Aviva Gives Shareholders Responsibility Vote

Companies increasingly use their annual report to boast of their corporate responsibility credentials but now the Aviva insurance giant is using its annual meeting to show off its ethical aims. It is the first UK company to ask shareholders to vote on the corporate responsibility report.

What this company does today, others will be pressured to adopt tomorrow. Aviva is both a plc and an investor in plcs. As an institution it tells other companies how to run their business so it has to set an example with its own. The insurer is a zealot on governance issues and its investment arm has been lobbying for votes on CR reports for two years: its first success is its own parent board, but that gives it the leverage to demand polls elsewhere.
Pension funds and mutual life assurers can safely call on plcs to adopt shareholder measures they cannot adopt themselves. Quoted investors like Aviva face a dilemma however. On the new corporate governance code's call for all directors to face annual re-election, for instance, Legal & General is in favour, even though it would have to adopt it itself, while Standard Life is against it for itself and for the companies it invests in. Prudential admits it likes it for companies in its portfolio but not for itself.

Aviva's fund managers favour annual re-election of the whole board but have yet to convince their parent board to adopt that too. But as this year's annual meeting already has 22 resolutions, the prospect of 13 more to re-appoint directors would be daunting.

But corporate responsibility reports that many companies put out look like a branch of the public relations function rather than the output of the HR or finance departments. Arms manufacturers print glossy photos of Third World community projects and mining companies devote pages to saving wildlife.

Aviva's CR report is 44 pages long. Even the précis in the annual report, on which shareholders will vote, is 11 pages of dense type with no pictures. It ticks all the boxes -â€" carbon neutrality, business ethics, global community initiatives, employee engagement, sustainability, volunteering, bribery, climate change, contributions to local economies, diversity, women, gays and how it uses less water, less paper and recycles 84 per cent of its waste.

Like motherhood and apple pie, surely no shareholder could vote against such a report: it would be churlish and expensive to say it is not enough. In fact, like the preceding remuneration report on the meeting's agenda, the vote is only advisory. If investors did reject, directors are not obliged to drop or redouble their programme. The board says the vote will give feedback and let shareholders express their views. It also presumably makes the vast team of regional CR directors, the board-level CR committee and the people who wrote those 44 pages think their time has not been wasted.

But now Aviva has made corporate responsibly an AGM issue, other FTSE companies will be under pressure to follow. From now on, meetings will take even longer.

(Pic: Aviva)