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Wellington Management Company LLP

PRI reporting framework 2018

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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.

03.3. Additional information. [Optional]

The prioritization of our engagement activity can come from any part of the ESG Research team’s process – ratings and research, portfolio reviews with portfolio managers, or proxy voting.

As one component of the firm’s research process, companies are assigned an ESG rating using a proprietary, systematic process that uses third-party inputs and considers industry, home market, and company size in defining the peer universe. Each rating reflects a peer-relative assessment, thus comparison versus peers is most meaningful. Importantly, the rating is not a buy or sell signal but rather helps to flag companies and provides a starting point for deeper analysis. Because ESG ratings for a given peer group are assigned based on a normal distribution, the ratings naturally identify positive and negative outliers which may warrant further research and engagement. We may choose to engage with a negative outlier company to ensure that the rating is capturing the company’s full scope of procedures and disclosures, to provide direct feedback to the company on a particular issue, or to check in on the company’s progress since we last spoke. We may choose to engage with a positive outlier to hear about emerging best practices in a particular industry, which helps us provide better feedback to other companies in the sector when we engage on the same topic.

Another source of prioritization comes from the portfolio review process. An ESG analyst performs portfolio reviews with portfolio managers to identify holdings with the greatest ESG risks and opportunities. These conversations often lead the portfolio manager to provide feedback about the companies which s/he would like the ESG Research team to engage with and potentially influence behavior.

In certain instances, the ESG Research team will engage with companies prior to an annual general meeting in the event that the company did not receive strong support from shareholders in the prior year. In particular, the team seeks to understand whether the board has been receptive to shareholder feedback and made substantial changes to improve the proposal.


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 during and following your engagements activities carried out by internal staff.

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

04.4. Additional information. [Optional]


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

09.2. Additional information. [Optional]

In 2017, the ESG Research team built out a tool that allows the team to better track and communicate engagement activity. This involves tagging the relevant ESG indicators discussed and assessing the company's progress on each indicator. The tool then emails an engagement note directly to portfolio managers and analysts who own or follow the company.

Each company within the ESG Research team’s coverage has a dedicated ESG page on the central investment collaboration platform which shows an explanation of what is driving the company’s ratings, recent company engagements, and proxy voting activity and history. This page also provides a historical view of the company’s rating over time and identifies leaders and laggards based on its relevant peer set.


LEA 10. Tracking number of engagements

10.1. Indicate if you track the number of your engagement activities.

Type of engagement
Tracking engagements

Individual / Internal staff engagements

10.2. Additional information. [OPTIONAL]

The ESG Research team's engagement tracking tool allows for the tracking of all ESG-led engagements. ESG analysts join meetings with companies hosted by equity and credit analysts and portfolio managers, and vice versa. Wellington uses a global investor calendar to log meetings with companies across all investment teams and facilitate collaboration across teams in these meetings.


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