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Vigeo EIRIS (Delisted)

Service Provider Reporting Framework 2017

You are in Stewardship Services » Voting


SS 14. ESG in voting recommendations

14.1. Describe how ESG is taken into consideration in voting recommendations.

          The Vigeo Eiris voting service provides voting guidance at a meeting level, rather than resolution by resolution. When there is an upcoming AGM in a customer portfolio, we assess ESG risk at the company in question in terms of six specific themes. Where a company falls short of one or more of the ESG themes and issues we apply, a cause for concern is flagged to the client. Some of the themes are applied in a sector-specific or country-specific way, according to an assessment of the fundamental underlying ESG risk profile for a sector or country on a specific issue.
The six ESG themes we consider are Human Rights risk and reporting, Environmental Impact and reporting, Climate Change impact and disclosure, Health and Safety performance, Corruption and Bribery, and Supply Chain. We also include perspectives derived from our Convention Watch service, which looks at company compliance with global conventions and norms around the world.
Where a cause for concern is identified, this signifies that a vote against management at this meeting is warranted on ESG grounds.
It is up to the client to determine how they then apply that concern, including which resolution(s) to oppose management with in respect of the issue(s) we identify.
In short, our “Voting Service” is an ESG driven research report which confirms whether there is sufficient ESG specific cause for concern to consider opposing management. It is silent on voting strategy.

14.2. Provide examples

Voting guidance reports are confidential documents between Vigeo Eiris and our clients.

SS 15. Raising concerns with companies ahead of voting

15.1. Indicate whether you raise concerns on behalf of your client with companies prior to voting.

15.2. Additional information [OPTIONAL]

As explained above, our voting research does not identify specific resolutions to be opposed; it simply gives an indication to the client that a vote against management may be warranted at an upcoming AGM for reasons of ESG concerns.

The source for this information is the Vigeo Eiris core ESG research database. This proudly consists of comprehensive ESG analysis undertaken at regular intervals (outside of the AGM meeting cycle) as well as ESG event-driven controversies alerts and (where relevant) ratings and data updates, which is undertaken as and when an ESG event (positive or negative) is identified by our news monitoring. All issuers have access to view their summary profile on our issuer portal, VE Connect, so they are aware of ESG concerns we have about their company, and the ratings we provide.

A check of the company profile information is also undertaken prior to confirmation of the research being sent to clients, to ensure there is no more recent pertinent information which may affect the position identified by the research, data and ratings on our database.

Therefore, issuers do not get specific pre-notification of a report related to our voting service that identifies sufficient cause for concern, though they do have access to view a summary of our general analysis of ESG performance of their company. This is a reliable proxy for whether there may be adequate cause for concern indicated in our AGM research note.

As with all of the research, data and ratings we provide to investors, the consumers of our research are at all times free to take their own view and position in light of what we provide to them.

SS 16. Voting model and clients’ needs

16.1. Describe the processes that are in place to ensure that your voting model takes into account the diversified needs of your clients.

          Our voting service is not provided through a specific voting platform, so there is no available mechanism for “auto-voting” in line with Vigeo Eiris guidance. Furthermore (and in any case) there is no resolution-specific voting guidance. Therefore the main mechanism through which our voting model enables the needs of each specific client to be central in the process is the fact that users of our voting research service have to make an autonomous (manual intervention) decision to include our concerns in their ultimate voting decision. 

The Voting Service is delivered through our Specialist Research team in London. The reason for this is that the majority of our voting research customers require customised, bespoke input including (inter alia) direct liaison with ESG analysts at the client to incorporate their perspective in the final research piece on a company by company basis, and (where relevant) inclusion of previous year’s voting decisions at the same company about the same issues.

SS 17. Voting against management

17.1. Describe what ESG factors and situations would trigger you to recommend voting against management.

          We do not undertake any of the voting for our clients, so it is not true to say we vote against management. 

However, there are conditions under which, in principle, we may identify a company as potentially of concern enough to issue research outlining why a client might wish to vote against management at that meeting as a result of inadequate performance on one or more of the following issues:
•	Climate change data disclosure quality and reporting against targets for companies identified as very high or high impact companies.
•	Environmental performance of high and medium impact companies on issues such as energy, emissions, waste and water use.
•	Human rights policies, non-compliance procedures, training, risk impact assessments as reported as well as verified by stakeholders in extractive industries
•	Health and safety – key data in highest risk business activities such as mining and construction.
•	Corruption and bribery approach, performance and quality of policy and results for companies in high risk bribery sectors operating in countries with a high-risk exposure to bribery. 
•	Supply chain policy approach, performance and policy quality for companies sourcing a large volume of high risk products from non-OECD countries.

17.2. Indicate whether you communicate the rationale to companies when you abstain or vote against management recommendations on behalf of your clients

17.3. Describe what subsequent actions you take after voting against management.

          Not applicable because we do not abstain or vote against management recommendations

SS 18. Monitoring voting outcomes

18.1. Describe how you monitor voting outcomes.

          We do not monitor voting outcomes, because we do not make resolution-specific voting advice.

18.2. Indicate whether you provide clients with recommendations for next steps.

18.3. Describe how you incorporate ESG factors in your recommendations for next steps.

          Our voting research service is entirely ESG focussed so all next steps are about ESG. With regard to the voting research service, next steps for a bespoke service client may well be escalating the proposed action the following year in the absence of progress.
However, in the vast majority of cases, the identification of next steps has to do with the strategy of active ownership, which relates to investor-specific perspectives. Whilst we might make suggestions for proposed next steps, these are normally at the specific request of the client to record the previous year’s voting decisions.

SS 19. Publishing voting outcomes

19.1. Indicate whether you publish your voting outcomes.

19.2. Indicate whether you enable your clients to publish your voting outcomes.

SS 20. Mechanisms for clients to review voting recommendations

20.1. Indicate whether you have formal mechanisms in place for clients to review your voting recommendations.

20.2. Describe the formal mechanisms you have in place if clients wish to review your voting recommendations.

          Our voting research is not pre-populated by us into any voting platform. Some clients specifically ask us to provide the output to their voting service provider for integration into their wider voting process. However, there is no direct mechanism under our control which could enable us to confirm, let alone override, a client voting decision because we do not have direct access to the client voting systems. 

Therefore, any client voting decision made using our research is one that by definition must be manually decided and/or confirmed by the client. Our delivery model ensures that all voting “recommendations” must be reviewed and manually confirmed by the client.

SS 21. Involvement in projects to improve voting trail and obtaining confirmation

21.1. Describe your involvement in any project to improve the voting trail and/or to obtain vote confirmation.

          None – our voting service is not a vote agency service.