Appendix 1(i) – Examples of managers’ illustrations of significant votes - LGIM
LGIM
Vote 1 (UK equities)
Vote 2 (North American equities)
Company name
Shell Plc
Apple Inc.
Date of Vote
21 May 2024
28 February 2024
Fund’s holding as at the date of the vote (as % of portfolio)
7.7%
5.8%
Summary of the resolution
Approve the Shell Energy Transition Strategy
Report on Risks of Omitting Viewpoint and Ideological Diversity from EEO Policy
How the manager voted
Against
Against
Rationale for the voting decision
While LGIM acknowledges the substantial progress Shell has made in terms of climate- related disclosures in recent years, they cannot support the company’s current approach. LGIM view positively the commitments made to reduce emissions from operated assets and oil products, the strong stance on tackling methane emissions, and the pledge to halt frontier exploration activities bey ond 2025. However, the recent revisions to Shell’s Net Carbon Intensity (NCI) targets, combined with the ambition to expand its gas and LNG business this decade, raise significant concerns. LGIM expects Shell to provide clearer evidence that these plans align with an orderly transition to net-zero emissions by 2050. Specifically, they seek greater transparency regarding the expected lifespan of the assets the company plans to develop further, the flexibility in revising production levels across a range of scenarios, and concrete actions across the value chain to enable customer decarbonization. Moreover, LGIM requires further clarity on Shell’s lobbying activities in regions where hydrocarbon production will play a major role, more detailed guidance on capital expenditure allocated to low-carbon initiatives beyond 2025, and the application of responsible divestment principles in asset sales. Given that portfolio changes are a significant lever in Shell’s decarbonization strategy, it is crucial that the company ensures these principles are rigorously applied to support a genuine transition.
LGIM believes that a vote against this proposal is warranted, as the company has already provided shareholders with adequate disclosure regarding its diversity and inclusion efforts and nondiscrimination policies. Additionally, incorporating viewpoint and ideology into Equal Employment Opportunity (EEO) policies does not align with standard industry practices.
Outcome of the vote
The resolution passed
This resolution failed
Implications of the outcome
LGIM will continue to engage with their investee companies, publicly advocate their position on this issue and monitor company and market-level progress.
Criteria on which the vote is considered significant
LGIM is publicly supportive of so called "Say on Climate" votes. LGIM expect transition plans put forward by companies to be both ambitious and credibly aligned to a 1.5C scenario. Given the high-profile of such votes, LGIM deem such votes to be significant, particularly when LGIM votes against the transition plan.
LGIM views gender diversity as a financially material issue for their clients, with implications for the assets LGIM manage on their behalf.
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