Investment stewardship
Looking after and enhancing our clients’ assets for the long term.
Our responsibility
As a fiduciary investor, we advocate for sound corporate governance and sustainable business practices that result in long-term value creation for our clients.
Engaging with companies
We engage company leadership on key topics emphasising governance practices including management of environmental and social factors that potentially have material economic, operational or reputational ramifications for the company. The purpose of engagement is to provide companies with our feedback as a long-term investor and to understand a company’s approach. Where and when appropriate, in our voting we hold directors accountable for their action or inaction on material governance matters.
Voting
In determining how to vote at shareholder meetings, we take into consideration a number of factors and inputs including a company’s disclosures, external proxy research and our past engagements. Where necessary, we will also engage with company leadership to ensure we cast informed votes aligned with clients’ long-term interests. We aim to cast votes at the shareholder meeting of every company in which our clients hold shares as we believe voting is an important feedback mechanism between companies and investors.
Promoting thought leadership
In conjunction with BlackRock’s Global Public Policy Group, we engage on public policy issues to evolve industry best practices and governance regulations.
Engagement priorities
Our engagement priorities promote sound corporate governance and business practices that are consistent with sustainable long-term financial returns. We determine our engagement priorities based on our observation of market developments and emerging governance practices, and evolve them year over year as necessary.
Board quality
We focus on board composition, effectiveness and accountability as a top priority. In our experience, most governance issues require board leadership and oversight. We engage to better understand how boards assess their effectiveness and performance, as well as their position on director responsibilities and commitments, turnover and succession planning, crisis management, and diversity.
Corporate strategy and capital allocation
We expect boards to be fully engaged with management on the development and implementation of the company’s strategy. Companies should succinctly explain their long-term strategic goals, the milestones that demonstrate progress, and any obstacles anticipated or incurred.
Compensation that promotes long-termism
We expect executive pay policies to use performance measures that are closely linked to the company’s long-term strategy and goals to ensure executives are rewarded for delivering strong and sustainable returns over the long-term, as opposed to short-term hikes in share prices.
Environmental risks and opportunities
Sound practices in relation to the material environmental factors inherent to a company’s business model can be a signal of operational excellence and management quality. Environmental factors relevant to the long-term economic performance of companies are typically industry-specific, although in today’s dynamic business environment some, such as regulation and technological change, can have a broader impact. Corporate reporting should help investors and others understand the company’s approach to these factors and how risks are integrated and opportunities realised.
Human capital management
In a talent constrained environment, we view a company’s approach to human capital management as a potential competitive advantage. We expect disclosure around a company’s approach to ensuring the adoption of the sound business practices likely to create an engaged and stable workforce.
We are a global team with a local presence
Our global approach to stewardship gives us the reach to better understand a company’s regional risks and challenges, with a local presence to understand the context within which those companies operate. We are positioned as an investment function because stewardship is core to value creation.
