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Strathclyde Pension Fund

PRI reporting framework 2017

You are in Direct - Listed Equity Active Ownership » (Proxy) voting and shareholder resolutions

(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:

17.3. Attach or provide a URL to your voting policy. [Optional]

URL

Attach document


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

While the Fund relies on its external managers to execute the vast majority of proxy voting since its meeting in March 2016 the Strathclyde Pension Fund committee agreed that on issues which have been identified by LAPFF (the Local Authority Pension Fund Forum), GES (Global Engagement Services), or officer engagement as being of particular concern, the Fund should be prepared to vote portfolio holdings directly to support its engagement strategy.

In quarter 2, in support of the ‘Aiming for A’ coalition and shareholder resolutions calling on Rio Tinto and Exxon to publish annual assessments of long term portfolio impacts of public climate change policies and asking Exxon to assess the impact on the company’s oil and gas reserves and resources under a two-degree scenario and the resilience of the Company’s portfolio of reserves and resources through 2040 and beyond, officers of the Fund voted the Fund’s holdings in support of the resolutions.

 

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).

Historically SPF's Responsible Investment policy has been firmly focused on its investment managers, this includes proxy voting and the filing and/or co-filing of shareholder resolutions. The rationale for this approach has been that: it is consistent with the Fund's policy of outsourcing the day-to-day investment function; investment managers are best placed to engage with the companies which they have researched and invested in; and consideration of ethical, social and environmental issues should be an integral part of the managers' investment processes. The Fund's voting policy requires each investment manager to vote all possible holdings and to produce quarterly voting statistics. The Fund monitors this in detail.

The Fund also recalls stock on loan to facilitate voting should the manager or officers require, this happens several time a year. Voting takes priority over stock lending.

LAPFF members sometimes choose to draft and co-file shareholder resolutions, either among themselves or in coalition with other investors. During 2015, some LAPFF members co-filed a shareholder resolution with National Express in relation to labour rights. LAPFF also worked with the Aiming for A initiative to co-file resolutions on strategic climate resilience with Shell and BP.

In addition, we receive periodic voting alerts for companies where LAPFF has identified serious ESG concerns and where attempts to engage with the company have been unsuccessful.

 


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]


LEA 19. Percentage of voting recommendations reviewed

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

19.1. Of the voting recommendations that your service provider made in the reporting year, indicate the percentage reviewed by your organisation, giving reasons.

Percentage of voting recommendations your organisation reviewed

Reasons for review

19.2. Additional information [Optional]


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 .

          Officers of the Fund have direct access to the proxy voting platform (Broadridge Proxy Edge) used by the managers. Officers monitor the upcoming votes to supervise manager activity and to intervene where necessary on specific issues/votes. The Fund's overlay provider GES had also been mandated to carry on a monitoring programme of manager voting to inform the Fund as to votes of two key themes, climate change and remuneration and also to understand if their exists any conflicts or contradiction in manager actions where a stock is held in common across several portfolios.
        

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.

21.2. Indicate how voting is addressed in your securities lending programme.


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]

The active management of the equity mandates requires managers to follow up votes against as part of the investment process.

When LAPFF issues voting alerts, the alerts contain the rationale for the vote recommended and are regularly sent to target companies for comment.


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%)

99 %

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]

Managers might not vote proxies in markets where tendering shares to vote entails their being blocked from trading during the voting periods. We now see this very infrequently and tends to effect only small companies in emerging markets.


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
89 %
Against (opposing) management recommendations
10 %
Abstentions
1 %
100%

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

          The Fund's managers will conduct follow engagement with companies where votes have been cast against management. The managers are instructed to communicate the reason for the vote against and suggest actions/changes to avoid a repeat. Where the officers are voting against management the follow-up is typically an additional phase in a collaborative engagement or initiative.
        

24.4. Additional information. [Optional]

LAPFF recommended voting ‘For’ the shareholder recommendations filed with Anglo American, ExxonMobil, Glencore, Chevron, and Sports Direct.

LAPFF recommended opposing the resolution to approve the remuneration report at WPP


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]

LAPFF encouraged member funds to co-file at four companies in total - the strategic resolutions received between 96 and 99% of the vote in support. The Sports Direct resolution received a vote in support from over half of independent shareholders.

Three were co-filed through LAPFF’s involvement in co-filing the strategic resilience resolutions to Anglo American, Rio Tinto and Glencore, and one was co-filed by a LAPFF fund with Sports Direct. LAPFF supported a shareholder resolution with National Express that was not accepted onto the AGM agenda.

The Fund voted in support of these.


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
          Environment
        
Decision made by
Objectives

Strategic resilience resolution to encourage companies to set out their  strategic approach to global climate and energy challenges

Scope and Process

Voted in favour of the strategic resilience reporting

Outcomes

Company engagement and some company commitments to change their strategy analyses and reporting to account for a two degree scenario

Topic or ESG issue
          Social
        
Decision made by
Objectives

Support resolution calling for independent human capital management assessment

Scope and Process

Voted in support of this resolution on the grounds that the Company was not adequately taking measures to protect labour rights in the workplace and were not reporting adequately on the issue of workplace rights and zero hour contracts

Outcomes

Subsequent request for engagement with the Company to further encourage action on this issue

Topic or ESG issue
          Governance
        
Decision made by
Objectives

Dividend policy as it relates to climate change

Scope and Process

Advised voting in favour of dividend policy to increase the amount authorised for capital distribution to shareholders in light of the growing potential for stranded assets and decreasing profitability associated with capital expenditures on high cost, unconventional projects.

Outcomes

Sufficient support to re-file in subsequent year

Topic or ESG issue
          Governance - Remuneration
        
Decision made by
Objectives

vote against the remuneration report at BP

Scope and Process

Scale back bonus payments and Long Term Incentive awards to Executive Directors during the year.

Outcomes

The remuneration report was defeated with 59% of shareholders voting against and 4% abstaining. Since the vote, the manager has engaged with the Remuneration Committee Chairman regarding its policy.

Topic or ESG issue
          Governance - Remuneration
        
Decision made by
Objectives

vote against remuneration proposals for the new CEO

Scope and Process

vote against remuneration proposals for the new CEO at Telecom Italia Group  due to concerns over the size and structure of payments which could total €40m by 2019

Outcomes

The scheme received one of the highest levels of dissent seen in Italy this proxy season with 38% of shareholders voting against the proposal. The manager have further meetings with Telecom Italia planned and will continue dialogue with the company.

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]

If LAPFF discloses a vote recommendation to the public, it does summarise the rationale for the recommendation; however, members receive all voting recommendations and LAPFF fully explains all voting recommendations to them.

 


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