The year 2017 will be remembered for the devastating effects of hurricanes and other extreme weather events. Climate change will therefore remain top of the investor agenda for the foreseeable future. There will be a push for more standardised disclosures, based on the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD), and increasing collaboration between investors globally in an attempt to move companies in the right direction. We will continue to engage with companies on the risks and opportunities arising from climate change and encourage them to report against the TCFD recommendations.
The diversity of boards has caught the eye of investors over the past year. In the UK, we systematically opposed nomination committee chairs or board chairs if the proposed board composition did not meet our expectations on the representation of women directors. We will increase our efforts on diversity in 2018 by moving beyond gender as well as by looking at the issue below the board level.
Sustainable Development Goals
We expect ongoing focus by companies and investors on the UN Sustainable Development Goals. In support of these, engagement on human and labour rights, as well as supply chain management, will remain an important part of our stewardship activities in 2018.
Competition has increased between stock exchanges for initial public offerings globally. As a result, several stock exchanges, for example in Asia, have been considering whether to soften their approaches to listings of companies with differential voting rights. We have argued for adherence to the one-share one-vote principle, which is a prerequisite for effective stewardship, and will continue to do so. We will cover the topic more intensively in our Q4 2017 Public Engagement Report, which is due out in late January.
Encouragingly, companies in some markets appeared to have listened to the concerns of shareholders on remuneration and so in 2017 we saw some progress, for example a simplification of previously highly complex pay structures. To keep up the momentum, we continue to push for changes in pay policies and practice.
We welcomed the further advance of stewardship codes in 2017, which launched in Australia and even in the US. As they encourage investors to monitor the companies they invest in, engage with them on a wide range of environmental, social and governance issues and to exercise their votes at shareholder meetings, they have been a crucial driver of stewardship. We will continue to advocate these principles and their effective implementation as part of our policy work with regulators across the world.