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(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 that your agreed-upon voting policy is adhered to, giving details of your approach when exceptions to the policy are made.

We use the voting reports and recommendations provided by ACSI for the Australian market, which covers the ASX300.

We actively contribute to setting the ACSI Governance Guidelines which are used by ACSI’s management to inform their voting recommendations and by us in exercising our voting rights. The Guidelines are co-written and approved by members via working groups and ACSI’s Member Council. 

Link to ACSI’s Governance Guidelines:

https://acsi.org.au/wp-content/uploads/2020/01/ACSI-Governance-Guidelines-2019.pdf

We puslish the LGS Proxy Voting Report on a biannual basis. The latest Proxy Voting Report can be found at https://www.lgsuper.com.au/assets/Documents/Proxy-Reports/Proxy-Voting-Report-Dec-2019.pdf

LGS is advised by Glass Lewis for proxy voting recommendations in our international markets. 

In 2019, we became a signatory to the Australian Asset Owner Stewardship Code. This can be found at https://www.lgsuper.com.au/investments/responsible-investment/active-ownership/lgs-stewardship-statement/.

12.3. Additional information.[Optional]

LGS sources research and proxy voting recommendations from ACSI for our ASX holdings and ACSI and CGI Glass Lewis for our international holdings. ACSI’s recommendations are based on its Corporate Governance Guidelines which outline superannuation funds’ expectations in terms of corporate governance and ESG issues. As a broad rule LGS will vote in accordance with ACSI recommendations/Corporate Governance Guidelines for company annual meetings. However, from time to time we will consider voting against these when we believe there is a significant environmental, social or governance risk which has or could lead to a loss of shareholder value.

In addition we take into account the recommendations of our fund managers holding the stock in making informed decisions on behalf of our members. 


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


LEA 14. Securities lending programme

14.1. Does your organisation have a securities lending programme?

14.3. Indicate how the issue of voting is addressed in your securities lending programme.

14.4. Additional information. [Optional]


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

15.1. Indicate the proportion of votes participated in within the reporting year in which where you or the service providers acting on your behalf 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]

Prior to ACSI issuing voting recommendations to members, ACSI attempts to make contact with all companies, particularly if there is a controversial item or where ACSI may oppose the board on a resolution.


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

16.1. Indicate the proportion of votes where you, and/or the service provider(s) acting on your behalf, communicated the rationale to companies for abstaining or voting against management recommendations. Indicate this as a percentage out of all eligible votes.

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

16.4. Additional information. [Optional]

We include a rationale for all against votes (for ASX and international equities), which is published on our website before company meetings.


Prior to ACSI issuing voting recommendations to members, ACSI attempts to make contact with all companies, particularly if there is a controversial item or where ACSI may oppose the board on a resolution. When ACSI is making a recommendation against, ACSI engages with the company and seeks a response and rationale from the company for the report.


LEA 17. Percentage of (proxy) votes cast

17.1. For listed equities in which you 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%)

100 %

Specify the basis on which this percentage is calculated

17.3. Additional information. [Optional]

ACSI issued voting advice for the entire ASX300.


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

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

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

Voting instructions
Breakdown as percentage of votes cast
For (supporting) management recommendations
89 %
Against (opposing) management recommendations
10 %
Abstentions
1 %
100%

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

100

18.4. Additional information. [Optional]

Alongside all formal company meetings, ACSI always attempts to contact companies before publishing an against management recommendation to discuss the resolution.


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.

19.2. Indicate the escalation strategies used at your organisation following abstentions and/or votes against management.

19.3. Additional information. [Optional]

Through our service provider, ACSI, we engage companies and undertake a series of escalation steps before and after company meetings. The level of escalation recommended by ACSI is dependent upon the nature and materiality of an issue and responsiveness of a company to engagement.

Generally, where ACSI recommends a vote in opposition to the board, depending on the materiality, the company may be put onto ACSI's engagement priority list for the following year.

Further escalation can include:

  • Further engagement with board members and/or chair
  • Expressing concerns to alternative company representatives (i.e. management, other non-executive directors)
  • Working collectively with asset managers/other asset owners and holding discussions with other equity or bondholders
  • Recommending additional votes against management on relevant proposals at general meetings (eg: ACSI's women on boards policy https://acsi.org.au/wp-content/uploads/2020/02/2019-Voting-Policy-gender-diversity.pdf)
  • Speaking to regulators, industry bodies and advocating for policy change
  • Expressing concerns publicly
  • Encourage our membership and other industry participants to take up more pro-active stance

LEA 20. Shareholder resolutions

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

20.7. Additional information. [Optional]

We view shareholder resolutions as an important tool to complement direct and indirect engagement strategies.

