Our approach to stewardship

We take an active and holistic approach to stewardship through a clear and structured program that fully aligns with clients’ investment beliefs, policies and requirements. 

15. Apr 2021

As an investment manager, is our fiduciary duty to monitor companies’ ESG performance, engage with management on identified risks and opportunities and vote consistently at shareholder meetings. Ultimately, the insights of our stewardship activities feed into our investment decisions and form an inextricable part of the SI integration process.  Stewardship is embedded in our SI approach.

We believe that managing both active and passive strategies creates synergies which we can bring to our stewardship approach. On the one hand active strategies can benefit from the increased exposure to companies generated by passive strategies which can lead to stronger corporate access and a greater ability to influence management. On the other, the in-depth knowledge of expert financial analysts with sector expertise, and their relationships with corporate management, can benefit passive strategies.

Stewardship: the active strategy perspective in listed equity and fixed income

Our ESG integration process focuses on taking better account of material risks which could enhance investment returns and/or impact downside risks. Put simply, ESG integration involves a more holistic accounting of sustainability factors in the research process both for our listed equity and fixed income analysts. We believe this leads to better informed investment decisions which could, in turn, reduce risks and enhance performance.

Engagement as a core part of the investment process, relying on:

The UBS ESG Material Issues framework which identifies the 3 to 5 most financially relevant factors across 32 different industry sectors

The UBS ESG Risk Dashboard which combines scores and data from internal and external sources to flag companies with elevated sustainability risks

The assessment of ESG issues is oriented around the ESG Material Issues framework developed by our Sustainable Investment (SI) research analyst team. Sustainability covers a wide range of topics, so financial analysts and portfolio managers need to focus their attention on a set of key factors that could affect a company's financial performance. Our materiality framework identifies the three to five most financially relevant factors per sector that can impact the investment thesis and credit recommendation across 32 different industry sectors. This helps analysts focus on those sustainability factors most likely to influence investment returns.


To facilitate the integration of sustainability factors through the assessment of material ESG risks, UBS-AM has developed a proprietary "ESG risk dashboard” for both corporate listed equity and fixed income holdings which serves as the starting point for ESG integration. It allows equity and credit analysts to quickly identify companies with significant ESG risks via the "UBS ESG Risk Signal". It provides investment teams with a structured, holistic view of ESG risks across four different dimensions, allowing for industry relative comparisons (expressed via the UBS ESG Consensus Score) as well as the identification of outliers. If one or more pillars fail thresholds set, the issuer is flagged for severe ESG risks by the signal. Those companies will need more work to assess the material impact of the highlighted risks.


The ESG Risk Signal is incorporated into fundamental equity and credit analysts' standardized ESG templates. They conduct an ESG risk assessment as part of their investment case for their companies under coverage. They indicate whether they agree with the results, provide a rationale for their conclusions and assess the overall direction of the company's ESG performance.


For companies where an ESG risk has been identified, but where the analyst does not believe that the risk signal flag is current, appropriate or material, an additional analysis may be conducted by the SI Research Analysts which then serves as the final reference point for the portfolio manager’s investment decision making.

In this way, ESG integration creates a situation in which equity and credit analysts, SI analysts and portfolio managers discuss the implications for investment research, potential engagements and outcomes at the portfolio level. This combination ensures that portfolio managers are fully aware of any material sustainability risks that could have a negative impact on portfolio performance. This understanding allows portfolio managers to make informed decisions where their investment convictions are expressed through instrument selection and weightings and embedded in the construction of the portfolio. Within this framework, a portfolio manager may choose to invest in a company with high ESG risks where this is seen to be adequately compensated by the expected investment return. Alternatively, the portfolio manager may choose to reduce their exposure to the risks.

Mitigate (through Engagement and Voting)

If, having assessed the ESG risks, engagement is identified as a next step, dialogue with the investee company will be initiated. The sharing of ESG information and investment research in a centralized manner via our internal platforms, ensures there's a consistent and aligned voice from the firm. Our engagement insights are used to inform our voting decision making and help reiterate feedback we provide to investee companies as well as acknowledge improvements.

