Committed to ESG principles

We recognise the important role environmental, social and governance (ESG) related issues play in the creation of long-term investor value and believe that the informed consideration of these factors can enhance our investment processes. Companies that successfully manage their ESG risks and opportunities and proactively follow good ESG practices may experience risk-adjusted outperformance over the longer-term. This belief underpins our commitment to being a responsible investor.

ESG factors are, therefore, key considerations in our investment process and feed into our overall assessment of the quality of a business. Our research analysts and portfolio managers follow a process that considers the potential impact of ESG issues related to investments in our portfolios, and we seek partners that do the same. This analysis informs, to varying degrees, our asset allocation, stock selection, portfolio construction, shareholder engagement and voting.

We use in-depth dialogue to encourage investee companies to improve performance and move towards best practice in the management of ESG issues. Our engagement encompasses a broad spectrum of ESG issues, covering companies across sectors and geographies.

We use a range of engagement tools and methods including in-person and phone meetings and written correspondence at different levels through organisations, including controlling shareholders, board level, executive management and operational specialists. Typically our engagement is one-to-one with companies, but where we see scope to collaborate with other investors or through stakeholder groups, we may do so if this is in line with our objectives and will be more effective in achieving the desired outcome. Our approach is based on constructive and confidential dialogue, and on building a relationship of trust, where over time we gain a sound understanding of how key ESG issues fit into companies’ business strategies.

It is our policy to vote at all shareholder meetings on behalf of our investment clients. We have developed guidelines that outline our expectations with regard to companies’ corporate governance practices, protection of shareholder rights and disclosure of information prior to general meetings. In executing votes, we follow the principles set out in the guidelines, applied in a pragmatic way to individual markets where local norms may deviate from international best practice. Where companies put forward a strong case for not complying with our guidelines we will take this into account, and adjust our vote if we believe the company is acting in the best interests of shareholders.