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Threadneedle Asset Management Ltd

PRI reporting framework 2017

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Process

Process for engagements run internally

LEA 03. Process for identifying and prioritising engagement activities

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

03.1. Indicate whether your organisation has a formal process for identifying and prioritising engagement activities carried out by internal staff.

03.2. Describe the criteria used to identify and prioritise engagement activities carried out by internal staff.

other description

          Around general meetings; high levels of shareholder dissent; contentious or high-profile issues; client queries/interest; companies identified by internal screening; social/sustainability impact
        

03.3. Additional information. [Optional]

Prioritisation, planning and the scope for collaboration are important factors in shaping our engagement objectives and activities. Engagement prioritisation is done in a number of ways, such as: issues highlighted by ESG stock reviews, which form the part of every mainstream stock review; quarterly screening and monitoring of holdings; via the proxy voting process identifying issues; company events.

Throughout this, the RI team works with the relevant investment professionals. Engagement is also guided by their preferences, ideas and concerns.

The decision to intervene is prioritised based on our assessment of the significance of issues to the company, the risks to our clients, relative holdings, scope to effect change and opportunities to collaborate. Internal escalation procedures will be followed if the decision to intervene is made.


LEA 04. Objectives for engagement activities

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

04.1. Indicate if you define specific objectives for your engagement activities.

04.2. Indicate if you monitor the actions that companies take following your engagements.

04.3. Indicate whether your organisation defines milestones and goals for engagement activities carried out by internal staff.

04.4. Indicate if you do any of the following to monitor and evaluate the progress of your engagement activities carried out by internal staff.

04.5. Additional information. [Optional]

We take a proactive approach to engagement; there are different levels depending on the situation. We maintain thorough records of our engagements, including attendees, holdings, topics, questions, previous voting history and notes from prior engagements. The performance of companies with which we have engaged is subject to review per the investment process. Regular meetings with companies also serve to update us on progress. We recognise that some of the issues that we engage on are longer term themes.

Meetings before and after engagements take place to clarify aims and objectives for the engagement. Each meeting has one leader whose responsibility it is to draw together an agenda and lead discussion.

Meeting notes are uploaded to our research sharing platform where we maintain and disseminate notes and records of meetings. This allows the information to be distributed throughout the firm, specifically to the relevant investment professionals. This serves as a means on monitoring progress.

Where goals are not met, the matter may be escalated and the decision made to intervene (as described in LEA 01.04). Engagement outcomes may also result in an investment decision being made.

On a quarterly basis, we screen our preferred holdings according to various ESG criteria. The results of this are then distributed throughout the investment department. This serves as another way to highlight issues and prioritise company engagement.

We view proxy voting as one of the most powerful ways in which to signal disapproval of a company strategy. All decisions are taken in collaboration with our portfolio managers and analysts. Watchlists are maintained within ISS Proxy Exchange. This allows us to review performance where there have been ESG concerns and to reflect this in our proxy voting research and subsequent action which may or may not include engagement.

 


Process for engagements conducted via collaborations

LEA 05. Process for identifying and prioritising collaborative engagement

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

05.1. Indicate whether your organisation has a formal process for identifying and prioritising collaborative engagements

05.2. Describe the criteria used to identify and prioritise collaborative engagements

other description

          High-profile events; investor and press attention; where we deem engagement necessary; encouragement to improve standards
        

05.3. Additional information [Optional]

We are active in the PRI Clearinghouse and monitor engagements underway. Likewise, through our other member organisations we are informed of and linked in to collaborative initiatives.

When deciding whether to undertake a collaborative engagement, the RI team will first review the proposed engagement in the context of our RI policy and approach, as well as our exposure to the issue or company. A decision will then be taken within the team and where relevant with the appropriate equity desk or analysts to join the initiative. As described in LEA 04.05, matters may be escalated internally prior to initiating an engagement.

We will only join initiatives where the interests of our clients are aligned with the wider group and there is a common purpose. An example of a collaborative engagement which may not be as high profile include CDP initiatives; the outcome of which will be to increase availability of data, enhance transparency and encourage companies.

This year, we have continued to be a member of the steering group and a lead investor in PRI's employee relations, human rights, water risks and as part of the Sustainable Stock Exchange initiative. We are also part of the conversation around supporting productivity with long-term capital and part of a number of other engagements focusing on accounting and capital authorities.


LEA 06. Objectives for engagement activities

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

06.1. Indicate if you define specific objectives for your engagement activities carried out collaboratively.

06.2. Indicate if you monitor the actions companies take following your collaborative engagements.

06.3. Indicate whether your organisation defines milestones and goals related to engagement activities carried out via collaborations.

06.4. Indicate if you do any of the following to monitor and evaluate the progress of your collaborative engagement activities.

06.5. Additional information. [Optional]

By virtue of the collaborative engagement there are regular opportunities to review and present outcomes to the wider group as part of a formalised process. This is a main benefit of group engagement. Internally, we maintain records of companies involved and the outcome of discussions. 

As with company engagement,  information gathered (as well as aims, progress, outcomes) are disseminated internally and, as appropriate, uploaded into the investment research platform per company, theme etc. to form part of portfolio manager/analyst investment and review process.


General processes for all three groups of engagers

LEA 09. Share insights from engagements with internal/external managers

09.1. Indicate if insights gained from your engagements are shared with your internal or external investment managers.

Type of engagement

Insights shared

Individual/Internal staff engagements

Collaborative engagements

09.2. Additional information. [Optional]

The RI team is embedded within the investment department and, as such, the work of the team – including engagement-related - form part of investment research and portfolio stewardship; investment decisions make be taken as a result of engagements. Summarised write-ups alongside meeting notes are circulated to relevant analysts and portfolio managers as well as being stored within the investment department’s research sharing platform.

Engagements are reviewed as part of the proxy voting and ESG stock review process. Insights passed on are monitored through their inclusion in internal review notes, at stock meetings and their use in the mainstream meetings of fund managers.


LEA 10. Tracking number of engagements

10.1. Indicate if you track the number of engagements your organisation participates in.

Type of engagement
Tracking engagements

Individual / Internal staff engagements

Collaborative engagements

10.2. Additional information. [OPTIONAL]

Our integrated investmen process means ESG considerations form part of company research and engagements. There were around 3,000 meetings led by fund managers and analysts from the investment department. The number of meetings led by members of the RI team numbered 166 last year, from 133 individual companies. The RI  engagements focus specifically on environmental, social and governance issues, whereas investment desk-led meetings tend to focus on operational and strategic concerns. The RI team engagements are tracked in full and the number is over and above any ESG-related matters discussed in the investment desk-led meetings.

As an illustrative example, of the c520 meetings held by the UK investment desk in 2016, c300 were relevant for companies held in the Threadneedle Ethical UK Equity fund, where ESG matters form an important part of the discussion.

RI team-led company meetings are recorded in a team calendar with meeting notes uploaded to our research-sharing platform, attached to individual companies and disseminated throughout the firm. As part of our (public) quarterly ESG report, we list all companies engaged with per quarter, alongside a selection of case studies.

For further information, please refer to LEA 11.05.


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