By Simon Jessop
LONDON (Reuters) - Federated Hermes' stewardship team said on Monday it had written to the boards of some of Britain's largest companies to warn them that it would take a tougher stance on diversity and climate change at annual general meetings in 2021.
The asset manager's EOS team, which advises clients with around $1 trillion in assets, said too many companies were lagging on gender equality, while businesses had faced increased concern over low levels of ethnic diversity.
As a result, EOS said it would now recommend a vote against any chair of a FTSE 100 company with a board where women make up "materially less" than 20% of the executive committee and its direct reports.
EOS said, as part of another new policy, it would also recommend voting against the chair of any company that does not have at least one director from an ethnic minority background or any "credible plan to rapidly achieve this".
"The past year has seen a heightened focus on diversity and inclusion and we believe now is the right time to continue to advance our expectations of companies and provide a leading voice on this topic for stakeholders," said Amy Wilson, UK Engagement Lead in a statement.
On climate change, EOS said for the first time it would recommend votes against the chair or other responsible directors where a company's strategy is "materially misaligned" with the goals of the Paris agreement on climate change.
"Climate change is another pressing global security challenge that presents a systemic risk to our clients’ portfolios and in 2021 we will be taking tougher measures against companies with strategies that are not aligned with a transition to a low-carbon economy," Wilson added.