Railpen Publishes Global Voting Policy for 2026

The policy reflects Railpen’s four corporate governance focus areas of corporate culture and purpose, board composition and effectiveness, remuneration and alignment of incentives, and shareholder rights, risk and disclosure. It also outlines Railpen’s perspectives on emerging governance and sustainability risks, such as climate accounting and responsible technology, considered to be most material to the scheme’s portfolio, and its expectations for companies on how to manage them effectively. 

Shareholder rights

Given the financial materiality of effective policymaking on shareholder rights and good governance, Railpen will, from 2026, more closely scrutinise and engage with portfolio companies whose capital markets policy advocacy runs counter to the interests of its shareholders, and risks undermining the company’s prospects of creating long-term sustainable financial value in the best interests of savers. 

This includes where Railpen considers a company to have played a material role in efforts to weaken shareholder rights at either a company- or a system-wide level, such as through advocacy for policies that reduce investor protections or where they have taken actions designed to diminish the voice of its shareholder base. 

Railpen will also more closely scrutinise loyalty shares which grant increased voting rights to investors who hold shares over multiple years, as such structures tend to concentrate voting power in the hands of insiders.

Climate accounting

Investors need financial reporting to reflect a company’s most material financial risks accurately. This is why in 2020, Railpen was one of the first investors worldwide to include expectations in its voting policy on how companies incorporate material information on climate-related issues into their financial statements. 

For 2026, Railpen has further clarified what it considers to be good practice on climate accounting, including the disclosure of quantitative climate-related assumptions and assessments, and how critical accounting assumptions have been adjusted for material climate risks.

Railpen expects material climate change risks to be considered in the financial statements and disclosed in a manner consistent with a company’s other reporting matters.

AI and cyber governance

As highlighted in Railpen’s and Chronos Sustainability’s Achieving Effective AI Governance report, AI has the potential to generate significant opportunities but also risks. This includes the infringement of intellectual property rights, litigation arising from adverse content, and liabilities associated with insufficient oversight of AI-driven decisions. Systemic risks, such as natural resource depletion and cyberattacks, may also be amplified.

The revised voting policy clarifies how Railpen expects companies to demonstrate how they are effectively governing AI. This includes disclosure on AI proportionate to risk exposure, determined by factors such as their role in the AI value chain, operational dependency on AI, and sector-specific use cases. 

Railpen’s commitment to a proactive approach to responsible technology is also evidenced by additional detail this year on how it expects companies to manage cybersecurity issues. This includes disclosures on the oversight, frameworks, and controls in place to identify and manage cybersecurity risks. In addition, companies should report material breaches in a timely manner, along with the remedial actions taken.

Workforce voice and engagement

Railpen believes that the inclusion of workforce perspectives at board-level can align the interests of shareholders, management and workers over the long term. It can also provide valuable insight into company operations and strengthen communication with stakeholders. 

Railpen recognises that there are multiple mechanisms through which this can be achieved, including the appointment of a workforce director. 

In 2026, Railpen will continue to raise awareness as to what a meaningful approach to workforce directors looks like in the UK and US markets, building upon its recent guidance for policymakers as well as the creation of the now £2 trillion Workforce Directors Coalition (WDC).

Where there are ongoing workforce issues and companies have continually been unresponsive to Railpen’s efforts to engage on a meaningful approach to workforce engagement and worker voice, it may consider the additional exercise of its voting and ownership rights to express its perspective.

Caroline Escott, Head of Investment Stewardship and Co-Head of Sustainable Ownership, Railpen, said: “The evidence shows that good governance is fundamental to creating sustainable financial value for companies and their shareholders. However, this year we have seen further moves in various jurisdictions to roll back corporate governance standards and dilute sensible shareholder engagement mechanisms. Such decisions are damaging to the long-term sustainable economic growth that benefits companies, shareholders and the savers on whose behalf we invest.

In 2026, we will continue to exercise our votes on issues which evidence shows are of most economic and financial relevance to good financial outcomes for members of the railways pensions schemes. Where we identify poor practice on the issues highlighted in our voting policy, we are always open to listening to the company perspective and expressing our preferences, but we will also consider a negative vote where we feel necessary.”

Adam Gillett, Head of Sustainable Investment and Co-Head of Sustainable Ownership, Railpen, added: “We have a responsibility to our members to ensure that our long-term investments remain resilient in the face of systemic risks such as climate change. To help us do this, we need our portfolio companies’ financial reporting to accurately reflect the most material risks it faces, including climate-related issues where relevant. Railpen has been engaging with companies for several years on their climate accounting, but this year we have provided greater clarification on what we would like to see from companies, to help them understand our perspective and ensure we can continue to work in partnership to help secure our members’ future.”