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Wellington Management Company LLP

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]
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] 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] (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]
Export Public Responses
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You are in Strategy and Governance » Investment policy

Investment policy

SG 01. RI policy and coverage

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

01.1. Indicate if you have an investment policy that covers your responsible investment approach.

01.2. Indicate the components/types and coverage of your policy.

Select all that apply

Policy components/types

Coverage by AUM

01.3. Indicate if the investment policy covers any of the following

01.4. Describe your organisation’s investment principles and overall investment strategy, and how they consider ESG factors and real economy impact.

At Wellington Management, we consider ESG criteria as one set of factors among many that should be weighed appropriately to inform investment decision making. We view ESG analysis and integration as both return enhancing and risk mitigating. To help our portfolio managers and investment teams better assess risks and opportunities in client portfolios, we have integrated the analysis of ESG factors into our investment and risk-management processes firmwide. We do this by producing ESG research and ratings, conducting ESG portfolio reviews with investment teams, and engaging with companies on ESG issues for the benefit of our clients. ESG analysts specialize by sector, which helps investors to consider common material ESG risks and opportunities across the sector as well as the relative performance of potential investments against a relevant peer set.

Each of our portfolio managers and investment teams develops their own investment approach whereby ESG considerations are integrated into their research and decision-making processes to the extent that they believe these issues may affect the long-term success of a company and investment returns. This can manifest itself within the investment thesis or portfolio weighting for a particular security, as well as within our proxy voting and company engagement efforts.

01.5. Provide a brief description of the key elements, any variations or exceptions to your investment policy that covers your responsible investment approach. [Optional]

ESG criteria have the same relevance to investment analysis as traditional financial criteria, and are incorporated into the investment decision to the extent that an investor believes that they will have an impact on financial returns. Where appropriate, our investment professionals integrate analysis on both “fields” simultaneously.

Given the impact that issues like these can have on financial performance, we believe it is our fiduciary duty to integrate ESG analysis into our investment process to help pursue better investment results for our clients.

Due to the way the firm has organized its research and portfolio management functions, we don't have a chief investment officer. Instead, our investment capabilities are organized as a community of teams — each functioning as an entrepreneurial entity within an established organization. Each of our portfolio managers develops their own investment approach whereby ESG considerations are integrated into their research and decision-making processes to the extent that they believe these issues may affect the long-term success of a company and investment returns. This can manifest itself within the investment thesis or portfolio weighting for a particular security, as well as within our proxy voting and company engagement efforts.

In recent years, we have further developed our specialized, in-house ESG Research team to help our portfolio managers and analysts gather deeper intelligence on ESG topics and integrate these considerations in to the investment process. Core to our ESG integration philosophy is the belief that material ESG issues are strategic business issues, so we focus on understanding these material issues so that we can make more informed investment decisions for our clients.

We provide central ESG integration resources to portfolio teams firm-wide, and approach ESG integration as a tailored process, applied to all asset classes. We analyze ESG risks and opportunities in client portfolios, engage with companies in which we invest to discuss material ESG issues, and vote proxies on clients’ behalf to support decisions we believe will maximize the long-term value of securities. Our culture is built to support collaboration and our open-architecture “community of investors” naturally lends itself to the integration of ESG considerations.

Our ESG Research team, part of the central Investment Research function, helps portfolio managers and analysts gather deeper intelligence on ESG topics and integrate these considerations into the investment process. We believe a holistic understanding of how companies deploy capital — financial, physical, and human — is helpful in framing an investment thesis, and examining ESG issues gives us a more complete picture. ESG analysts are responsible for conducting in-depth analysis of the ESG factors most relevant to the sectors within their coverage area. They are also responsible for coordinating the proxy voting and ESG engagement strategies for the companies in their sectors with equity and fixed income analysts and portfolio managers. Our ESG team works closely with investment teams to incorporate our research into the investment process — regularly conducting in-depth portfolio reviews with investment teams to discuss holdings with the greatest ESG risks and strengths.

SG 02. Publicly available RI policy or guidance documents

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

02.1. Indicate which of your investment policy documents (if any) are publicly available. Provide a URL and an attachment of the document.

URL/Attachment

URL https://www.wellington.com/en/wp-content/uploads/2018/01/wellington_management_esg_integration_philosophy_US.pdf

URL/Attachment

URL https://www.wellington.com/en/wp-content/uploads/2018/01/global-proxy-policy-and-procedures_2018.pdf

02.2. Indicate if any of your investment policy components are publicly available. Provide URL and an attachment of the document.

URL/Attachment

URL https://www.wellington.com/en/esg-integration/

URL/Attachment

URL https://www.wellington.com/en/insights/global-esg-research-update-wellington-supports-emerging-disclosure-framework-climate-related-financial-risks/

URL/Attachment

URL https://www.wellington.com/en/wp-content/uploads/2018/02/wellington_management_perspectives_on_climate_change_us.pdf

02.3. Indicate if your organisation’s investment principles, and overall investment strategy is publicly available

02.4. Additional information [Optional].

SG 03. Conflicts of interest

03.1. Indicate if your organisation has a policy on managing potential conflicts of interest in the investment process.

03.2. Describe your policy on managing potential conflicts of interest in the investment process.

Wellington Management does not engage in retail brokerage, lending, securities underwriting, or proprietary trading and is not affiliated with any firms that engage in these businesses. In addition, the firm’s business model, ownership structure, and culture seek to align the interests of clients with those of the firm. Our broadly diversified client base and functional lines of responsibility help to minimise the number of potential conflicts of interest in relation to stewardship though they cannot prevent such conflicts entirely. Together, these structural elements may help the firm avoid some of the typical conflicts of interest in the investment management business that may arise in connection with stewardship responsibilities, though they cannot prevent such conflicts entirely.  As a fiduciary, we seek to place the interests of our clients first and to avoid conflicts of interest, including those that arise from voting or engagement issues. Our policies and procedures for managing conflicts of interest in relation to corporate governance issues are contained in the Global Proxy Policy and Procedures. In addition, on an annual basis, our Investment Stewardship Committee sets standards for identifying material conflicts with respect to proxy voting and corporate engagement.

03.3. Additional information. [Optional]

SG 04. Identifying incidents occurring within portfolios

04.1. Indicate if your organisation has a process for identifying and managing incidents that occur within portfolio companies.

04.2. Describe your process on managing incidents 

          Wellington Management is a firm with a long history of conducting independent fundamental research. Monitoring our investee companies and engaging directly with company managements on a range of issues, including ESG matters, has always been a core part of our investment process. The majority of our company research is the result of direct contact with company management, both in our offices and on site, including contacts with company suppliers, customers, and competitors. 

Each year, Wellington participates in more than 10,000 meetings with company management teams from around the world. Portfolio managers, industry analysts, and ESG analysts all take part in our ongoing dialogue with companies, and we share information from these engagements with one another using a common research platform. This internal platform allows us to share specific company ratings from our fundamental, credit, quantitative and ESG research teams, along with engagement notes from meetings with company managements. Providing this level of transparency and information sharing across the firm facilitates our ongoing monitoring and dialogue with investee companies and helps us prioritize and focus our monitoring and engagement activity.

Our firm’s engagement with company management teams depends on the materiality of the issue, the responsiveness exhibited by the company to past communications and our assessment of whether such engagement is in the best interests of our clients. Our stewardship activities can include meeting with company boards, speaking to non-executive directors, carrying out proxy voting or participating in stakeholder dialogues. In the event that a company is not responsive to our initial engagement efforts, we will consider: additional meetings with management, meeting with the Chair and other board members, and potentially voting against members of the board in order to escalate our concerns.
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