Stewardship and ESG Integration
We partner with our clients to provide solutions that maximise the probability that they will achieve their investment objectives. We assess our client needs based on three key criteria: risk tolerance, investment horizon and return ambition level. We utilise third party monitoring services for our direct holdings.
We have a stake in the effective operation and sustainability of the broader economy, society, the integrity and transparency of markets, good governance and business conduct. Given the size, geographical coverage, (multi) asset class mix, and variety of institutional clients, we need to be flexible in the way we approach responsible investment and the integration of material ESG factors.
We employ a top-down investment process to efficiently allocate to broad asset classes. We utilise direct access to ESG ratings and data, which provides us with a comprehensive database of ESG scores for global companies. This allows us to directly replicate equity and bond market exposures. If deemed necessary, this allows us to remove poorly rated ESG companies within their sector classifications. Over time this is expected to add value to the portfolio by avoiding negative investment outcomes.
Assessment and monitoring
ESG research is conducted by the Multi-Asset Solutions team, with a focus on developing customised solutions for institutional clients. All research is designed to be implemented systematically using data provided by MSCI Ratings and Sustainalytics. Due to the top-down investment process, we do not typically directly meet with company management.
As part of our Stewardship responsibilities, we exclude specific companies involved in munitions and armaments across all of our portfolios, as well as apply screens to exclude tobacco and other ESG red flag companies for certain clients. In addition, we believe that voting on company resolutions is an important responsibility of being an equity holder and we vote on company resolutions using the services of CGI Glass Lewis.
"We work with clients to integrate ESG considerations into their portfolios as required to meet their investment objectives."
We believe that a strong commitment to stewardship is an essential component of a strong approach to responsible investment (RI), and that embedding RI 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.
The section below provides additional, team specific, information on climate change. Further information on our approach to climate change can be found in our climate change statement.
Team Climate Change Statement
Through the MSCI Carbon Footprint calculator we can monitor and manage the exposure to carbon emissions within the portfolio. We plan to do further analysis on the impact of climate risk on the portfolio in the coming twelve months. Due to the top-down investment process we do not directly meet with company management.
The team believes that voting on company resolutions is an important responsibility of any equity holder and votes on company resolutions using the services of CGI Glass Lewis. The team votes in line with CGI Glass Lewis recommendations, which have been formulated to promote high standards of corporate governance. In certain circumstances the team may override CGI Glass Lewis' recommendations where they believe it is in their clients’ interest to do so. Due to the systematic nature of their investment approach, the team maintains a separate proxy voting policy which is available on our website.
The team's live proxy voting record is available here.
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 FY2019.
The chart below shows the number of times the team have voted in each region.
Proxy voting by region
The chart below shows the number of times the team voted in each reason 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 31/12/2019
Source: First State Investments / CGI Glass Lewis