Railpen, the UK’s rail workers’ pension fund with more than £34bn (€40.5bn) in total assets, has published its 2025 voting policy, outlining the firm’s engagement and voting priorities, and how it will take voting decisions in the best interest of its members across UK and international annual general meetings (AGMs) in 2025.

The policy sets out Railpen’s four corporate governance themes: corporate culture and focus; board composition and effectiveness; remuneration and alignment of incentives; and shareholder rights, risks, and disclosures.

This year, Railpen maintains its commitment to strong corporate governance protections, introducing new lines that “toughen its stance” on defending shareholder protections in the wake of moves to weaken shareholder rights in the UK and elsewhere.

Following the release of its report Acting on audit: An investor stewardship perspective, next year Railpen will also strengthen its voting and engagement activities to encourage high-quality audits at portfolio companies.

More specifically, Railpen clarified that it will vote against proposals to indemnify external auditors and that it will likely not support proposals that limit auditors’ liability.

Additionally, Railpen said it will encourage portfolio companies to request graduated findings from auditors, and will vote against companies that do not appropriately explain how they have addressed previously identified weaknesses.

Furthermore, Railpen has clarified its position on ESG issues such as anti-microbial resistance and plastics as well as artificial intelligence.

Railpen will also continue to urge portfolio companies to resist the broader “race to the governance bottom” after the 2024 changes to the UK listing rules and the adoption of the EU Listing Act, both of which weaken investor protections and may lead to worse outcomes for everyday savers.

Railpen’s 2025 voting policy, therefore, underlines its commitment to the principle that a company’s shareholders should be allowed a formal opportunity to ‘make their views known and felt’ on transactions and strategic decisions that are fundamental to shareholder value.

Railpen has strengthened three specific engagement and voting commitments in 2025:

  • It will consider a vote against a board chair where companies in any jurisdiction choose to go ahead with a significant related party transaction (RPT) or a significant transaction without a shareholder vote in advance;
  • it will vote against any move by a company to re-incorporate in a domicile that it considers to have significantly fewer protections for shareholders, unless a compelling rationale is provided (it may also vote against the board chair);
  • it will oppose resolutions that seek to expand exculpation to company officers, in recognition that the right to hold company executives to account for negligence and breaches of their fiduciary duty of care is an important shareholder right.

Michael Marshall, director of investment risk and sustainable ownership, said: “Thoughtful voting coupled with constructive engagement with our portfolio companies supports our objective of delivering long-term returns for members.

“Our global voting policy ensures we undertake such engagement in a consistent way that is comprehensible to portfolio companies, external managers and our beneficiaries.”

Marshall said the updates to its 2025 voting policy reflect Railpen’s continued commitment to high corporate governance standards and shareholder protections.

He said: “We will continue to advocate for standards that ensure we can best represent members’ interests in 2025 and support our objective of protecting and enhancing long-term investment returns for members.”

Caroline Escott at Railpen

Caroline Escott at Railpen

Caroline Escott, senior investment manager of sustainable ownership, added that as an active investor, Railpen relies on portfolio companies’ financial accounts to represent a true and fair view of their financial health, which is why it is setting higher expectations for the audit profession and audit committees in 2025.

“This complements our ongoing stewardship work to protect high corporate governance standards; both are underpinned by our motivation to create sustainable financial value for members,” she said, adding: “In 2025, on audit, shareholder protections and elsewhere, we will encourage companies to resist the ‘race to the bottom’ on corporate governance, exercising our vote accordingly.”

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