Process for voting on shares in companies held by our Australian equities managers
For voting on shares in companies held by our Australian managers, HESTA determines how we will vote and execute the vote. To assist in determining how we will vote we have appointed proxy voting advisors.
When there is a 'contentious resolution(s)' defined as a resolution where (i) our proxy advisors are recommending a vote in opposition to the company's Board or management, or (ii) any of our external investment managers holding the company on our behalf are intending to vote against the company's Board or management, HESTA will request each of our managers holding shares in that company to advise us as to how they intend to vote on the contentious resolution(s) and their rationale for their vote. HESTA regards this advice as critical, as our managers have a detailed understanding of both the governance and operations of their investee companies. It is also part of our approach to encourage fund managers to take greater interest in ESG matters.
The decision on how HESTA will vote is made by HESTA's Investment Manager - ESG (IM-ESG). In determining how HESTA will vote, the IM-ESG considers the advice provided by the proxy voting advisor, as well as the advice provided by the external investment managers, having regard to the individual circumstances of the company. The decision on how HESTA will vote will ultimately be based on what is in the best long-term interests of HESTA members.
In Australia, HESTA has not been involved in filing and/or co-filing a shareholder resolution.
Process for voting on shares in companies held by our international equities managers
For voting on shares in companies held by our international managers, HESTA has appointed Hermes EOS to determine how we will vote and to execute the vote on our behalf. To assist in determining the vote Hermes EOS has appointed a proxy voting advisor. Hermes EOS makes recommendations in accordance with those of the proxy advisor except where there is a 'contentious resolution(s)' i.e. a resolution where their proxy advisor is recommending a vote in opposition to the company's Board or management. In these cases, Hermes EOS will undertake further analysis on the resolution(s).
In determining how Hermes EOS will vote, they consider the relevant corporate governance guidelines and the advice provided by the proxy voting advisor, having regard to the individual circumstances of the company. Where Hermes EOS intend to vote against the company's Board or management on a resolution, they endeavour to engage with the company before the meeting to highlight the contentious resolution(s) and to seek to have the issues resolved.
Hermes EOS will advise HESTA's international equities managers of their voting intention. Unless HESTA's managers notify Hermes EOS that they have an issue with the voting intention, Hermes EOS will execute the vote in accordance with their advice. If HESTA's managers identify an issue with Hermes EOS' voting intention, HESTA's managers are expected to engage with Hermes EOS on the matter. If agreement cannot be reached, the matter is referred to HESTA for HESTA to make the final decision in the same manner as outlined above.
Internationally, Hermes EOS files shareholder proposals in markets where it is relevant to do so, typically in Germany and the US, either as lead filer or as co-filer alongside other investors. This typically forms part of a wider engagement with the company and is used as a tool for leverage in its dialogue with management.