Fostering dialogue

UBS Asset Management | Stewardship Annual Report 2018

25. Okt 2019

Our approach to stewardship

It is UBS Asset Management's firm belief that engagement and proxy voting are intrinsic parts of the investment process. That is why we have been reporting on our stewardship activities for over two decades, alongside our sustainable investing efforts. These activities are carried out by our research and stewardship team, who are also responsible for ESG integration. Their work spans the asset classes.

We firmly believe that an effective stewardship strategy can be instrumental in helping investors meet societal targets as well as offering a way of adding financial value.

UBS-AM makes a commitment to companies: to enter into a dialogue of the highest quality. We aim to build relationships with company management which foster a healthy two-way conversation and enhance performance across a variety of Environmental, Social and Governance (ESG) issues.

Through our engagements we share our expectations of corporate management and encourage best practice to enhance long-term value. We are committed to principles of good stewardship and are supportive of best practice codes such as:

  • The International Corporate Governance Network (ICGN) Global Stewardship Principles
  • UK Stewardship code
  • The Japanese Stewardship code
  • The Hong Kong SFC Principles for Responsible Ownership
  • The investor led ISG Stewardship framework in the USA
  • The Australian FSC Standard 23 on Principles of Internal Governance and Asset Stewardship

UBS' engagement activities can be broken up into four major categories: thematic, reactive, proxy voting and proactive. Our stewardship activities cover both active and passive investment strategies and voting is a key component of our approach. Where we believe the effectiveness of engagement can be enhanced, we are willing to work both formally and informally with collective bodies or collaborate with other shareholders. Where we believe the effectiveness of engagement can be enhanced, we are willing to work both formally and informally with collective bodies or collaborate with other shareholders.


Our commitment on constructive dialogue

We believe in building relationships with the corporate management we engage with. We are asking our investee companies to be responsive to our invitations for dialogue and provide material and forward looking information to us. Equally, companies can expect the following behavior from us to allow for fruitful and effective conversations:

The four pillars of UBS-AM's stewardship activities

Dialogues within the first three pillars are generally conducted by the Sustainable and Impacting Investing (SI) team who will consult with the relevant analyst (in the case of companies actively held) to prepare for the meeting, align messages and conduct joint meetings when possible/relevant. Engagements driven by financial analysis are led by investment teams with support from the SI team to identify engagement objectives, develop an engagement plan and define voting decisions.

Active and Passive holdings


Engagement and proxy voting: an overview

Items related to business strategy and governance have been commonly raised in our meetings with companies. In addition, engagements have also focused on climate change action, human capital and the impact of products and services.

Engagements in 2018

Proxy voting

We have been voting on a discretionary basis on behalf of our clients since 1995. We implemented our first internal voting policy in 1998. In the 12 month period ending 31 December 2018, we submitted votes at 10,024 company meetings across 57 markets.

This represented 94% of meetings where a vote could have been cast on behalf of at least one portfolio. The meetings we voted at during the period comprised 97,881 resolutions proposed by both company boards and shareholders. We declined to support the recommendations of management on 13,125 resolutions.

Total number of meetings voted in region in 2018

Following the launch of our Climate Aware strategy in Q1 2017, we reviewed our voting principles, and since then we have expected companies to have a strategy for reducing greenhouse gas emissions, to be clear about goals, and to report on progress.


Fostering policy dialogue through collaboration

While we prefer to engage privately and directly with our investee companies, we see a strong benefit in working with others, particularly if we believe the effectiveness of engagement and the chance of success can be increased. That is why we have allocated resources to participate in the following initiatives:

  • PRI working group on SDGs in active ownership
  • IIGCC working group on scenario analysis
  • Climate Action 100+

Another key element of our stewardship activities is meaningful discussions with policy makers, as they ensure we can provide feedback on changes that could detrimentally affect our clients’ interests or rights.

In this report we highlight two particular topics we shared our comments on with policy makers in the last 12 months:

  • Consultation on UK Corporate
  • Governance Code and Joint investors statement on climate change
     

Proxy voting case study


SI insights

 

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