Our motivations for pursuing a responsible investment policy are at one with our objective of seeking long-term returns for clients. Materiality around governance issues and matters which may affect the sustainability of a company’s business model is of paramount importance. We recognise and respect the expectations placed upon us to be willing and able to hold companies to account. However, our main aim is to build and strengthen relationships with companies. Board-level engagement can be a useful way to develop investment insights and to understand the psychology of a company’s leadership.
As signatories we have a shared common purpose in promoting sustainable capital markets and the ability to work collectively on systemic risks. During the period we participated in the consultation for the 2020 UK Stewardship Code. This involved dialogue with our trade body, The Investment Association, and outreach with the Financial Reporting Council. We supported various proposals around the 2020 Code including i) application across asset classes; ii) linking stewardship to organisational strategy / purpose; and, iii) having explicit reference to ESG within the Code. During the period we also became members of the Institutional Investors Group on Climate Change (IIGCC). The IIGCC has been an effective platform for Jupiter to work with other investors to engage with companies on the climate agenda and refine investor practices.
Upholding values and improving compliance with codes and international practice is another motivation for pursuing our RI policy. As active owners, the pathway to best practice is a recurring theme in our engagement. We always review matters from the stance of representing our clients’ interests and do adopt an adversarial approach to these conversations. Through dialogue we impart our expectations to companies and underline why these matters are mutually beneficial in terms of shareholder and stakeholder alignment. We have faced some intensive situations in emerging markets (EM) where we think the underlying ESG issues could’ve been improved by adopting best practice. In these scenarios, we will engage extensively and where necessary engage with other holders, proxy advisors and regulators to escalate the agenda. We experienced various cases in emerging markets where improper disclosure around related party transactions and succession processes have hampered companies and their shareholders. We have taken measured and progressive steps to escalate,call for reform and apply global standards to these considerations. This included engagement with the Indian Regulators and Stock Exchange.
We view promoting public policy change as an important responsibility. We participate in industry consultations and outreach from policy makers. We take decisions on a case by case basis and value the opportunity to contribute to use our active market experience in this regard. Any decision to pursue this course of action is judged on whether it is in the interest of our clients. During the period we have engaged with the Japan FSA, MOF and METI regarding Foreign Exchange and Foreign Trade Act changes.
The scope of our policy applies to our various asset classes: equity, fixed income and fund of funds. Our Stewardship Policy (incorporating proxy voting, governance and sustainability) is approved by the CIO on an annual basis. Jupiter’s UK Stewardship Code disclosure is approved by the Board and this is also done annually. We have not encountered any significant exceptions to the policy for the period under review.
The details below help summarise how the policy implemented:
ROBUST CULTURE & ACCOUNTABILITY: Our fund managers are involved in voting decisions and engaging with companies which includes specific stewardship focussed sessions with non-executive / independent directors across geographies. This approach has been in place for over a decade and has raised awareness of stewardship issues across our firm. This engagement experience has also contributed to the development of our managers and wider investment personnel.
Our fund managers are supported by Jupiter’s Governance & Sustainability Team who assist with voting and engagement on stewardship.
Stewardship features within the formal objectives of our investment personnel (fund managers and assistants; equity / credit analysts and product specialists). The objectives are based around the articulation of a fund manager’s own stewardship priorities and the CIO Office’s role is to monitor, review and assist our investment personnel on these matters.
This does not detract from the concept of fund management freedom - it is additional support to help ensure that there is a consistent approach across different asset classes and our organisation. The CIO’s office has invested in third-party ESG risk data and additional ESG headcount to help fund managers with their voting and engagement considerations.
INTERNAL GOVERNANCE: Our fund management department has established a Stewardship Committee chaired by the CIO. The Committee provides a platform to coordinate and review engagement across asset classes in which Jupiter invests and to debate whether we are receiving the desired response from companies. The Committee also considers the external ESG landscape and industry and public policy matters. Other members include the Head of Governance & Sustainability, fund manager representatives from equity, fixed income and fund of fund asset classes and governance and sustainability specialists. The Vice Chairman of Jupiter Fund Management plc (JFM) is also a member of Stewardship Committee and this strengthens the alignment and information flows around stewardship to the Board.
The Executive Committee of JFM plc has also established a Corporate Social Responsibility (CSR) Committee. This Committee focuses on the wider CSR responsibilities of JFM plc (e.g. charitable giving, employee satisfaction, health & safety) and does not have authority over the actions of the Stewardship Committee. Nevertheless, information from the Stewardship Committee is relayed to the CSR Committee. We think this is valuable because stewardship activities are an important part of JFM's wider business purpose. In addition, this information helps to educate and inform senior management, thereby helping to further ingrain and support stewardship culture and awareness across our firm. The CSR Committee contains representatives of JFM's Executive Committee and the Head of Governance & Sustainability.
Our publicly available policy outlines prominent ESG themes in our voting and engagement activity. This is based on materiality, client feedback and investor experience.