Executive Summary
This report provides a comprehensive analysis of shareholder engagement and the transition of capital flows in Europe. Structured across five key chapters, each addressing critical aspects of shareholder engagement and transition strategies. Coordinated efforts from policymakers, professional investors, and corporate issuers to address existing barriers and promote effective transition investing are instrumental to achieving a positive change.
The proposed policy and practical recommendations are also accompanied with a unique Principles for Transition Investing Engagement, serving as a roadmap for achieving greater alignment between shareholder interests and corporate sustainability objectives.
Chapter I: Shareholder Rights and Barriers
Despite efforts to enhance shareholder engagement through improved voting mechanisms and remote voting options, significant barriers remain, including misaligned national transposition priorities and varied interpretations of what constitutes a shareholder.
Couple with ongoing disparities in AGM practices across member states, such as the advisory versus binding nature of resolutions and challenges posed by complex intermediary chains, EU policy makers should harmonise definitions, standardise AGM processes, and foster greater transparency with shareholder communications.
Chapter II: Individual Investor Interest and Support for Transition
Results indicate varying levels of familiarity with transition investing concepts, and key trends reveal a strong interest in climate-related resolutions, despite limited engagement opportunities.
Across all countries, individual investors emphasise the need for clearer and easy-to-understand communication as well as more frequent inclusion of transition topics in AGMs, stressing the importance of removing barriers to individual investor participation, enhancing transparency, and ensuring their preferences are reflected in corporate voting outcomes.
Chapter III: Institutional Investors and Associated Groups
Insights from institutional stakeholders acknowledge the importance of transition investing, while engagement levels remain inconsistent due to regulatory and structural barriers.
Notably challenges include cross-border voting inefficiencies and limited transparency, which can be addressed via time-bound engagement policies, collaborative shareholder proposals and structured escalation protocols.
Chapter IV: Transition Plans and Strategies of 20 Companies
An initial assessment of transition strategies across 20 leading companies in the banking, asset management, insurance, and pension sectors reveal varying degrees of commitment to climate goals.
The companies were evaluated based on their reported transition plans, engagement strategies, and capital allocation towards sustainable initiatives. Key findings indicate that while most companies disclose broad transition goals, detailed, actionable plans are often lacking.
Chapter V: Principles for Transition Investing Engagement
The set of principles developed by BETTER FINANCE and its Working Group Members, aim at standardising transition engagement practices for listed equity across the EU. The principles emphasise transparency, active engagement, and the importance of evidence-based escalation strategies.
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