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Edmond de Rothschild Asset Management (France) (EDRAM)

PRI reporting framework 2018

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Organisational Overview
Basic information [OO 01 - 09] Asset class implementation gateway indicators [OO 10 - 12] Peering questions [OO LE 01 - INF 03]
Strategy and Governance
Investment policy [SG 01 - 04] Objectives and strategies [SG 05 - 06] Governance and human resources [SG 07 - 08] Promoting responsible investment [SG 09 - 11] Outsourcing to fiduciary managers and investment consultants [SG 12] ESG issues in asset allocation [SG 13 - 15] Asset class implementation not reported in other modules [SG 16 - 17] Innovation [SG 18] Communication [SG 19]
Indirect – Manager Selection, Appointment and Monitoring
Listed Equity and Fixed Income Strategies [SAM 01] Selection [SAM 02 - 03] Appointment [SAM 04] Monitoring [SAM 05 - 07] Outputs and outcomes [SAM 08 - 09]
Direct - Listed Equity Incorporation
ESG incorporation in actively managed listed equities [LEI 01 - 10] Implementation processes [LEI 01 - 10] (A) Implementation: Screening [LEI 04 - 06] (B) Implementation: Thematic [LEI 07] (C) Implementation: Integration of ESG issues [LEI 08 - 10] Outputs and outcomes [LEI 12 - 14]
Direct - Listed Equity Active Ownership
Engagement [LEA 01 - 14] Overview [LEA 01 - 02] Process [LEA 03 - 10] Process for engagements run internally [LEA 03 - 04] Process for engagements conducted via collaborations [LEA 05 - 06] General processes for all three groups of engagers [LEA 09 - 10] Outputs and outcomes [LEA 11 - 14] (Proxy) voting and shareholder resolutions [LEA 15 - 24] Overview [LEA 15] Process [LEA 16 - 20] Outputs and outcomes [LEA 21 - 24]
Direct - Fixed Income
ESG incorporation in actively managed fixed income [FI 01 - 13] Implementation processes [FI 01 - 03] (A) Implementation: Screening [FI 04 - 07] (B) Implementation: Thematic [FI 08 - 10] (C) Implementation: Integration [FI 11 - 13] Fixed income - Engagement [FI 15 - 17] Outputs and outcomes [FI 18 - 19]
Assurance
Assurance [CM1 01.1 - 01.7]
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You are in Direct - Listed Equity Active Ownership » (Proxy) voting and shareholder resolutions » Process

Process

LEA 16. Typical approach to (proxy) voting decisions

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

Approach

Based on

16.2. 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).

  • Scope of our voting activities

As a responsible investor, Edmond de Rothschild Asset Management (France) takes its shareholder duties seriously. Voting at shareholder meetings is a key moment for taking part in companies’ decision-making.  

Edmond de Rothschild Asset Management (France) has pledged to vote uniformly at shareholder meetings of all companies in which it holds shares and where the participation of Edmond de Rothschild Asset Management (France) represents more than 0.01% of the company’s capital, regardless of the nationality of issuing companies, as long as the issuer provides sufficient information and as long as its custodians are able to take its votes into account.  

 

  • Objectives of our voting activity

These principles befit the wealth-management focus with which Edmond de Rothschild Asset Management (France) manages its portfolios, its determination to safeguard fund-holder interests, and its constant quest for performance, with a view to long-term value creation. 

 

  • Correlation between our voting activities and, engagement and investment activities

Fund managers meet with company officers on a regular basis to discuss strategic, financial and extra-financial themes with them. These meetings are also an opportunity for fund managers to bring up shareholder meeting resolutions, in order to move the company towards better practices.

Edmond de Rothschild Asset Management (France)’s investment decisions are closely linked to the company’s long term prospects and require: 

• the aim to deliver long-term value;

• deep understanding of economic and financial issues;

• concern for good governance;

• the development of a sound and stimulating work environment;

• efforts to reduce environmental footprint;

• equitable relations with stakeholders (e.g., clients, suppliers, civil partnership, etc.);

•  management of sustainable development risks and opportunities. 

