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The international business of Federated Hermes (formerly Hermes Investment Management)

PRI reporting framework 2020

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Overview

LEA 01. Description of approach to engagement

New selection options have been added to this indicator. Please review your prefilled responses carefully.

01.1. Indicate whether your organisation has an active ownership policy (includes engagement and/or voting).

01.3. Indicate what your active engagement policy covers:

General approach to Active Ownership

Engagement

Voting

01.4. Do you outsource any of your active ownership activities to service providers?

01.6. Additional information [optional]

The international business of Federated Hermes (“Federated Hermes”) engages with companies on material environmental, social and ethical, governance, strategy, risk and communication issues with the goal of achieving beneficial change with respect to risk management, value creation and reputation. Engagements are objective-driven and follow a structured, milestone-driven approach. Interactions are sought at the board, senior management and specialist level, which is complemented by collaborations with other investors where appropriate. The work is principally carried out by our interinational stewardship team, which has significant cumulative and diverse experiences and skills. All company engagements are sought to be complementary, in terms of their goals, to Federated Hermes' wider public policy and best practice work.

The long-standing Federated Hermes Responsible Ownership Principles, first published in 2002, aim to create a common understanding between company boards, managers and owners. The Principles set out our expectations of listed companies and similarly what these companies can expect from us as owners. The expectations  are derived from our extensive experience as an active and engaged shareholder; they underpin the way we fulfil our stewardship responsibilities and go beyond only stewardship of public companies. In addition to these high level Responsible Ownership Principles, we have also developed specific corporate governance principles specific to different countries and regions to target particular local issues and nuances. We believe that, by being clear with companies about what we expect, we can create a better framework for communication and dialogue with boards and management. This should, in turn, contribute to better management of companies, ultimately facilitating their long-term success, which, in turn, will lead to wider benefits to society and for our clients’ beneficiaries.

Our stewardship team boasts one of the largest stewardship resources globally. It is composed of an effective group of highly and diversely skilled, international professionals, all committed to positively influencing leading businesses on governance and sustainability matters. The main issues we engage on relate to minority shareholder rights, executive remuneration, corporate transparency, labour and human rights and climate change and wider environmental issues. Our engagements with companies will normally focus on those matters most relevant to the longer-term strategic success of the company and typically involve senior face-to-face interactions. Generally, our engagement activity becomes more active where we believe engagement will lead, from a value or risk perspective, to a more sustainable and successful company. Our approach is complementary to and supportive of wider efforts to promote prosperity, while protecting the planet. In particular, the different environmental and social themes included in our engagement plan are explicitly aligned with the Sustainable Development Goals (SDG), supporting each of the goals either directly or indirectly.

Our stewardship conflicts of interest policy is available online: https://www.hermes-investment.com/ukw/wp-content/uploads/2019/04/stewardship_conflicts_of_interest_policy.pdf


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