We firmly believe the actions of companies and their executives affect the long-term interests and value for shareholders.

As a fiduciary acting on behalf of our clients, we have a responsibility to examine a range of financial and non-financial factors that may impact the operational efficiency and financial performance of companies in which we invest. Since sustainability issues may have sizeable financial impact on companies, we analyse risks and opportunities associated with Environmental, Social, Governance and Workplace (ESGW) factors alongside traditional financial analysis. The guiding principle for incorporating ESGW signals into our investment process focuses on how these factors may enhance or detract from shareholder value over both short-term and long-term horizons.

We have been pro-actively conducting investment research on ESGW since 2007 and have been a leader in incorporating these factors in systematic portfolios ever since.

Vinva’s investment style utilises a systematic approach to the implementation of multiple investment insights. ESGW factors are treated no differently to any other investment insight – if there is a clear economic reason enabling them to forecast returns, and the market is not correctly pricing the factor, then we will add it to our suite of investment signals.
ESGW integration is part of our investment process, in particular, the quantitative analysis phase. We collect proprietary and publicly available data on a number of environmental, social, governance and workplace factors (400+ measures) which can be incorporated into our stock forecasting models and used in predicting future company operating and financial performance.

We also leverage our strong counterparty and vendor relationships to source custom data. This allows us to obtain bespoke data on specific areas of interest.

Environmental Factors

Vinva considers the potential financial and economic implications of environmental issues on companies’ operational efficiency and financial performance. We use proprietary sources and multiple third-party data providers to obtain data on environmental factors and companies’ policies on environmental issues. A range of environmental factors are incorporated into our alpha signals as part of our quality signal family, for example emissions and waste intensity, environmental disclosure, company-level environmental policies and so on. In addition, we are able to quantify exposures to certain environmental factors, allowing us to assess portfolios exposures to particular environmental themes.

Given the improving data environment around company carbon emissions disclosures and other forms of environmental reporting, we continue to monitor this area and expect to be able to incorporate a wider range of environmental information over time.

 Social Factors

Vinva considers social issues as part of its evaluation of how companies are run and their abilities to generate future profits. Economically important social factors are treated consistently with other investment signals to forecast future company earnings and stock returns.

Within the social category, we also collect information on relevant and economically important social factors such as customer satisfaction, human and labour rights, anti-slavery policies, business ethics, bribery, whistleblower protection and so on. These factors contribute to the overall social factor score for each company in our investible universe, which feeds into our quality signals alongside information from our environmental and governance factors. Companies with poor social policies are likely to be exposed to higher levels of legal risk, or loss of reputation, which negatively impacts future shareholder value creation.

Governance Factors

We believe there is a strong linkage between corporate governance and future returns and value creation for shareholders.  We assess stocks based on multiple governance factors including board quality and experience, board independence, independence of the audit and remuneration committees, the quality of risk management systems and the quality of the CEO. Governance data is collected regularly from multiple sources and is transformed into a score for each stock which feeds into our quality signals on a daily basis. 

ESG Stewardship

• Voting at shareholder meetings
• Engagement with current investee companies on ESG issues
• Participating in class actions
• Advocacy

Our ESG Stewardship Policy sets out our position on corporate governance issues such as proxy voting, engaging with investee companies on governance, environmental and social issues as well as class actions and reporting. The Policy has been approved by both our ESG Stewardship Committee and the Vinva Board of Directors. We take into account guidelines and standards of various groups, including the Australian Stock Exchange, the Australian Council of Superannuation Investors, the UK Corporate Governance Code and the ICGN Global Stewardship Principles. Our Policy will be reviewed regularly to ensure it remains relevant.

Proxy Voting

Voting rights are part of shareholder value and we therefore aim to vote on all resolutions at annual and extraordinary general meetings held by companies in which we invest. This includes all companies in the S&P/ASX300 index and the MSCI All Countries World Index (ACWI). Our policy is designed to ensure that we vote proxies in the best interest of our clients.

We receive proxy voting research reports for each meeting from Ownership Matters and CGI Glass Lewis for Australian meetings.  We use this research to assist us in making our decisions, while taking into account any other factors we believe may be relevant. All voting decisions for Australian companies are made by Vinva and based on our voting policy.

Globally, we have retained Institutional Shareholder Services (ISS) to provide research analysis and vote proxies in accordance with the ISS global voting guidelines on behalf of our global pooled fund and global mandate clients. 

The implementation of both Australian and international voting is outsourced to ISS. Using ISS’ proxy voting solution allows Vinva to control our voting policy and final vote decisions while outsourcing the processing and management aspects of the process to a reliable partner.  They receive clients’ proxy ballots, work with custodians, execute votes on clients’ behalf, maintain voting records and provide reporting to deliver a complete end-to-end solution.

We use our best efforts to exercise our voting rights, however, in some circumstances it may be impractical or impossible for us to vote. For example, in international markets where share blocking applies we typically will not vote due to liquidity constraints. We will also not vote when manual voting via fax is required.

Voting statistics

Environmental and Social Issues

Generally, Vinva will apply a common approach to evaluating social and environmental proposals. Our overall principle focuses on how the proposal may enhance or protect shareholder value in either the short term or long term and a variety of factors goes into each analysis.

Say on Climate (SoC) Management Proposals

We expect all companies to provide public disclosures in accordance with the International Sustainability Standards Board (ISSB), the Taskforce for Climate-related Financial Disclosures (TCFD) framework or the Australian Accounting Standards Board (AASB) new Australian Sustainability Reporting Standards (ASRS Standards) once finalized.

