The £17bn Church Investors Group (CIG) has turned the focus on gender equality outside of its own institutions and onto its investee companies, warning today that it is set to take a "harder line" on businesses which are not making enough progress.
As annual general meeting (AGM) season approaches, when investors will have to vote on issues such as executive pay and director appointments, CIG has said it will tighten its voting policy on executive pay, gender diversity and climate change.
The group – which represents institutional investors from mainstream Christian church denominations and charities, including the main investment bodies of the Church of England and the Methodist Church – said it will "encourage other shareholders to hold directors to account and refuse to re-elect directors where the company is out of line with best practice".
"The best companies contribute to the common good through their products and services and the way they treat their employees," said the Reverend Canon Edward Carter, chair of CIG.
"Their directors understand that if they are not doing something about fairness and about the risks facing us today, they are part of the problem and risk losing the confidence of the public and ultimately their licence to operate."
CIG from now on will vote against the re-election of nomination committee chairs where the board consists of fewer than 33 per cent women. If the board has below 25 per cent female constituents, CIG will vote against all directors on the nomination committee.
The group will also withdraw support for remuneration reports where pay ratios are not disclosed, chief executive pensions are "excessive", or where financial services or pharmaceutical companies do not pay the living wage.
A company's chair will not receive backing if the business is making little progress to "transition to a low carbon world". This will be measured against the Transition Pathway Initiative, a project established by the Church of England which has support from more than 25 global asset owners with more than £5 trillion under management.