UBS AM's stewardship policy is our commitment to act as good stewards of assets held and managed on behalf of our clients. We recognise that clients expect us to ensure the alignment of our approach with their own investment beliefs, policies and guidelines. We seek to be active shareholders by encouraging good governance and a high standard of corporate practices.
Our approach involves the following:
- use of internal information shared upon our proprietary database, external specialist sell-side broker research and ESG rating tools (including MSCI ESG Research, Sustainalytics, Trucost, CDP, RepRisk and ISS ESG)
- review of proxy voting material ahead of the annual shareholder vote;
- meetings with company executives and non-executive board members;
- assessment of the quality of explanations given;
- monitoring of corporate developments through market news sources and company announcements on an on-going basis.
This approach enables us to identify the factors that drive the company’s value and key risks. Our engagements are prioritized and undertaken dependent on the circumstances and the issues to be discussed. Where we have a significant holding in a company, or have identified an issue with the strategic direction of the company or the performance of management, we will seek to discuss our concerns with the company early in order to minimise the potential loss of shareholder value.
Engagements with company management are undertaken by our investment teams with support from our Sustainable and Impact Investing team. Many of our engagements continue for several years as part of our on-going review process. We maintain a comprehensive database of our meetings with companies, review progress over time and follow-up on issues identified.
Where we believe the effectiveness of engagement and the chance of success can be increased, we are willing to work both formally and informally with collective bodies, or to collaborate with other shareholders.
Depending on the issue and whether the engagement activity is reactive or part of on-going discussions our engagement with issuers can take the following forms:
- Written communication,
- Conference calls,
- Face-to-face meeting
Stewardship is relevant for both active and index (rules based) investments. In the case of actively managed strategies, it facilitates enhanced investment decisions for long-term value creation. For index, or passive strategies, it addresses broader negative externalities to the economy which could cause instability and inefficiencies within the financial markets.
Our stewardship activities are commonly organized according to four pillars:
- Thematic engagements: these are focused on specific themes considered material, analyzed by available internal and external research and aligned with the overall sustainability and sustainable investment strategy of UBS-AM.
- Reactive engagements: these are focused upon companies which are involved in serious breaches of international standards, such the Universal Declaration of Human Rights, the International Labor Organization’s Declaration on Fundamental Principles and Rights at Work, the Rio Declaration on Environment and Development, and the United Nations Convention Against Corruption.
- Engagements around proxy voting decisions: these are undertaken ahead of an AGM or other shareholder meeting to help inform our voting decisions and/or to communicate to companies about our views.
- Proactive engagements: these are engagements undertaken by our investment analysts and portfolio managers on specific issues related to the business strategy and/or sustainability risks and opportunities that may have a positive or substantial impact on valuation models.