Vinva will vote on a case-by-case basis on management proposals that request shareholders to approve the company’s climate transition action plan, taking into account the completeness and rigour of the plan, among other aspects.

Diversity

Vinva will also review the percentage of female directors on a board with the aim of 30% of female directors on any ASX300 company board.  We may take this into account when voting for directors who hold positions on the nomination committee and when engaging with companies.

Shareholder Proposals

 

Generally, Vinva will vote on all environmental and social shareholder proposals on a case-by-case basis, examining primarily whether implementation of the proposal is likely to enhance or protect shareholder value.

 

We will consider supporting a shareholder proposal if:

 

• the request is focused on enhanced disclosure of the company’s governance and/or risk oversight
• the adoption of the request would protect our clients’ interests as minority shareholders; or
• the request would advance progress on our stewardship priorities, including affirming a company’s good practice or prior commitment.

 

Company Engagement

 

In addition to voting, Vinva may enter into dialogue with a company if we have concerns in relation to corporate governance, environmental or social issues.  Engagement may be in the form of correspondence, phone calls, or meetings.

 

For Australian investee companies, we aim to communicate with companies regarding any issues where we have voted AGAINST management.  These issues are prioritised based on how contentious the issue is and/or size of the shareholding.  Communication of concerns regarding governance and proxy voting issues may occur prior to or after the annual general meeting.

 

We also undertake face-to-face meetings with companies to discuss upcoming AGMs and any governance issues, as well as targeted campaigns around modern slavery and climate reporting.

 

Partnering with ISS on global engagement complements the direct targeted engagement undertaken with Australian and global investee companies on specific themes, such as director elections, modern slavery and  and climate reporting.  This type of collaborative engagement allows us to engage and influence a wider range of companies globally given we are part of an 80 strong group of investors with greater than US$3.5 trillion dollars under management in aggregate.

 

We have partnered with ISS for engagement with global investee companies in our investable universe to represent our client’s interest in five areas of focus:

 

– Human rights;

– Labour rights;

– Environment;

– Net zero; and

– Corruption.

 

Norm-based engagement: ISS engages directly with companies (25 per quarter) that are rated as high risk across the four themes (human rights, labour rights, environment, and corruption) and have been identified by ISS’ ESG Research Team as failing to prevent or address social and environmental controversies in line with national norms such as the UN Sustainable Development Goals, UN Global Compact, OECD Guidelines for Multinational Enterprises and UN Guiding Principles.

 

Net zero: ISS engages directly with 50 companies over a three-year engagement period and aims to improve companies’ commitments to reach net zero emissions by 2050 by setting ambitious targets and clear metrics.

 

Vinva is a participant in Climate Action 100+ – an investor-led initiative to ensure the world’s largest corporate greenhouse gas emitters take necessary action on climate action.  It consists of 700+ investors globally with over US$68 trillion in assets.  There are currently 170 focus companies, 14 of which are Australian.  Vinva is a contributing investor involved in collaborative engagements with specific focus companies.

 

Conflicts of Interest

Vinva has a comprehensive stand-alone Conflicts of Interest Policy that addresses a range of conflicts we have identified.  In addition, we maintain a register that identifies key conflicts of interest and describes systems in place to mitigate the risks.  

Where there is deemed to be a conflict, when voting at a client’s or service provider’s annual general meeting, the voting decision is outsourced to Ownership Matters for Australian companies and to ISS for global companies.

Advocacy

 

Vinva is committed to sustainability and responsible investing and we collaborate with organisations that seek to support a number of ESG priorities including the transition to a low-carbon environment.

 

 

 

 

 

 

 

Vinva is a signatory to the Principles of Responsible Investment (PRI) and our approach is closely aligned with these Principles.  We are a supporter of the Financial Stability Board’s Task Force on Climate-related Financial Disclosures (TCFD) and encourage companies to consider whether they have material exposure to climate change risk by reference to the recommendations of the TCFD and, if they do, to consider making the disclosures recommended by the TCFD. In 2023, Vinva produced its first TCFD report.

 

Vinva is a participant in Climate Action 100+ – an investor-led initiative to ensure the world’s largest corporate greenhouse gas emitters take necessary action on climate action.  It consists of 700+ investors globally with over US$68 trillion in assets.  There are currently 170 focus companies, 14 of which are Australian.  Vinva is a contributing investor involved in collaborative engagements with specific focus companies.

 

Class Actions

 

Vinva’s ESG Stewardship team is responsible for shareholder class actions.  We believe it is our fiduciary duty to recover losses incurred from fraud in securities class actions on behalf of our clients.  The decision to participate in a class action will depend on a number of issues, including whether it is a good course of action, eligibility to participate, size of potential loss, the chance of recovery, and any costs involved in participating.

 

Reporting

 

A comprehensive record of voting is provided on a quarterly and/or annual basis to clients. This report includes every resolution voted and records our reasoning for any vote AGAINST management. Aggregate voting statistics will be disclosed annually on our website as required by the Financial Services Council.  We also provide reporting on our engagement activities on a regular basis.  A more detailed ESG Stewardship report will be provided annually.

If you have any questions regarding this Policy, please contact us as follows:

Vinva Investment Management Limited
Level 27, 259 George Street
Sydney NSW 2000
Tel: +61 2 8298 4700
Fax: +61 2 8298 4777