Issues on the AGM's Agenda in 2025
With the appropriate planning, companies can not only comply with new laws and regulations, but also be better equipped to deal with external pressure, such as activism.
With this in mind we present an overview of the issues that should be on the AGM agenda for the coming year, and the developments that companies should take into account.
Virtual AGM
Dutch companies are still not allowed to have fully virtual or digital annual general meetings (AGMs) - the draft legislation has been with the Dutch parliament for about a year. Several parliamentary factions have asked questions that echo the criticism from some role players involved in the AGM. For example, Eumedion, the lobby organization for Dutch institutional investors, is concerned that the quality of the meeting will be reduced, that interaction with the board will be less and that transparency will be jeopardized. Eumedion suggests that virtual AGMs should be allowed only in the case of non-controversial topics or exceptional emergencies such as an epidemic.
In 2024, several companies already approached law firm A&O Shearman for an opinion on whether they could incorporate the full digital meeting, in anticipation of the change in legislation, into their articles of association. ‘It fits within the principles of good governance, especially with the notion that in exceptional circumstances, it should be feasible to hold a fully digital meeting to enable sustainable meeting practices,’ says Joyce Leemrijse, partner and notary at A&O Shearman. ‘But most companies have, in anticipation, taken it off the agenda again. It still seems too early to have the issue back on the agenda, unless a company has a major shareholder strongly supporting it.’
Leemrijse expects that digital general meetings will eventually be introduced, in part because this already is standard practice across the border. Proxy advisors ISS and Glass Lewis are not opposed to the idea; they just prefer not to act ahead of final legislation.
Critical stakeholders
The 2024 shareholder season was remarkably calm compared to 2023. ‘There were few controversies, even though a significant number of votes were taken on companies' remuneration policies,’ observes Kirsten van Rooijen, head of Continental Europe at Computershare, an international consultancy that supports companies in shareholder relations and the organization of shareholder meetings. She attributes this calm to better preparation by companies. ‘Companies are increasingly engaging with investors and shareholders beforehand to explain their policies. This has become standard practice in the Netherlands and is now a trend across Europe.’
While it was a relatively smooth year, Van Rooijen warns against complacency. ‘Many institutional shareholders have indicated that their clients — the asset owners — feel they were not critical enough during 2024. They expect asset managers to be more stringent in the coming year, not just on remuneration but also on other issues. This is something companies need to be mindful of,’ she advises.
Large institutional investors have responded by introducing programs, such as BlackRock with the BlackRock Voting Choice, introduced in 2022, which gives shareholders a direct say. This has resulted in active votes representing an investment amount of $2.7 trillion of BlackRock's total portfolio of $5.2 trillion. As a result, minority shareholders are exerting increasing influence.
This shift is changing the voting behavior of large groups of shareholders, bringing more diversity and critical approaches. ‘This presents challenges,’ Van Rooijen admits. ‘Who will you consult with about your strategic considerations in the future? Is it one party? Six? Thirty? Will you need to negotiate with a pension fund in Ohio to get approval? That could very well become a reality.’
CSRD compliance
From 2024, large companies must report on their impact on people and the environment under the CSRD (Corporate Sustainability Reporting Directive). How should this issue be dealt with at the upcoming AGM? This depends partly on how the CSRD is implemented in Dutch legislation. While the process is slow, it is expected to be finalized during 2025, at the latest. A key point is that companies should appoint an external auditor at the upcoming AGM to sign off on their sustainability report. ‘This appointment must be made explicitly, whether or not in conjunction with appointing the auditor for the annual financial statements,’ explains Leemrijse. ‘If an auditor for financial reporting for 2025 or 2026 has already been appointed, the appointment of an auditor for the sustainability report needs to be added to the agenda.’ In future, it will be necessary to explicitly state that the auditor is appointed for both financial reporting and the sustainability report. It is permissible for the same auditing firm to handle both. Regarding fiscal year 2024: if the implementation legislation takes effect before the auditor provides the assurance statement, a resolution by the supervisory board is sufficient. ‘If the legislation is not yet in place, I recommend having the appointment made by both the executive board and the supervisory board to ensure compliance,’ Leemrijse advises.
The sustainability report itself must also be presented to shareholders at the upcoming AGM. Leemrijse suggests: ‘Our advice would be to include the sustainability report as part of the management report and list it as a discussion item. This aligns with an integrated strategy where sustainability forms a core component of the overall strategy.’
CSDDD: Corporate Sustainability Due Diligence Directive
The Corporate Sustainability Due Diligence Directive (CSDDD) complements the CSRD by requiring large companies to conduct due diligence to identify and address environmental and human rights violations. Companies must not only recognize such issues but also actively address them. The CSDDD aims to provide greater transparency regarding the negative impacts of businesses on the environment and human rights. Companies could face liability under this directive, with enforcement at the national level of participating states. The CSDDD further compels the development of a climate transition plan aligned with the Paris Agreement. This includes emission reduction targets for: Scope 1: direct emissions, Scope 2: indirect emissions from energy cosumption, Scope 3: emissions across the entire value chain. ‘This is critical,’ says Jochem Spaans, partner and attorney at A&O Shearman. ‘Last week, the court ruled that Shell has an obligation to fight climate change, but that it could not impose a specific reduction target. Companies that fall under the CSDDD, will have no choice but to adopt climate measures.’
