ESGW and ESG Stewardship
We firmly believe the actions of companies and their executives affect the long-term interests and value for shareholders.
Actively exercising our stewardship responsibilities is an integral part of Vinva’s approach to ESG. Stewardship is also known as active ownership.
Vinva’s stewardship approach includes the following:
- Voting at shareholder meetings
- Engagement with current investee companies on ESG issues
- Participating in class actions
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.
Environmental, Social, Governance and Workplace issues
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 ESGW 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.
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.
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
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 email 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 TCFD.
Partnering with ISS on global engagement complements the direct targeted engagement undertaken with Australian and global investee companies on specific themes, such as net zero commitments and TCFD 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;
- Net zero; and
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 SDGs, UN Global Compact, OECD Guidelines for Multinational Enterprises and UN Guiding Principles.
Net zero: ISS engages directly with 30 companies over a two-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 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.
As a signatory to the Carbon Disclosure Project since 2012, we actively participate in the Non-Disclosure Campaign for our Australian investee companies and will expand to our global investee companies in 2023. The campaign concentrates on general climate change disclosure as well as forestry and water disclosures.
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.
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