Stewardship and ESG integration
The strategies do not have ESG targets and on that basis are not designed for investors who are looking for strategies that meet particular ESG targets. The strategies investment decision process, including with respect to ESG factors, may differ to other strategies managed by First Sentier Investors.
As part of the team’s investment decision process for these strategies, each entity considered for investment is evaluated against six key criteria, being:
- industry/entity position
- sustainability, and
- market factors.
ESG factors are considered in the sustainability criterion. When evaluating an entity against the sustainability criterion, the Investment Manager may consider ESG factors including, but not limited to, the following:
- Environmental factors: an entity’s commitments with respect to climate change (such as its commitment to managing carbon emissions) and an entity’s management of water and waste.
- Social factors: an entity’s commitment to workplace health and safety and an entity’s stated commitments and policies regarding human rights (such as modern slavery).
- Governance factors: an entity’s board composition (which may include factors such as board independence, the separation of the chairman and CEO roles and audit remuneration committee independence), remuneration structures and corporate disclosure.
The emphasis placed by the Investment Manager on a particular ESG factor in the assessment of the sustainability criterion is based on the Investment Manager’s assessment of the extent to which that factor is likely to have an impact on the returns of the relevant security over the long-term. As a result, consideration of a particular ESG factor may vary by sector and/or industry, as well as being influenced by entity-specific details.
There is no set weight given to the sustainability criterion as part of the overall investment decision process and as a result it is possible that an entity which scores poorly on the sustainability criterion may still be considered eligible for inclusion in the portfolio when considered against the other five criterion.
The Investment Manager relies on internal qualitative research, which includes active company engagement when assessing and monitoring entities in respect of the sustainability criterion. ESG matters are frequently raised with senior management, including board members, during engagement with entities. Research may also be supplemented by third-party providers from time to time.
We believe that a strong commitment to stewardship is an essential component of a strong approach to responsible investment, and that embedding responsible investment into the core of our investment activities is in the best long-term interests of our clients. For more than a decade we have systematically and progressively improved our practices and processes across our investment capabilities globally.
Climate change statement
Key climate-related risks in the team’s portfolio
How these risks are identified
The targets and objectives that have been set
Proxy voting history by type of resolution
The table below contains the proxy voting history for the team by issue type. The chart provides the same information for FY2022.
The chart below shows the number of times the team has voted against management recommendations, proxy advisors' recommendations, or against both. The purpose of this table is to show the independent judgement which is applied by the team when making voting decisions.
Proxy voting by region
The chart below shows the number of times the team voted in each region and the percentage of votes against management recommendations, against our proxy advisors' recommendation, or against both. The purpose of this table is to show the regional difference in voting patterns and governance concerns.
Proxy voting information is as at 31/12/2022
Source: First Sentier Investors / CGI Glass Lewis
Any targets (including, but not limited to, the net zero targets) on this webpage are based on (i) available information and representations made to First Sentier Investors by third parties, including, but not limited to, portfolio companies; and (ii) assumptions made in relation to future matters such as the implementation of government policy in climate-related areas, enhanced future technology and the actions of portfolio companies. Such information and representations may ultimately prove to be inaccurate and such future matters may not ultimately be realised. As such, First Sentier Investors cannot guarantee the achievement of these targets. These targets are subject to ongoing review and may change without notice.
Any ESG related commitments, are current as at the date of publication and have been formulated by the relevant investment team in accordance with either internally developed proprietary frameworks or are otherwise based on the Institutional Investors Group on Climate Change (IIGCC) Paris Aligned Investment Initiative framework. The commitments are based on information and representations made to the relevant investment teams by portfolio companies (which may ultimately prove not be accurate), together with assumptions made by the relevant investment team in relation to future matters such as government policy implementation in ESG and other climate-related areas, enhanced future technology and the actions of portfolio companies (all of which are subject to change over time). As such, achievement of these commitments depend on the ongoing accuracy of such information and representations as well as the realisation of such future matters. Any ESG related commitments are continuously reviewed by the relevant investment teams and subject to change without notice.
To the extent this material contains any measurements or data related to ESG factors, these measurements or data are estimates based on information sourced by the relevant investment team from third parties including portfolio companies and such information may ultimately prove to be inaccurate.