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ISS Releases Policy Updates for 2022

Institutional Shareholder Services (ISS) has released its final policy updates for Canadian issuers, affecting meetings held on or after February 1, 2022. Overall, policies are generally unchanged for the upcoming proxy season. A few notable changes to highlight:

Say on Pay Vote (TSX Guidelines)

Boards are expected to respond to Say on Pay vote results with less than 80% support. This threshold for response is up from 70%. The change acknowledges the high levels of Say on Pay support in Canada, on average over 90% for the past 5 years. It also aligns with commentary from the Canadian Coalition for Good Governance (CCGG), recommending that boards engage with investors to understand concerns where the Say on Pay vote received less than 80% support.

Social and Environmental Issues – Climate Change

Requests by management for shareholders to approve a climate action plan (Say on Climate) will be reviewed on a case-by-case basis. Applicable to all markets, including Canada, ISS is codifying the framework it developed over the past year to analyze management-offered climate transition plans. Information to be considered includes:

  • The extent to which the company’s climate related disclosures are in line with recommendations from the Task Force on Climate-Related Financial Disclosures (TCFD) and meet other market standards

  • Disclosure of its operational and supply chain greenhouse gas (GHG) emissions (Scopes 1, 2, and 3)

  • The completeness and rigor of the company’s short-, medium-, and long-term targets for reducing operational and supply chain GHG emissions in line with Paris Agreement goals (Scopes 1, 2, and 3 if relevant)

  • Whether the company has sought and received third-party approval that its targets are science-based

  • Whether the company has made a commitment to be “net zero” for operational and supply chain emissions (Scopes 1, 2, and 3) by 2050

  • Whether the company discloses a commitment to report on the implementation of its plan in subsequent years

  • Whether the company’s climate data has received third-party assurance

  • Disclosure of how the company’s lobbying activities and its capital expenditures align with company strategy

  • Whether there are specific industry decarbonization challenges, and

  • The company’s related commitment, disclosure, and performance compared to its industry peers

Proposals from shareholders to publish a climate action plan will also be reviewed case by case. Shareholder proposals may request the company to disclose a report providing its GHG emissions levels and reduction targets and/or its upcoming/approved climate transition action plan. They may also provide shareholders the opportunity to express approval or disapproval of the company’s GHG emissions reduction plan. ISS will consider the following:

  • The completeness and rigor of the company’s climate-related disclosure

  • The company’s actual GHG emissions performance

  • Whether the company has been the subject of recent, significant violations, fines, litigation, or controversy related to its GHG emissions, and

  • Whether the proposal’s request is unduly burdensome (scope or timeframe) or overly prescriptive.

Coverage (TSX Guidelines)

Coverage extended to include the NEO Exchange. Proxy analyses and voting recommendations are provided for common shareholder meetings of publicly traded Canadian companies that are held by institutional investor clients. Going forward, the coverage of “TSX policy guidelines” including guidelines for executive compensation, governance, and pay for performance will apply to companies listed on the Toronto Stock Exchange and the NEO Exchange.

Voting on Director Nominees (TSX Guidelines)

Increased focus on gender diversity. For S&P/TSX Composite Index companies, ISS has raised the expectation for gender diversity policies, citing votes will generally be withheld for the Chair of the applicable Committee if (i) women comprise less than 30% of the board of directors, and (ii) the company has not provided a formal, publicly-disclosed written commitment to achieve 30% women on the board at or prior to the next AGM. This change comes after ISS provided a one-year grace period for at least 30% women on the board.


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CONTEXT To the middle of June, Say on Pay results in Canada are consistent with past years, with average support of 92%. In many ways this has been a typical proxy season, but behind the scenes, the p

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