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Australian Small Companies - Responsible Investment

Approach to Responsible Investment

Sustainability is one of the six key criteria used in our evaluation of securities, however it is not a negative screen. Our assessment of a company includes criteria related to practice, commitment and disclosure of ESG issues by management, and performance relative to peers. For example, environmental assessment considers issues of climate change, company efficiency and practices relative to industry and applicable standards; social assessment incorporates measures of employee and stakeholder policies and human rights; and governance considerations include board composition, remuneration structures and corporate disclosure.

Our extensive proprietary analysis is supplemented by company disclosures, the media and external research.

Assessment and monitoring

We monitor each company’s progress on managing ESG issues as part of our ongoing company research program.

Integration

Where ESG factors are determined to have a material impact on profitability, they are quantified and can influence other factors, most directly in the valuation and financials of the company.

Engagement

We have active, direct dialogue with many company board members and senior management on material ESG issues, which we identify through our consideration of ESG risks. We try to gain comfort that the company’s senior management and board are aware of, and accountable for, the management of material issues. Where relevant, we encourage companies in which we invest to improve their ESG disclosure.

"By favouring companies with sustainable competitive advantages, strong financials, quality management and predictable earnings we can deliver superior returns and protect from downside risks."

"Sustainability is one of the six
factors that we assess when evaluating a company’s investment credentials."

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.

Learn more through our interactive case studies map

Team Climate Change Statement

Climate change is an issue that we evaluate when considering the sustainability of a company’s activities. Although climate change may not be an important short-term issue for some stocks, it may be an important long-term issue for stocks with sensitive exposure to trends in climate change.

Our comprehensive research process assesses every potential investment on a range of factors, including sustainability. Carbon risk is considered as part of the sustainability rating.

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.

^{_{Proxy voting information is as at 31/12/2019

Source: First State Investments / CGI Glass Lewis}}

Voting Independence

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.

More information

View First Sentier Investors proxy voting record and statistics

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In Australia ‘Colonial’, ‘Colonial First State’, ‘CFS’, and ‘First State Global Asset Management’ are trade marks of Colonial Holding Company Limited and ‘Colonial First State Investments‘ is a trade mark of Commonwealth Bank of Australia (the Bank) and all of these trade marks are used by First Sentier Investors under licence.

On 16 September 2019, Colonial First State Global Asset Management (CFSGAM) rebranded to First Sentier Investors. Any content produced prior to this date may be branded CFSGAM and include trade marks that First Sentier Investors is permitted to use under licence.

The product disclosure statement (PDS) and Information Memorandum (IM) for the Colonial First State Global Listed Infrastructure Securities Fund-Class A, ARSN 157 876 134 (Fund) issued by Colonial First State Investments Limited (ABN 98 002 348 352, AFSL 232468) (CFSIL) should be considered before making an investment decision. The PDS or IM are available from First Sentier Investors on its website.

Total returns for the Funds have been calculated using exit prices after taking into account all ongoing fees and assuming reinvestment of distributions. No allowance has been made for taxation. Past performance is no indication of future performance.

Any opinions expressed in videos are the opinions of the individual participant and are subject to change without notice. Such opinions are not a recommendation to hold, purchase or sell a particular financial product and may not include all of the information required to make such a decision. Before making any such decision you should consult a financial adviser.

Copyright © First Sentier Investors (Australia) Services Pty Ltd 2020, (part of First Sentier Investors, a global asset management business. First Sentier Investors is ultimately owned by Mitsubishi UFJ Financial Group, Inc MUFG.)

Approach to Responsible Investment

Stewardship and ESG integration

Case studies

Climate change

Carbon footprint

Proxy voting

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