Following Investment Committee's decision to review the market for additional global fund managers, our Independent Investment Advisor surveyed the market to identify which funds would be a good match for our own investment objectives (including to invest responsibly) and were managed by managers who properly understood ESG integrated investment. She long listed a number of funds which were considered by the committee and we met with a short list. We discussed in further detail the objectives of the funds, how investment decisions are made and how ESG is integrated into that decision making process. This included  in depth discussions about their engagement processes. We also examined closely how compatible our own investment objectives would be to those of the fund.

A number of fund managers were not able to give us the assurances we required and were removed from the list of possible candidates.

At our May 2019 ESG meetings with our fund managers, we asked them:

• How they were redressing the gender imbalance in the investment management sector within their own firms.
• How they approach engagement with companies on corporate tax.
• Whether they had engaged in the last year on issues around technology.

This process represented part of our ongoing, long term, engagement with our managers on these issues.

We  started having discussions with our fund managers about  the fund manager/analyst gender imbalance within their own firms in 2016.  Progress since then has been mixed although interestingly we have seen a correlation between positive performance and those doing well in this area.  Sometimes improvement has been hindered by a low turnover of staff but, in other cases, senior management still needs to fully grasp the structural changes needed.  Although gender balance will not dominate our manager retention and appointment decisions, it will influence them.

Discussions around, corporate tax, were also challenging.  While all our fund managers identify corporate tax avoidance as a risk issue, it is clearly difficult to engage on this issue on a company by company basis given the complexity of corporate tax and different regimes in different countries. Our hope is that things may become easier on this front as the OECD progresses its work around international tax cooperation.

We began discussing technology with our managers in 2018 and built on those discussions this year.  Although not all our managers are invested directly in the big technology, their investee companies will be exposed to the issues affecting these companies and the topic remains critical to us.

At our May 2019 ESG meetings with our fund managers, we asked them about the collaborative engagements they had undertaken in the last year.  We believe collaborative engagement is a very effective way of engaging with companies and others and have, for a number of years, encouraged our fund managers to participate in it.

We have noticed a mix of enthusiasm among our fund managers for collaborative engagements. At one end of the spectrum we have fund managers who lead on collaborative engagements and at the others who have minimal involvement with it.  Although involvement in collaborative engagement will not dominate our manager retention and appointment decisions, it will influence them.

We were concerned that the merger of Informa and UBM meant that we had become part owners in an arm exhibition company. Although this represents only a very small part of the group's activities, we regard any level of this kind of activity as being unacceptable. We therefore engaged with two of our fund manager who hold the stock in their portfolio about our concerns.

This monitoring is ongoing.  Potentially it could lead to the suspension of the relationship with the fund managers concerned if insufficent progress is made.