 

To lead its voting rights activities, Edmond de Rothschild Asset Management (France) has set up an in-house Voting and Engagement Committee composed of the CEO, the Chief Investment Officer, Heads of the asset management expertise, the Chief Compliance and Internal Controls Officer, an SRI team manager, a middle office representative. The purpose of this committee, which meets at least twice a year, is to ensure adherence to the voting policy and to make changes in that policy, based on the resolutions that are submitted. At last, the voting statistics are also disclosed during the meetings.

 

  • Differenciation of our voting approach between markets

Edmond de Rothschild Asset Management (France) has not set geographical limits for taking part in votes. The reason for this is that even when it holds only a small portion of total shares, voting allows Edmond de Rothschild Asset Management (France) to express its point of view and to show companies its commitment to impeccable corporate governance and, where applicable, to better practices on environmental, social and stakeholder issues.

The special case of lock-ups: A number of issuers in countries such as Switzerland, Norway, Morocco and Luxembourg block transactions on shares when the shareholder wishes to vote. The duration of this lock-up varies widely and depends on the issuer, depositary and sub-depositary and can last up to 10 days. Edmond de Rothschild Asset Management (France) votes at least 75% of its total position at shareholder meetings affected by such lock-ups, thus leaving the fund manager some room for manoeuvre.

Influence of local regulatory or other requirements on our voting approach: Edmond de Rothschild Asset Management (France) adapts its criteria to each country’s circumstances. In accordance with Article 314-100 of the General Rules of the French Financial Markets Authority, Edmond de Rothschild Asset Management (France) has set out within its voting policy how it exercises the voting rights embedded in shares held in all its portfolios. 

Finally, note that Edmond de Rothschild Asset Management (France) adapts its criteria to each country’s circumstances. With this in mind, the percentage of independent directors required shall be lower for controlled companies. In accordance with Article 314-100 of the General Rules of the French Financial Markets Authority, Edmond de Rothschild Asset Management (France) has set out below how it exercises the voting rights embedded in shares held in all its portfolios.

 

  • Our voting policy principles

To carry out its investment activity in a socially responsible manner, Edmond de Rothschild Asset Management (France) focuses on seven founding principles:

• Respect for shareholder rights and equal treatment of shareholders, as expressed in the principle of “one share, one vote”.

• Accounting integrity and continuity and transparency in reporting, as guaranteed by the independence of the statutory auditors.

• Separation of powers between company managers and members of the board of directors or supervisory board, in their role as supervising bodies.

• Transparency in compensation, through an independent compensations committee and variable compensation linked to specific performance targets.

• Allocation of earnings and use of shareholders’ funds in the interests of shareholders, particularly minority shareholders.

• The company’s strategic development with justified and equitable equity transactions.

• Enhanced management of environmental and social issues in conducting the company’s business and awareness of its responsibilities regarding ESG (Environmental, Social and Governance) risks. 

 

  • Our exercise of voting rights and record keeping

Edmond de Rothschild Asset Management (France)’s fund managers are the only persons to decide how to vote, in the sole interests of unit holders in their portfolios. 

Managers' votes are electronically archived on the ISS proxy exchange platform. In addition, the votes generated automatically from the ISS’ proxy voting platform are reprocessed by Edmond de Rothschild Asset Management (France)’s teams to obtain coherent statistics with our voting perimeter,  in compliance with the statistics required under Article 314-101 of the General Regulation of the French Financial Markets Authority.

For more details, please see the comments in LEA 18.

16.3. Additional information.[Optional]

For our open-ended funds, we vote exclusively from our own voting policy. For our institutional mandates, two possibilities can occur : either we apply the client’s voting policy, or, if it did not have one, our own voting policy is applied by default.

 

  • Voting process

Edmond de Rothschild Asset Management (France) has set up an organisation that centralises and coordinates all information necessary for exercising the voting rights embedded in shares held by the portfolios that it manages. The organisational procedure is backed by the Middle Office team, which acts as a liaison between Edmond de Rothschild Asset Management (France) and the portfolios’ custodians/depositaries in charge of sending voting forms to issuing companies. 

