Insights Blog

The Investment Association has published its shareholder priorities for listed companies in 2021. The paper sets out investors’ expectations for 2021 and the approach that the Investment Association’s corporate governance research service (IVIS) will take in assessing the performance of listed companies against these expectations. 

While the four key priority areas identified in 2020 (Responding to Climate Change, Audit Quality, Stakeholder Engagement and Diversity) remain unchanged, a number of adjustments have been made to specific investor expectations for 2021 which are likely to be relevant to FY20 Annual Reports and forthcoming FY21 AGMs for issuers. In particular, changes to the circumstances in which IVIS will issue “red top” or “amber top” reports in respect of issuers’ compliance with expectations in relation to Climate Change and Diversity priorities merit particular consideration by issuers and their advisors. 

Key changes to IVIS’ approach to colour topping for 2021 which internal legal teams and advisors should be aware of include:

Responding to Climate Change

  • For the first time, IVIS will “amber top” the ESG report of any issuer in a “high risk sector” (identified as the following sectors: financials, energy, transportation, materials and buildings and agriculture, food and forest products) which does not address all four pillars of the Task Force on Climate-related Financial Disclosures (Governance, Risk Management, Strategy and Metrics and Targets).


  • For the first time, IVIS will “amber top” any FTSE 350 companies that do not disclose either the ethnic diversity of their board or a credible action plan in place to achieve the Parker Review targets (every FTSE 100 board should have at least one director from an ethnic minority background by 2021, and every FTSE 250 board by 2024).
  • IVIS will “red top” FTSE 350 and “amber top” FTSE SmallCap companies which fail to meet female representation targets of 30% on boards and 25% on executive committees and direct reports (this marks an increase from female representation targets of 20% for FTSE 350 and 25% for FTSE SmallCap companies in the corresponding shareholder priorities for 2020). 

The 2021 shareholder priorities also contain a number of additional questions which IVIS will raise when considering issuers’ FY20 Annual Report disclosures under the Climate Change, Audit Quality, Stakeholder Engagement and Diversity priorities. Issuers and their advisors should have regard to these questions when finalising their disclosures in Annual Reports for FY20 and in subsequent public disclosures throughout FY21. 

For further information, please reach out to your usual Arthur Cox contact.

The expectations outlined in 2020 have been adjusted to reflect …
a greater focus on capital management and accounting for climate-related matters, COVID-19 specific
stakeholder engagement, and a focus on companies’ plans to meet the Parker Review targets for ethnic
diversity on boards.