By the numbers

For our engagements, we set specific expectations and track progress 

How often topics are raised on total cases

Source: UBS Asset Management 2021, for illustrative purposes only

The chart titled “How often topics are raised on total cases” lists the most common topics covered by the UBS-AM engagement team in their conversations with companies.

Corporate engagement implies a two-way dialogue between investors and companies. Its objective: to enhance information and improve business performance. Discussions with corporate management are conducted around specific issues related to the business strategy, capital allocation, operational management and/or ESG risks and opportunities that could significantly impact valuations. The goal of these interactions is to collect more information and influence corporate practices in order to trigger better financial performance or creditworthiness in the long term. Investors can share their expectations of corporate management and encourage practices which could enhance long-term value. Companies, meanwhile, can explain the relationship between sustainability, their business model and financial performance. In our view, it is this two-way dialogue which defines engagement. Simply asking companies questions without providing feedback and encouraging improvements would not be classified as an engagement.

A number of factors determine which companies in our invested universe would be prioritized for in-depth research and dialogue. These include:

  • High financial exposure
  • Presence of high ESG risks and opportunities
  • History of votes against management
  • Performance on topics selected for thematic programs
  • Presence of significant controversies

At the start of each engagement, we define our priorities and objectives for the dialogue with management. Progress against these objectives is tracked in our internal platform accessible to all investment teams. In case of lack of progress, our escalation strategies may include

  • Writing to the board of the company to formalize our concerns and requests
  • Presenting a statement at the AGM
  • Supporting and/or filing shareholder resolutions
  • Eventually, decreasing or exiting a position  END OF PAGE 21

Thematic engagements

These are engagements that are focused on specific themes considered material, analyzed by available internal and external research and aligned with the overall sustainability and sustainable investment strategy of the firm. Ongoing thematic engagements in 2020 focused on:

Climate change

The engagement focuses on an original list of 49 companies in the oil and gas and utilities sectors. They have been selected based on our Climate Aware methodology, which measures the ability of companies to transition to a low-carbon economy.


The focus is on companies showing some good practice but which also display areas for improvement.


Our equity impact strategy has an explicit goal: to create positive environmental and social impact while generating competitive financial returns that connect to and support the UN SDGs.


A subset of our engagement cases focus on companies that are involved in serious breaches of international standards. The United Nations Global Compact Principles are accepted as the general reference framework for defining cases of concern.

Voting in 2020- Facts and figures

Source: UBS Asset Management, 2021.

The chart titled “Voting in 2020- Facts and figures, Number of votes cast,” lists the number of proxy votes cast globally by UBS-AM in 2020.

  • Vote in 60 countries globally
  • Seek to vote consistently and in line with UBS policy and principles across all strategies
  • For calendar year ending 31 December 2020 we submitted votes at 11,615 shareholder meetings, upon 115,222 separate resolutions, corresponding to  96% of shareholder meetings where we had an eligible position to vote
  • We voted against management recommendation on 19,288 proposals, being 16.7% of total resolutions voted.
  • Voted against management on at least 1 proposal at 64% of meetings
  • We voted against management on 614 occasions because of a lack of gender diversity as measured against our defined thresholds by markets
  • During 2020 we voted on 667 shareholder resolutions which were focused on ESG issues. 50 were related to environmental issues, 171 related to social issues and 400 related to governance issues. Overall, we supported 64% of these resolutions.
  • We supported 88% of shareholder resolutions focused on environmental issues.

Voting at shareholder meetings is a vital component of our overall approach to the effective stewardship of our clients' assets. Voting isn't an end in itself, but rather a crucial element of our oversight role. It allows us to voice our opinion to a company on a broad range of topics and is a way of encouraging boards to listen to and address investor concerns.

Voting is linked to research

It is important that proxy voting is linked to our research and investment process. If holdings are included in more than one portfolio then we aim, as far as possible, to vote consistently to send one strong, unified message to our investee companies.