How can your company get started with CSDDD? This can be done in five steps:
- Integrate due diligence in internal policies and systems. Create a code of conduct for environmental, sustainability, and human rights standards, applicable both internally and to direct business partners.
- Identify potential or existing negative impacts on the environment, human rights, and sustainability across the company’s operations and supply chain.
- Formulate plans to prevent and mitigate negative impacts. Establish contractual guarantees with business partners and offer financial support to SME suppliers to meet standards, if needed. If improvements are unfeasible, terminating relationships with non-compliant suppliers might become necessary as a last resort.
- Consult with employees, communities, and other stakeholders across the value chain to understand and address concerns.
- Establish a complaints procedure or hotline where stakeholders can voice their concerns. This allows for early detection and resolution of potential issues.
‘The legislators understand that companies cannot tackle all issues at once,’ Spaans notes. ‘Businesses are allowed to prioritize the most probable or severe risks. However, this has its own risks—you may face criticism for the wrong prioritization. Therefore, it is essential to carefully document decisions and the reasoning behind them.’
Say on Climate
Should shareholders have a vote on their company’s climate policy? ‘It is a challenging issue, with proponents and opponents worldwide,’ says Joyce Leemrijse. Some European countries, such as Spain and Switzerland, have embraced Say on Climate by incorporating it into their national legislation. In the Netherlands, Eumedion advocates for a non-binding vote on the sustainability report at the upcoming AGM. ‘That may seem harmless,’ Leemrijse notes. ‘However, in its green paper, Eumedion envisions a binding vote on the report and a non-binding vote on sustainability policy in the near future. That is a significant step forward—and not without risks. How can shareholders have a say on the report without forming an opinion on the policy itself? This would inevitably lead to greater influence.’ In the Netherlands, board autonomy has traditionally been paramount. The executive board and the supervisory board bear collective responsibility for the company’s strategy, including its sustainability strategy. Shareholders are invited to discuss strategy and policy but do not have decision-making power.
Leemrijse cautions companies to be wary of expanding shareholder influence. ‘A binding or even non-binding vote on climate policy would directly infringe on board autonomy.’ It becomes very difficult to roll back or limit voting rights once extended. Leemrijse also highlights another critical issue: the potential influence of short-term and international investors. ‘On average, shareholders hold their shares for only six months. While institutional investors like pension funds tend to remain engaged longer, this group largely consists of foreign entities. Many of these are U.S.-based pension funds and other international investors. Should we allow parties from the U.S.—where a different political climate prevails—to influence Dutch policy? Should they have a say in shaping our strategy?’
The VOR
The Verklaring Omtrent Risicobeheersing (VOR, or Risk Management Statement) is set to be incorporated into the Corporate Governance Code, potentially as early as January 1, 2025. This new requirement will compel companies to ensure transparency not only regarding financial risks but also sustainability and operational risks. The VOR proposal originates from the Van Manen Commission and has been endorsed by key stakeholders, including trade unions, employer organizations, publicly traded companies, the VEB (Dutch Association of Shareholders), and Eumedion. Facing the prospect of stricter legislation, companies opted for a self-regulatory approach.
What will change? With the new requirements, directors will issue a more comprehensive risk management statement in their annual reports. This expanded declaration will hold them accountable for sustainability risks, such as environment and social impact, and operational risks, including compliance risks and internal operational processes. The Minister has approved the Monitoring Commission to amend the Corporate Governance Code accordingly. While a new chairperson has been appointed, the commission is not yet fully constituted, as the FNV (Federation of Dutch Trade Unions) recently withdrew. Despite the current delays, Leemrijse advises companies to prepare for the stricter risk management requirements. ‘The VOR could be rapidly implemented,’ she warns.
Climate Activism
Companies like Shell, ING, and Rabobank have faced growing pressure from climate activists, and this trend shows no signs of abating. Kirsten van Rooijen also anticipates other forms of activism, such as increased vocalization by labor unions and employees, as well as political activism, like drawing attention to conflicts such as the one between Israel and Palestine.
Activists employ diverse tactics. For example, silent activists quietly infiltrate companies. ‘By massively buying up shares, such activists try to secure a board seat and exert influence. And they sometimes succeed.’ Anything but silent was the tactic of hedge fund Elliott Management. This activist addressed shareholders and stakeholders of Southwest Airlines through a podcast. In the podcast, Elliott presented its vision for improving Southwest, including naming their proposed board members.
Companies can sometimes detect signs of activism well in advance. Van Rooijen cites Anglo American, the British/South African mining company, which noticed unusual activity when BHP was preparing a potential takeover. By monitoring IP addresses through its investor relations website, the company identified a surge in document downloads. ‘The lesson is that it pays off to Invest in data monitoring,’ says Van Rooijen. ‘Make sure you have insight into what information is being accessed and by whom. This can reveal activism at an early stage.’ She notes that activists target not only the board but also investors and proxy advisors. Activists often spend a year conducting research before approaching the company. ‘So, make sure you have a solid communication strategy, have a plan in place, and test it annually.’
Diversity
The Directive on Gender Balance is now in effect at the European level and must be implemented in national law. The directive sets the goal for publicly listed companies to have at least 40% representation of women (and men) on supervisory boards, or 33% representation of women (and men) on the management board and supervisory board combined. Legislative adjustments to align with this directive were scheduled for debate in the House of Representatives and Senate in late 2024. However, this timeline will not be met.
This report was published in Management Scope 01 2025.