Responsible Investment Report 2017
During the course of 2017, a number of developments have been undertaken to improve Unigestion’s Responsible Investment (RI) behaviour. These efforts are coordinated by the Responsible Investment Committee which brings together senior management and representatives of the various investment teams. The RI Coordinator attends RI conferences and workshops, creates a network of likeminded industry peers and stays abreast of new developments to identify areas for the ongoing enhancement of Unigestion’s RI capabilities, sharing these with the investment professionals to further advance our RI incorporation, as well as providing clear and transparent communication to our investors and the public.
Unigestion has written a Responsible Investment Policy (which follows) for the whole firm setting out the overarching principles to be applied throughout the company as well as the practices of each of the investment strategies.
On February 19th 2013, Unigestion became a signatory of the United Nations supported Principles of Responsible Investment (PRI). We completed our fourth PRI Reporting Framework in March 2017. This annual filing immediately generates a Transparency Report with the details on how we meet the six PRI principles. This Transparency Report is posted both on the PRI site and on the Responsibility page of our website. In June 2017 we received our Assessment Report in which the PRI benchmarks our efforts against those of our peers. We have continued to make progress again this year. We were rated an “A+” for our Strategy & Governance, the highest grade awarded. We also scored an “A” for the Private Equity and Listed Equity – Incorporation modules. We scored a “C” in the category of Listed Equity – Active Ownership which reflects a combination of Proxy Voting and Engagement activities. In particular, our scores for both Individual and Collaborative Engagements improved to a “C”. However, as highlighted below, this year we dramatically increased our efforts in engaging with the management of companies whose shares we hold to try to positively influence their ESG behaviour. As a result, our marks on this measure should continue to improve next year. Taking a leadership role in best practices, and in the spirit of transparency, we also posted this PRI Assessment Report on our website.
As we announced in last year’s report, we set two major themes to be the focus of our RI activities in 2017: Carbon and Engagement.
In June 2016 we signed the Montréal Carbon Pledge, an ambitious collaboration between the PRI and investors from around the world. The pledge has attracted commitment from over 120 asset owners and investment managers with over USD 10 trillion in assets under management. By signing the pledge, we committed to measuring and disclosing the carbon footprint of all of our liquid portfolios to help investors better understand, quantify and manage climate change-related impacts, risk and opportunities.
During 2017, our first collaborative engagement was completed. Unigestion and about 30 other PRI signatories had participated in a PRI coordinated collaborative engagement with 130 large global corporations suspected of producing excessive carbon footprints that they were not reporting. Letters were sent to these companies urging them to disclose their full and complete carbon footprint to investors. Many of the companies we engaged with responded positively to our request and we have already seen increased transparency from some. Overall, however, the outcome of this collaborative engagement was not as impactful as originally anticipated.
Further on the topic of engagement: in 2017 we engaged directly with 25 portfolio companies on a variety of Directors Related, Routine Business, Reorganisation and Merger, Health & Environment, and Corporate Governance issues. We did this by writing a letter to corporate management voicing our concern and requesting that they be addressed. The intention is that this then sparks a dialogue with management through emails and phone conversations to clarify our position, personalise the engagement, and advocate for change. In addition, the RI Committee chose to add an additional category for engagement during the year. We will now also engage on Shareholder proposals on Social/Human Rights issues.
We have also signed up to the Climate Action 100+ collaborative engagement. This five-year initiative is focused on engaging with the 100 largest global carbon emitters. The goal is to have them address how their businesses remain viable in a world that is constrained to a maximum of a two degree Celsius temperature rise. To date, 256 asset owners and asset managers, including Unigestion, with combined assets of USD 30 trillion have signed up to this initiative.
We have subscribed to a class action recoveries service provided by Securities Class Action Services, LLC (a subsidiary of our proxy voting services provider, ISS) on behalf of our Uni-Global SICAV. The adoption of class action recoveries is considered a best practice in maximising value for investors.
Members of the RI Committee regularly attend and present at industry conferences. Please find below the list of the RI conferences in 2017 at which Unigestion employees spoke. Eric Cockshutt, Unigestion RI Coordinator, was a panellist at; HFSB Nordic Institutional Investor Roundtable, Responsible Investment in Helsinki and Responsible Investment in Hedge Funds, launch of the new ESG DDQ sponsored by the PRI in Stockholm. Maria Musiela, Equities Investment Specialist, was a panellist at Investment Europe Nordic Summit, Risk management through ESG & Carbon in Stockholm and London Pension Officer Forum, Low Carbon Strategy in London. In addition, members of the RI Committee and Unigestion analysts attended a further 11 RI and ESG conferences.
In May, Fiona Frick, our CEO, was elected to the board of Sustainable Finance Geneva. Through this role, she will be able to work with the innovative financial community in the city and collectively reinforce the importance of continuing to improve sustainable finance.
In terms of promoting RI, we have also posted to our website a video interview of our RI Coordinator, Eric Cockshutt, which provides an overview of our RI history, activities and accomplishments.
A task force of the RI Committee met in November 2017 to prepare an ESG Road Map for Unigestion. One of the major outcomes was to survey our colleagues to determine their ESG values which has just been completed. We look forward to reporting the findings next year.
In 2017, we completed our efforts in contributing to a working group in conjunction with the PRI, AIMA and the SBAI (the Standards Board of Alternative Investments, formerly the HFSB) as well as other industry leading asset managers, asset owners and consultants, to construct a standard ESG Due Diligence Questionnaire to become the benchmark across the Hedge Fund industry. The final document was published in March 2017.
We believe in the importance of being an active shareholder and have therefore decided to exercise the shareholders’ rights of our clients through an outsourcing arrangement with a third-party proxy voting specialist firm. Unigestion’s proxy voting is carried out by ISS based on their International Sustainable Proxy Voting policy. During 2017, Unigestion voted on 91.72% of 10,049 votable items. We voted against management on 12.9% of the votes we cast.
One example of our voting activity was the landmark Shareholder proposal at the Exxon Mobil AGM. Unigestion, in concert with ISS’s recommendation, voted against management and in favour of the initiative proposed by the Church Commissioners of England. The proposal requested that Exxon Mobil report on how its portfolio of reserves and resources would be affected by global efforts to limit the average rise in temperature to 2 degrees Celsius above pre-industrial levels. This groundbreaking shareholder initiative was carried with 62% of votes in favour of the motion.
At the close of 2017, Unigestion managed CHF 4.05 billion in SRI funds and mandates: a doubling over the past two years.