Our voting process is managed by our SI Research and Stewardship team. They work closely with our fundamental investment teams to decide how to exercise our voting rights, based on our voting principles, any engagement we may have undertaken, and our knowledge of the investee company. We do not outsource our voting decisions and retain full oversight and discretion when determining how to vote on behalf of our clients and funds.

The principles outlined in our Global Proxy Voting policy provide the foundation for our voting decisions. We will always seek to review and evaluate as much information as possible, including insights gained through our research and engagement process and information obtained through third-party research. This ensures our decisions are in the best financial interests of our clients and that we avoid ‘box-ticking’ when it comes to voting. In cases where we plan to deviate from our initial policy view, our Stewardship Committee will review the reason and consider the case for and against changing the initial commendation. A majority of committee members must approve the intended vote and reasons for the final decisions are recorded, tracked and used to inform our future policy reviews. This additional oversight strengthens our decision-making process and ensures that votes remain aligned to our principles, with a consistency in our approach. 

Daily monitoring

Voting positions for all strategies where we are entitled to vote are monitored daily by our Stewardship team via the ISS Proxy Exchange electronic voting platform. This provides us with a comprehensive overview of the total number of shares we are eligible to vote upon for all shareholder meetings.

Our voting instructions are submitted and processed via the ISS platform, allowing us to track the progress of the voting rights through to the relevant custodian bank or other intermediary who is responsible for the final submission of the vote to the issuing company.

Real estate

While the primary focus is financial objectives, we believe there is a direct link between responsible property investing and long- term returns. An increasing body of evidence suggests that 'greener' buildings (in terms of both environmental and social impacts) perform better than less 'green' buildings across indexes ranging from void periods, tenant retention and rental levels.

Our Real Estate and Private Markets' (REPM) responsible investment strategy has been developed by the REPM Sustainability Workgroup. It comprises professionals from multiple countries and disciplines, ranging from engineering and construction, through to investment and business management. It sets strategies and objectives at a global level and ensures our sustainability objectives are appropriately integrated into REPM's investment strategies and property operations, in accordance with regional requirements. The responsible investment strategy is implemented by all operational functions during the entire ownership cycle of an underlying project.

Individual properties

For individual properties, sustainability performance is measured against recognized external benchmarks, such as the GRESB key performance indicators and third-party certifications (LEED, ENERGY STAR, BREEAM, MINERGIE®). Infrastructure also utilizes the GRESB Infrastructure key performance indicators and benchmark reports for individual investee companies.

Listed properties

When our alternative assets teams invest in listed real estate companies, our Proxy Voting policy applies and we regularly exercise our shareholders' voting rights. If the financial analyst- or SI analyst-led engagements focus on real estate companies, we may also share information and coordinate our efforts in the dialogue with corporate management.


The Multi-Manager Real Estate (MM-RE) team conducts engagements directly with underlying fund managers on ESG issues. Engagements may be routine in nature or based around specific transactional or recurring circumstances, such as the release of GRESB results.

ESG makes a long-term difference

Effective monitoring and engagement are essential components of the fiduciary duty on behalf of clients, and for this reason the team does not outsource any of the engagement activity. These engagements can take various forms, including written communication, conference calls, face-to-face meetings, investor meetings, AGMs etc.

ESG is also a factor in MM-RE quarterly risk assessments, a qualitative and quantitative risk assessment which uses GRESB data together with other internal measurements to rank each underlying investment for its ESG risk.

MM-RE believes ESG engagement is crucial in order to limit the risk of regulatory non-compliance, maintain properties' competitive position in the market, increase the appeal of
a property to tenants and purchasers, and in some cases, reduce expenses and improve returns. To date however, ESG risk alone has not caused an investment to be halted or a sell to take place within MM-RE.

So far, we have seen that the results of this focus and engagement have been positive, with our flagship product, GREFS, consistently achieving higher GRESB scores than the benchmark since 2014. In 2015, we were invested in one 5 star rated fund in Europe. Today, we are invested in ten 5 star rated funds.

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