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Impax Asset Management

PRI reporting framework 2017

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(Proxy) voting and shareholder resolutions

Overview

LEA 17. Voting policy & approach

New selection options have been added to this indicator. Please review your prefilled responses carefully.

17.1. Indicate whether your organisation has a formal voting policy.

17.2. Indicate what your voting policy covers:

17.4. Provide a brief overview of your organization’s approach to (proxy) voting.

Proxy voting is a key component in the ongoing dialogue with our companies. We are committed to ensuring consistent exercise of voting rights associated with shares held in investment mandates where proxy voting has been delegated to us. Through implementation of our voting policy, we aim to enhance the long-term value of our shareholdings and to foster corporate governance best practices.

Impax’s policy is to vote all shareholder meetings and on all shares held on behalf of all our investors who have granted us the voting rights. In some markets there are costly and administratively burdensome Powers of Attorney rules that may in some rare events prevent effective voting.

Impax has developed a governance framework, as part of our ESG-analysis, which is driven by country-level governance rules, codes and best practice. We analyse whether companies’ governance structures deviate from local governance codes or best practise. Where companies deviate from codes and best practice, we engage with the companies and can vote against a management resolution. We always endeavour to notify a company prior to AGM, or at least afterwards if we have voted against or abstained on a resolution.

In 2016 Impax voted 2,316 resolutions at 196 company meetings globally.

 

17.5. Provide an overview of how you ensure your voting policy is adhered to, giving details of your approach when exceptions to the policy are made (if applicable).

Impax’s listed equity operations, including its voting activities have been audited and received full ISAE 3402 certification (International Standards for Assurance Engagement) every year since the fiscal year ending September 30, 2012.


Process

LEA 18. Typical approach to (proxy) voting decisions

18.1. Indicate how you typically make your (proxy) voting decisions.

Approach

Based on

18.2. Additional information.[Optional]

Impax uses ISS’ electronic voting platform and we assess the ISS advisory recommendations for voting, however ultimately determine our voting based on our Governance Framework and company-specific ESG-analysis.

Impax’ listed equity operations, including its voting activities have been audited and received full ISAE 3402 certification (International Standards for Assurance Engagement) every year since the fiscal year ending September 30, 2012.


LEA 19. Percentage of voting recommendations reviewed (Not Applicable)


LEA 20. Confirmation of votes

New selection options have been added to this indicator. Please review your prefilled responses carefully.

20.1. Describe your involvement in any projects to improve the voting trail and/or to obtain vote confirmation .

          There is an increasing interaction between us and the companies (and their representatives) in ensuring voting and voting confirmation both before and after voting. We take actively part in these interactions and confirmations.
        

20.2. Additional information. [OPTIONAL]

          
        

LEA 21. Securities lending programme

New selection options have been added to this indicator. Please review your prefilled responses carefully.

21.1. Indicate if your organisation has a securities lending programme.

21.3. Additional information.

          Impax is currently not conducting any stock lending, however we are aware of the possible effects on proxy voting from stock lending, would our stance to stock lending change in the future.
        

LEA 22. Informing companies of the rationale of abstaining/voting against management

New selection options have been added to this indicator. Please review your prefilled responses carefully.

22.1. Indicate whether you or the service providers acting on your behalf raise any concerns with companies ahead of voting

22.2. Indicate whether you and/or the service provider(s) acting on your behalf, communicate the rationale to companies, when , you abstain or vote against management recommendations.

22.3. Additional information. [Optional]

We have a relatively small number of companies we vote for every year, we therefore ensure we analyse the resolutions in detail and use proxy voting as an opportunity to engage with companies.

Impax has developed a governance framework, as part of our ESG-analysis, which is driven by country-level governance rules, codes and best practice and we analyse whether companies’ governance structures deviate from local governance codes or best practise. Where companies deviate from codes and best practice, we engage with the companies and can vote against a management resolution. We always endeavour to notify a company prior to AGM, or at least afterwards if we have voted against or abstained on a resolution.


Outputs and outcomes

LEA 23. Percentage of (proxy) votes cast

23.1. For listed equities where you and/or your service provider have the mandate to issue (proxy) voting instructions, indicate the percentage of votes cast during the reporting year.

