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Australian Ethical Investment Ltd.

PRI reporting framework 2019

You are in Direct - Listed Equity Active Ownership » (Proxy) voting and shareholder resolutions

(Proxy) voting and shareholder resolutions

LEA 12. Typical approach to (proxy) voting decisions

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

Approach

Based on

12.2. 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.

Our proxy voting process is:

  • Meeting alerts are received from ISS Proxy Exchange
  • Meeting and resolution details, together with any source documents provided by ISS, are sent directly to the appropriate analyst covering the stock, Portfolio Manager and CIO
  • If we agree with ISS’ Sustainable Responsible Investing (SRI) recommendation, then no action is required given our standing instructions are to vote in line with ISS’ SRI policy. Should we disagree with the recommendation, then we can change the vote by logging into the Proxy Exchange portal.

12.3. Additional information.[Optional]


LEA 13. Percentage of voting recommendations reviewed (Not Applicable)


LEA 14. Securities lending programme

14.1. Indicate if your organisation has a securities lending programme.

14.2. Describe why your organisation does not lend securities.

We invest significantly in smaller cap companies, where securities lending may unduly restrict our capacity to manage our investment in those companies. For our larger cap holdings, we do not consider the benefits of securities lending to outweigh its risks.

14.4. Additional information.


LEA 15. Informing companies of the rationale of abstaining/voting against management

15.1. Indicate the proportion of votes where you or the service providers acting on your behalf have raised concerns with companies ahead of voting.

15.2. Indicate the reasons for raising your concerns with these companies ahead of voting.

15.3. Additional information. [Optional]

In addition to concerns we raise directly, our proxy research provider will explain its rationale for voting recommendations to companies during the provider’s engagement process for items where it recommends AGAINST management. However, this is not done on behalf of the research provider’s clients.


LEA 16. Informing companies of the rationale of abstaining/voting against management

16.1. Indicate the proportion of votes participated in within the reporting year in which, you and/or the service provider(s) acting on your behalf, have communicated to companies the rationale for abstaining or voting against management recommendations.

16.2. Indicate the reasons your organisation would communicate to companies, the rationale for abstaining or voting against management recommendations.

16.3. In cases where your organisation does communicate the rationale for the abstention or the vote against management recommendations, indicate whether this rationale is made public.

16.4. Additional information. [Optional]

In addition to concerns we raise directly, our proxy research provider will explain its rationale for voting recommendations to companies during the provider’s engagement process for items where it recommends AGAINST management. However, this is not done on behalf of the research provider’s clients.


LEA 17. Percentage of (proxy) votes cast

17.1. For listed equities where you and/or your service provider have the mandate to issue (proxy) voting instructions, indicate the percentage of votes cast during the reporting year.

Votes cast (to the nearest 1%)

99 %

Specify the basis on which this percentage is calculated

17.2. Explain your reason(s) for not voting on certain holdings

The 12 resolutions not voted related to the Telenor ASA AGM. Australian Ethical did not vote due to Telenor implementing a share blocking system which requires shareholders who intend to vote, to forfeit their right to sell their shares over a given period. 

17.3. Additional information. [Optional]


LEA 18. Proportion of ballot items that were for/against/abstentions

18.1. Indicate if you track the voting instructions that you and/or your service provider on your behalf have issued.

18.2. Of the voting instructions that you and/or third parties on your behalf issued, indicate the proportion of ballot items that were:

Voting instructions
Breakdown as percentage of votes cast
For (supporting) management recommendations
87 %
Against (opposing) management recommendations
10 %
Abstentions
3 %
100%

18.3. In cases where your organisation voted against management recommendations, indicate the percentage of companies you have engaged.

18.4. Additional information. [Optional]


LEA 19. Proportion of ballot items that were for/against/abstentions

19.1. Indicate whether your organisation has a formal escalation strategy following unsuccessful voting.

19.3. Additional information. [Optional]


LEA 20. Shareholder resolutions

20.1. Indicate if your organisation directly or through a service provider filed or co-filed any ESG shareholder resolutions during the reporting year.

20.6. Describe whether your organisation reviews ESG shareholder resolutions filed by other investors.

We monitor shareholder resolutions through the ISS proxy voting platform, as well through our participation in organisations like UNPRI and RIAA and their working groups and collaborative initiatives. We consult with civil society organisations about shareholder resolutions they are contemplating, including the wording of resolutions and our engagement with companies about issues raised in proposed resolutions.

We have a shareholder resolutions policy which deals with the types of shareholder resolution we will support.

20.7. Additional information. [Optional]


LEA 21. Examples of (proxy) voting activities

21.1. Provide examples of the (proxy) voting activities that your organisation and/or service provider carried out during the reporting year.

ESG Topic
Climate Change
Conducted by
Objectives

Increased transparency and action by fossil fuel companies on management of climate risk and opportunity, including the measurement and reduction of methane fugitive emissions.

Scope and Process

Australian NGO Market Forces sponsored a shareholder resolution calling on oil and gas company Santos Limited to provide more information on the company’s strategy to measure, report and reduce fugitive methane emissions.

We don’t invest in fossil fuel companies, but we supported the resolution with a nominal advocacy holding. We engaged with Santos about the resolution before its AGM, and challenged their opposition to the resolution.

Outcomes
ESG Topic
Diversity
Conducted by
Objectives

Increase gender diversity on company boards

Scope and Process

On 247 occasions we voted against management recommendations on director related matters (primarily the election of directors, or ratification of the appointment of directors). Of these 168 votes were at least in part due to lack of gender diversity on the Board, particularly when the nominee was an incumbent director.

Outcomes

21.2. Additional information. [Optional]


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