Our external provider ACSI, provides analysis of shareholder resolutions on a case-by-case basis in the Australian market. ACSI will generally favor those proposals that result in the disclosure of information that is useful to shareholders and not overly prejudicial to their commercial interests. Resolutions should be linked to improved governance or transparency within the relevant company. A judgment on each proposal will be based on what is in the best interest of shareholders, and a thorough assessment of any potential impacts on the company

For international listed equities, CGI Glass Lewis applies the ACSI International Governance Guidelines which are generally supportive of increasing company disclosure and action to address material ESG issues. CGI Glass Lewis will highlight any shareholder resolutions they deem to be of interest to us. We also monitor the PRI collaboration platform to ensure we are aware of upcoming resolutions that may be material to our holdings.

Of the 273 shareholder resolutions lodged in 2019, we supported 179 of these.


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

ACSI seeks companies disclose reliable and sufficiently granular information for investors in line with the TCFD Framework that provides insights into how the company manages climate risks and how they are resilient under a low carbon economy. ACSI assesses companies against the following areas:

  • Climate transparency, governance & policy
  • Transition risk management and disclosure
  • Physical risk management and disclosure
  • Paris-aligned targets
  • Just transition
  • Industry associations
Scope and Process

ACSI’s focus is on companies in the ASX300 who have a material exposure.

ACSI provides analysis on climate-related resolutions by analyzing the climate change disclosures by the company and engages on where improvements can be made often seeking commitments from the company ahead of the AGM. Depending on the company’s disclosures or commitments to improve ACSI will either recommend a vote in favour or against a shareholder proposal. In 2019, ACSI provided voting recommendations on 12 companies with climate-related resolution.

Outcomes
ESG Topic
Executive Remuneration
Conducted by
Objectives

Ensure alignment of executive and shareholder interests, and appropriate board oversight.

Scope and Process

ACSI provided our fund with voting advice on remuneration-related resolutions at each [ASX200/ASX300] company. (At least one remuneration vote is held by each company per year.)

ACSI analyses the remuneration disclosures by the company and engages with the company on where improvements can be made or why remuneration was paid in certain outcomes.  Depending on the company’s disclosures, commitments to improve or discretion applied ACSI will either recommend a vote in favour or against.  

Outcomes
ESG Topic
Labour practices and supply chain management
Conducted by
Objectives

To ensure these companies have adequate systems, policies and practices in place to monitor and modify contractor/supplier behaviors. This includes encouraging public disclosure of training efforts, auditing outcomes, lists of suppliers and engagement with Governments where issues are systemic.

Scope and Process

ACSI focus is on companies in the ASX200 who have a material exposure.

ACSI provides analysis on LHR-based shareholder resolutions in the Australian market. For 2019, ACSI provided analysis on one LHR-based shareholder resolution.

Outcomes
ESG Topic
Diversity
Conducted by
Objectives

Increase the representation of women on ASX300 company boards to 30%. Where companies fail to demonstrate a plan to reach 30% ACSI recommends votes against zero women boards.

Scope and Process

Of the 81 companies targeted at the start of 2019, 34 companies appointed a female director to their board. Our program included 75 meetings with these target companies and resulted in ACSI opposing 16 director re-elections as they failed to demonstrate a plan to reach 30% women on their board.

ACSI will make a recommendation based on actual appointments and commitments to improve gender diversity.

Outcomes
ESG Topic
Other governance
Conducted by
Objectives

Board composition and accountability:

Broadly, there are two objectives:

(1) Ensure appropriate board composition, including a majority of independent directors.

(2) Ensure board accountability to shareholders for past decisions.

Scope and Process

ACSI provides voting advice for the ASX300 on board composition and accountability (this includes diversity issues), via recommendations on director elections and re-elections.

Outcomes

21.2. Additional information. [Optional]

Our service provider ACSI makes all proxy voting recommendations in accordance with the Governance Guidelines which are created and approved by its member funds. The guidelines are available on the ACSI website: https://www.acsi.org.au/images/stories/ACSIDocuments/ACSI-Governance-Guidelines.Nov17.pdf

ACSI informs companies of its voting recommendations before the meeting where possible, or after the meeting. ACSI frequently meets companies whose resolutions it opposed.


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