not so board-centric, its headline might have been the more accurate: Poor Judgement and Lack of Responsiveness to Investor Concerns from Board Members Leading to No Votes for Director Candidates. We note that another article in the same issue highlights the increase in diversity and financial expertise on boards, which it is fair to attribute in part to the kind of increased scrutiny of board candidates State Street and others are undertaking.

State Street Global Advisors’ (SSGA) CEO Cyrus Taraporevala is ramping up expectations for companies to boost disclosures and update strategies on board and employee diversity as well as climate change this year. Taraporevala’s letter to board members on the firm’s 2022 proxy voting agenda, released this month, warns that the firm will vote against directors for not providing disclosures aligned with the Taskforce on Climate-related Financial Disclosures (TCFD) framework.

“[W]e choose where and when to use our voice and our vote carefully — to address systemic risks and opportunities we foresee for the companies in which we invest as a fiduciary on behalf of our clients,” Taraporevala said in the letter. As announced last year, the firm this year will also vote against the nominating and governance committee chairs of S&P 500 companies without at least one person of color on the board, if S&P 500 companies don’t disclose the racial and ethnic diversity of the board, and if S&P 500 companies do not disclose Equal Opportunity Employment Commission (EEO-1) reports. State Street also announced last year that it will vote against companies in its global portfolio without at least one female director, starting this year.

Agenda – New Investor Policies ‘Highly Likely’ to Increase Negative Director Votes