Stewardship and ESG integration
We consider ESG risks to be factors that may place business value at risk. Companies at risk are identified using both external providers and our own internally driven research, which is based on a systematic and extensive company meeting program.
Company meetings provide us with the opportunity to engage on ESG issues and gain greater insight into potential risks and opportunities. It also provides us with the opportunity to positively influence companies towards ESG best practice where appropriate.
Identified ESG risk factors are used to assist in developing the quantitative and qualitative assumptions used by analysts in their assessment of industries and stocks. This analysis is vigorously stress tested and screened under a peer review process. This process seeks to highlight the analyst's and team's conviction in the target price and buy/sell recommendation.
Assessment and monitoring
ESG risks are primarily identified by the team's own internally-driven research, which is based on a rigorous company engagement programme. Analysts assess how companies are managing ESG issues and encourage the entities in which they invest to improve their ESG performance and disclosure.
ESG considerations are used to help develop quantitative and qualitative risk assumptions in analysts' assessment of industries and stocks, and are overlaid in target price and stock recommendations.
We have active dialogue with chairpersons and/or senior company 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 we feel material issues are not being appropriately addressed it can ultimately flow into our proxy voting and investment decisions.
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.
Disclaimer: Reference to specific securities (if any) is included for the purpose of illustration only and should not be construed as a recommendation to buy or sell the same. All securities mentioned herein may or may not form part of the holdings of First Sentier Investors’ portfolios at a certain point in time, and the holdings may change over time.
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 Sentier Investors / CGI Glass Lewis
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.
(Source: First Sentier Investors Responsible Investment & Stewardship Report 2019)