Pendal Australia's policies and processes in relation to proxy voting can be found in our firm's "Proxy Voting Policy" and "Principles of Internal Governance and Asset Stewardship" both documents are available on our website:
These provide an overview of our policies and procedures in relation to proxy voting, including our approach to ESG issues. Pendal Australia's overarching principle is that voting on resolutions should be cast in a way designed to ensure that proxies are voted in the best interests of clients. Our belief is that ESG matters are best dealt with through ensuring appropriate board structures are in place, incorporating a broad level of experience and range of backgrounds, thereby ensuring proper oversight and improved transparency for investors to better assess performance.
As an active investment manager, Pendal Australia's investment framework includes conducting extensive research and analysis on companies in addition to actively engaging with management. Our team of experienced investment
professionals are involved in the review of the proxy votes we make. This includes sector specialists and Portfolio Managers as well as ESG specialists, Head of RI and Regnan - a dedicated ESG Research and Engagement provider (50% owned by Pendal in 2018 and 100% as of February 2019). As such we believe our collaborative process enables us to formulate well-informed voting decisions.
Voting decisions are made on a case-by-case basis by an assessment of the matter at hand and after taking into consideration the likely effect on the performance on the portfolio or fund. In all cases, we consider all of the
relevant information and, where appropriate, the Analyst or Portfolio Manager responsible may consult with other sources internally, such as the Head of RI, on issues relating to ESG matters, or externally, such as by engaging with the relevant company to obtain further details or clarification on the matter or an external corporate governance advisor, before making a final recommendation. In cases where we have concerns on a resolution our policy is to initially engage directly with the company and advocate for change privately
An external proxy voting system is used to support the administration of Pendal Australia's proxy voting-related requirements, including functions such as vote notification and record keeping. Once a corporate action is identified by the provider, the portfolio management team reviews and advises on how it should be voted and proxy voting is performed within the deadlines and in accordance with mandate requirements where reasonably possible. The performance of the outsourced administrator is reviewed and monitored by Pendal through a number of key reporting and meeting structures.
The Governance and Risk Management Frameworks within Pendal include various mechanisms to identify and escalate incidents which include the breakdown of controls or breach of policies, including the Proxy Voting Policy. Where exceptions to the Policy arise these would be reported, assessed and escalated in line with relevant policies and procedures and rectifications / remediation actions taken.