Liontrust is a long term active fund management company that uses proprietary investment processes to identify and hold companies for our clients for the medium to long term. Our funds’ average investment in a company is a number of years, and many companies have been held for much longer.
Investing in companies over the long term emphasises the need for good governance and stewardship which is an essential part of creating shareholder value. Our primary objective is to deliver investment performance for our clients with appropriate levels of risk and in order to do so we seek a long term understanding of the companies in which we invest.
Liontrust Corporate Governance & Proxy Voting Framework has been drafted in accordance with the Financial Reporting Council’s Stewardship Code, which Liontrust endorses. The fundamental principle of our framework is to protect and enhance the economic interests of our clients. In any situation, our actions will always be determined by this principle. We also believe that sustainability or environmental, social and governance (ESG) factors create risks and opportunities for companies and these should be managed appropriately. A copy of the framework can be found on our website at https://www.liontrust.co.uk/handlers/DownloadDocumentsHandler.lion?itemids=339d5a28-b280-4b79-bd1e-af2f7113d1c4
Liontrust publish quarterly voting reports on our website, outlining how we vote each holding https://www.liontrust.co.uk/investor-relations/Governance/governance-policies.
In 2018, Liontrust Investment teams met with management of 520 global companies and engaged on matters such as company strategy, performance, risk, capital structure and corporate governance.
Liontrust currently participates in the following external governance-related organisations including the Investment Association, the Pensions and Lifetime Savings Association, UK Sustainable Investment & Finance Association (UKSIF) and the 30% Club Investor Group. Liontrust is a signatory to the United Nations Principles for Responsible Investment (“UNPRI”), Carbon Disclosure Project (CDP), the UK Stewardship Code and have recently become supporters of the Taskforce on Climate-Related Financial Disclosures (TCFD) and have signed the PRI Sustainable Palm Oil Expectation Statement.
For the Sustainable Investment team, engagement is integral to how they monitor and ensure they invest in high-quality companies. Engaging with companies gives them greater insight and helps to identify leading companies but it is also used as a lever to encourage better business practices. Engaging with investee companies challenges and encourages them to proactively manage their business for the benefit of long-term shareholder value.
The majority of their engagement is focused on companies held across their portfolios. They meet companies face to face but also correspond directly through emails, calls and letters. Depending on the specific issue, the interaction with the company might include senior management, sustainability teams or experts within the organisation. In 2018, the Sustainable Investment team had 214 face to face meetings with companies where they raised 226 key environmental, social and governance (ESG) issues with companies over the year, either in direct meetings or through other forms of correspondence such as letters and emails.
The team also engage collaboratively with other investors on initiatives that are aligned with the team’s engagement priorities and where they believe we are more likely to succeed collectively. In some instances, we lend our support to collaborative initiatives that can include targeting companies not held in our portfolios.
The Sustainable Investment team prioritise a number of proactive engagement initiatives in collaboration with their Advisory Committee at the beginning of each year. They assess how their holdings are positioned on these specific issues and where appropriate, define target lists of companies for engagement. For 2018, as well as continuing their efforts to increase corporate disclosure on ESG impacts, mitigation efforts and performance, they have the following priority initiatives: Impact and Sustainable Development Goals; Encouraging sustainable use of plastics; Anti-Bribery & Corruption; Responsibility in apparel supply chains; Promoting gender diversity; Encouraging corporate tax responsibility; Ensuring privacy & data security; Value creation in the healthcare system.
The Sustainable Investment teams' 2018 annual review outlining further active ownership activities is available at https://www.liontrust.co.uk/what-we-offer/investment-processes/sustainable-future-process.
The Sustainable Investment teams' engagement policy is available at https://www.liontrust.co.uk/what-we-offer/investment-processes/sustainable-future-process.