Edmond de Rothschild Asset Management (France) has retained the services of one firm, ISS. ISS provides decision making services to Edmond de Rothschild Asset Management (France)’s fund managers through reviews of draft resolutions submitted for shareholder approval. For each of these resolutions, and in accordance with the pre-set voting policy, a voting decision is automatically proposed within the platform made available by this service provider. If Edmond de Rothschild Asset Management (France) decides to vote against its own voting policy, it must justify its stance.

ISS may under no circumstances replace Edmond de Rothschild Asset Management (France)’s fund managers, who alone shall decide how to vote, in the sole interests of unit holders in its portfolios.

The reason for this is that fund managers vote mainly on the basis of their geographical responsibilities or their special knowledge of the companies. Voting decisions made by fund managers for shareholder meetings and in accordance with Edmond de Rothschild Asset Management (France)’s voting policy apply uniformly to all positions held. However, if the fund manager votes differently of Edmond de Rothschild Asset Management (France)’s voting policy, he must explain and justify his vote. 

Edmond de Rothschild Asset Management (France)’s currently exercises voting rights by mail. However, it may, if it deems necessary, decide to attend shareholder meetings in person. With this in mind, Edmond de Rothschild Asset Management (France) shall systematically vote against any resolution to eliminate the holding of live shareholder meetings. Edmond de Rothschild Asset Management (France) does not vote by proxy and does not transfer its voting rights to the chairman.

Besides, Edmond de Rothschild Asset Management (France) has set up an in-house voting and engagement committee composed of a Management Board member, the Chief Investment Officer, the regional CIOs, the Chief Compliance and Internal Controls Officer, and an SRI team manager. The purpose of this committee, which meets at least twice a year, is to ensure adherence to the voting policy and to make changes in that policy, based on the resolutions that are submitted.

 

  • Conflicts of interest

Edmond de Rothschild Asset Management (France) ensures that it places the clients’ interests above any other consideration. With this in mind, Edmond de Rothschild Asset Management (France) has set up an organisation and control and monitoring procedures for employee transactions, in order to identify and best manage any potential conflicts of interest that may arise.

To cite one example, a fund manager must never accept duties that could put him in a conflict-of-interest situation with regard to listed companies in which the portfolio holds shares. He/she must not make any commitments, even implicit, that would restrict his/her decision-making freedom. As a result, he/she may not be, either personally or as a representative of a legal entity, a corporate officer of a listed company in which the portfolio holds shares, nor take part in meetings of its board of directors or supervisory board. Under Edmond de Rothschild Asset Management (France)’s procedure, each employee is required to report the positions that he holds to the Group’s Department of Compliance and Ongoing Controls.

In the event of conflict of interests of whatever nature, Edmond de Rothschild Asset Management (France) or the employee concerned shall report to Edmond de Rothschild Asset Management (France)’s senior management and the Group’s Department of Compliance and Permanent Control. The latter may take all decisions that it deems necessary to safeguard fund-holders’ interests.

 

LEA 17. Percentage of voting recommendations reviewed (Not Applicable)

LEA 18. Confirmation of votes (Private)

LEA 19. Securities lending programme (Private)

LEA 20. 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.

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

20.2. 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.

20.3. Additional information. [Optional]

During the period that precedes shareholder meetings, we focus our dialogue efforts with a restricted number of companies if they contact us, or if we require any additional information in order to better appreciate the situation of the company as we analyse resolutions. This early dialogue can also concern the companies with which we are already engaged with on ESG issues.

Edmond de Rothschild Asset Management (France) works with companies that request to be informed of its voting intentions prior to the meeting and particularly when it intended to vote against a resolution or abstain. In 2017, 6 conference calls or meetings were held.

Moreover, fund managers often contact or meet with company managers to discuss strategic, financial and extra-financial issues with them. These meetings are an opportunity for managers to bring up shareholder meeting resolutions, in order to steer the company towards better practices.
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