Votes cast (to the nearest 1%)

97 %

Specify the basis on which this percentage is calculated

23.2. Explain your reason(s) for not voting certain holdings

23.3. Additional information. [Optional]


LEA 24. Proportion of ballot items that were for/against/abstentions

24.1. Indicate if you track the voting instructions that you and/or your service provider on your behalf have issued.

24.2. Of the voting instructions that you and/or third parties on your behalf issued, indicate the proportion of ballot items that were:

Voting instructions
Breakdown as percentage of votes cast
For (supporting) management recommendations
92 %
Against (opposing) management recommendations
8 %
Abstentions
0 %
100%

24.3. Describe the actions you take after voting against management recommendations.

          Our approach towards voting in 2016 remained similar to previous years, in that it is closely linked to our ESG-analysis and we closely follow AGM/proxy statement developments at our companies from year to year. These are catalysts to many of our governance-related company engagements. We pay particular attention to votes and related engagements in the companies where we have large shareholdings. A specific proxy-related engagement has been on companies with "entrenched boards" (average tenure >10 years and no new directors in the last 5 years). We have endeavoured to engage with these companies pre voting and at least afterwards, to seek improvement. We have found that companies with entrenched boards, management diversity tends to be weaker, but these companies are also more often laggards in terms of development of robust sustainability processes and reporting.
        

24.4. Additional information. [Optional]


LEA 25. Shareholder resolutions

New selection options have been added to this indicator. Please review your prefilled responses carefully.

25.1. Indicate if your organisation directly or via a service provider filed or co-filed any ESG shareholder resolutions during the reporting year.

25.6. Additional information. [Optional]

We believe that we can be more constructive and ultimately in the long-term more influential with our investee companies, if we interact and engage directly with the company on specific concerns. Public statements or filing resolutions would be last resort activities in exceptional circumstances of escalation.


LEA 26. Examples of (proxy) voting activities

New selection options have been added to this indicator. Please review your prefilled responses carefully.

26.1. Provide examples of the (proxy) voting activities that your organisation and/or service provider carried out during the reporting year.

Topic or ESG issue
          Entrenched board, US water infrastructure company.
        
Decision made by
Objectives

Engage with company regarding an entrenched board structure.

Scope and Process

Company board is increasingly entrenched with 7/9 directors having served on the board for 8-10 years (since spin-off) and the latest new director was appointed 4 years ago. The average tenure is not that high (as the directors have mostly worked together since the spin-off 10 years ago), but we would much rather see a spread of a few new directors, some who have served ~ 5-10 years and a few who have been longer (not possible here). We also note that 5/9 directors today, also still serve at the previous parent’s board, which seems “clubby” and not dynamic for a company that has been independent for 10 years. While age and experience is valuable, many companies have policies in place for tenure/age. Here all directors who have served for 8-10 years are in their 70s and 80s, adding to the sense of entrenchment. We believe that the most effective boards have a variety and diversity of tenure, experience, gender and even age. To express this view we have therefore withheld our vote on the two directors most directly responsible for the development of the board structure, i.e. the Chair of the Board and the Chair of the Nominations committee.

Outcomes

Fed-back ahead of vote to company voting representatives. Call to discuss the board structure post-AGM. This engagement is still on-going.

Topic or ESG issue
          Lack of transparency and disclosures regarding director employment terms and remuneration. Israeli water infrastructure company.
        
Decision made by
Objectives

Clarification regarding new Director employment terms and compensation for AGM resolution, lack of transparency. Objective to avoid weak transparency in the future.

Scope and Process

Emailed the company General Counsel before vote and AGM with our concerns.

Outcomes

Company clarified the employment terms and compensation structures of the new director, which were all satisfactory. We voted FOR this particular resolution as part of the AGM, but pointed out to the company the importance of transparency and also the timely engagement with the proxy voting advisers (who recommended voting AGAINST due to lack of transparency).

Topic or ESG issue
          Shareholder resolution requesting sustainability reporting. US energy efficiency company.
        
Decision made by
Objectives

Company has faced several years of shareholder resolutions calling for an introduction of sustainability reporting. At the 2016 AGM 60% of shareholders (including Impax) voted for the introduction of a sustainability report by the company. Impax wrote a letter to the company to highlight the importance and benefit with reporting. We also raised the issue about the company's entrenched board structure.  

Scope and Process

Impax wrote a letter to the company to highlight the importance and benefit with reporting. We also raised the issue about the company's entrenched board structure.  

Outcomes

Company was unresponsive, despite several contacts. A few months later, it was announced that the company was being acquired.

26.2. Additional information. [Optional]


Communication

LEA 27. Disclosing voting activities

27.1. Indicate if your organisation proactively discloses information on your voting activities.

27.2. Indicate if the information disclosed to the public is the same as that disclosed to clients/beneficiaries.

27.3. Indicate the voting information your organisation proactively discloses to the public and/or to clients/beneficiaries.

Indicate how much of your voting record you disclose

Indicate what level of explanation you provide

27.4. Indicate how frequently you typically report voting information.

27.8. Additional information. [Optional]


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