Investor Trends: How the Big 65 Approach ESG, Compensation and AI

ESG Priorities: Investors are still scrutinizing climate practices, with 43 of the top 65 addressing Scope 3 emissions reporting in their voting guidelines. While challenges in tracking indirect emissions persist, companies are expected to disclose material categories and engage stakeholders across the value chain. Climate-related lobbying transparency is also gaining traction, with 26 investors emphasizing alignment between lobbying activities and decarbonization goals.  

DEI Backlash: This year, several investors, including Goldman Sachs, Capital Group, AllianceBernstein, Charles Schwab and Vanguard, scaled back DEI expectations in their voting guidelines. However, 47 investors still advocate for board diversity, with specific thresholds for gender and racial representation, signaling that DEI remains a priority for many.  

Executive Compensation: Exceptional pay packages are under scrutiny, with 34 investors addressing this issue. While some (JP Morgan, Aberdeen) oppose one-off awards outright, others may support them if tied to exceptional circumstances and demonstrable value creation. Transparency and alignment with long-term performance are key.  

Governance Expectations: Investors demand greater board responsiveness to shareholder concerns, with 39 investors prepared to hold directors accountable for unresolved issues. Unequal voting rights are widely opposed, with 50 investors advocating for the one-share-one-vote principle.  

AI Practices: AI is under increasing investor scrutiny, with 26 investors publishing position papers on responsible AI use. Companies are expected to establish governance frameworks, ensure transparency, and address ethical risks, including bias and societal impacts, as AI becomes integral to business strategies.