Glass Lewis updated its proxy voting guidelines for the U.S., Canada, U.K., and continental Europe on Monday, relating to board diversity, ESG risk oversight, and multi-class share structures.

Board diversity

Starting in 2022, the proxy adviser will generally recommend voting against nominating committee chairs of Russell 3000 and Toronto Stock Exchange (TSX) boards with fewer than two gender diverse directors, or the entire nominating committee of a board with no gender diverse directors.

For U.S. and Canadian-listed companies outside of the Russell 3000 and for boards with six or fewer total directors, Glass Lewis’ existing policy requiring a minimum of one diverse director will remain in place, the proxy adviser said.

Starting next year, large-cap and mid-cap companies in the European Economic Area will also be expected to have boards with at least 30% gender diversity.

Glass Lewis will generally recommend voting against nominating committee chairs at FTSE 100 companies that have failed to appoint at least one director from a minority ethnic group and have failed to provide “clear and compelling disclosure” for why they have been unable to do so.

Starting in 2023, Glass Lewis will transition from a fixed numerical approach to a percentage-based approach and generally recommend voting against nominating committee chairs of Russell 3000 boards that are not at least 30% diverse.

Director skills

Beginning in 2022, nominating and/or governance committee chairs at S&P 500 companies may face adverse recommendations if they offer “particularly poor disclosure” relating to director diversity and skills.

From 2023, when S&P 500 companies have not provided disclosure of individual or aggregate racial/ethnic minority demographic information, the proxy adviser will generally recommend voting against governance committee chairs.

Remuneration

In the U.K. and continental Europe, Glass Lewis may recommend shareholders vote against the remuneration committee chair where there are “substantial concerns” with the remuneration policy.

In “particularly egregious cases” or where there are “ongoing concerns” with a company’s remuneration policy or practices, the proxy adviser will recommend shareholders vote against the re-election of all remuneration committee members, it said.

Multi-class structure

Beginning in 2022, Glass Lewis will recommend voting against governance committee chairs at U.S.- and Canada-listed companies with a multi-class share structure and unequal voting rights without “a reasonable sunset” – generally seven years or less.

”Say on climate” and environmental risk

Glass Lewis continues to have “concerns” relating to “say on climate” votes, on the grounds that corporate sustainability reports often fail to provide shareholders with sufficient information to assess the robustness of their net-zero transition strategy. Accordingly, the proxy adviser will generally oppose shareholder proposals seeking “say on climate” votes.

In cases where companies have adopted “say on climate” votes and are asking shareholders to weigh in on their climate-related strategies, Glass Lewis will evaluate corporate transition plans on a case-by-case basis, taking into account a company’s unique operations and risk profile.

Starting 2022, Glass Lewis will “note as a concern” when all U.S.- and Canada-listed companies outside of the S&P 500 and TSX 60 do not provide clear disclosure concerning the board-level oversight afforded to environmental and/or social issues.

The proxy adviser will generally recommend voting against governance committee chairs at S&P 500, FTSE 100, and European blue-chip index companies that fail to provide “explicit disclosure” concerning the board’s role in overseeing these issues.

The same recommendations will apply to all U.S.- and Canada-listed companies outside of the S&P 500 and TSX 60 from 2023, Glass Lewis said.