"ISS Governance's transparent, market-based approach to evolving the policies that are the basis of our informed, independent research and benchmark voting recommendations, continues to develop to support our institutional investor clients' voting and other investment stewardship-related decisions."

December 19, 2023

ISS Governance Announces 2024 Benchmark Policy Updates

ROCKVILLE, Md. (December 19, 2023) – ISS Governance, a leading global provider of independent and objective shareholder meeting research and recommendations, multiple voting policy choices and end-to-end workflow solutions for institutional investors, and a unit of ISS STOXX, today announced updates to its 2024 benchmark proxy voting policies. The updated policies will generally be applied for shareholder meetings taking place on or after Feb. 1, 2024.

By way of background, each year ISS Governance Research conducts a robust, inclusive, and transparent global policy development process to review and update the ISS benchmark voting policies for the upcoming year, led by its Global Policy Board. The process incorporates an assessment of emerging issues, relevant regulatory changes, and notable trends seen across global, regional, and individual markets, plus relevant academic research, and empirical studies. Views and input are then gathered  from a broad range of institutional investors, companies, and other market participants worldwide through a variety of channels and over a number of months. For further details on this year’s policy development process, please see here. The updates announced today have been informed by the careful consideration of the many inputs received.

“Institutional investors, companies and other interested market constituents globally have provided thoughtful feedback on a range of issues through the ISS Governance benchmark policy survey, multiple policy roundtables and discussions, and through our public open comment period on proposed changes,” said Georgina Marshall, Global Head of Research and Chair of the ISS Governance Global Policy Board. “ISS Governance’s transparent, market-based approach to evolving the policies that are the basis of our informed, independent research and voting recommendations continues to help support our institutional investor clients in making informed voting decisions according to their  investment and governance philosophies with regard to their investment stewardship responsibilities and fiduciary duties.”

For full details of the ISS Governance benchmark policy updates announced, please visit the ISS Policy Gateway.

The updates announced include:

Board Diversity – Canadian Policy
In 2022, a new board diversity policy was announced for Canadian S&P/TSX Composite Index constituents with a one-year grace period to February 1st, 2024. This year’s policy update removes the transition language and further introduces mitigation based on a publicly disclosed commitment to add at least one racially or ethnically diverse board member at or prior to the next AGM. Accordingly, ISS will generally recommend a vote against or withhold from the Chair of the Nominating Committee or Chair of the committee designated with the responsibility of a nominating committee, or the Chair of the board of directors if no nominating committee has been identified or no chair of such committee has been identified, if the board has no apparent racially or ethnically diverse members, or if the company has not provided a formal, publicly-disclosed written commitment to add at least one racially or ethnically diverse director at or prior to the next AGM.

By way of background, since 2020, Canada has broadened disclosure requirements on board diversity for publicly traded corporations beyond gender, mandating businesses to report on four employment equity groups (women, visible minorities, Indigenous peoples, and persons with disabilities) through new requirements introduced to the Canada Business Corporations Act (CBCA) in Bill C-25. According to the Government of Canada, these measures aim to foster diversity at the highest levels of corporate leadership in Canada, improve shareholder democracy, and help investors make better and more informed decisions through better transparency.

Distributing corporations established under the CBCA are required to disclose both to their shareholders (through their proxy circulars), and to Corporations Canada, information regarding the diversity of their boards and senior management. The disclosure must include the representation of various designated groups on the board and among senior management. These designated groups include women, Indigenous peoples (First Nations, Inuit, and Métis), persons with disabilities and members of visible minorities. In addition, the CBCA requires distributing corporations to disclose whether they have a diversity and inclusion policy, and if not, to provide an explanation why not. This “comply or explain” approach is not prescriptive but is intended to foster a dialogue between distributing corporations and their shareholders, increase corporate transparency and support the push for increased diversity on boards and in senior management.

Election of Directors – Japan Policy
The ISS Japan benchmark policy is being updated to reinstate the application of the “return on equity” (or ROE) policy for Japanese companies under ISS’ benchmark policy, which was temporarily suspended in 2020 due to pandemic-related considerations. The reinstated ISS Japan benchmark policy will recommend votes against the re-election of the top executives at companies that have underperformed in terms of capital efficiency (i.e., when the company had posted average ROE of less than 5 percent over the previous five fiscal years), unless an improvement (defined as ROE of 5 percent or greater for the most recent fiscal year) has been observed.  

Takeover Defense Plans (Poison Pills) – Japan Policy
The ISS Japan benchmark policy on Takeover Defense Plans (Poison Pills) is generally to recommend against proposed plans unless several necessary conditions are met. ISS is updating one necessary mitigating criterion – independent directors should now comprise a majority of the board after the shareholder meeting, increased from at least 1/3 of the board. The update reflects improving board independence in the market and further signals that board independence remains critical if a company seeks to deploy a poison pill. In particular, when pills are designed for specific shareholders, the updated policy is intended to prevent a non-independent board from arbitrarily using a poison pill mechanism for management entrenchment.

Equity Compensation Plans – Asia-Pacific Regional Policy
The ISS Asia-Pacific Regional benchmark policy is being updated to clarify and codify the policy approach regarding equity compensation plans for companies in Indonesia, Malaysia, Pakistan, Sri Lanka, Thailand, and Vietnam. It formalizes ISS’ approach already being applied for the evaluation of stock option plans and restricted share plans for those markets and provides greater transparency of the existing framework applied on the analysis of such proposals.


About ISS Governance: Founded in 1985 as Institutional Shareholder Services (ISS) Inc., ISS Governance is a leading global provider of independent and objective shareholder meeting research and recommendations, providing multiple voting policy choices as well as end-to-end workflow solutions for institutional investors. More than 1,600 clients worldwide utilize ISS Governance’s actionable expertise to help them make informed investment stewardship decisions, and to help them manage their voting responsibilities. Covering over 50,000 meetings annually, ISS Governance leverages its extensive global footprint, deep experience, high quality data and analysis, unified client support, and technology infrastructure to continuously evolve and extend its innovative suite of solutions to meet clients’ evolving portfolio, fiduciary, and stewardship requirements. Learn more at: 

About ISS STOXX: ISS STOXX GmbH, through its group companies, is a leading provider of comprehensive and data-centric research and technology solutions that help capital market participants identify investment opportunities, detect qualitative and quantitative portfolio company risks, and meet evolving regulatory requirements. With roots dating back to 1985, we today deliver world-class benchmark and custom indices across asset classes and geographies and serve as a premier source of independent corporate governance, sustainability, cyber risk, and fund intelligence research, data, and related offerings. Our products and services give clients the scale and leverage they need to grow their business more effectively and efficiently. ISS STOXX, which is majority owned by Deutsche Börse Group, is comprised of more than 3,400 professionals operating across 33 global locations in 19 countries. Its approximately 6,400 clients include many of the world’s leading institutional investors who turn to ISS STOXX for its objective and varied offerings, as well as companies focused on ESG, cyber, and governance risk mitigation as a shareholder value enhancing measure. Clients rely on ISS STOXX’s expertise to help them make informed decisions to benefit their stakeholders. 

Media Contact:
Sarah Ball, Executive Director, Communications

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