p i warsh ed t s policy - lgt group · considers effective stewardship to be an important duty we...
TRANSCRIPT
Stewardship policy
A look inside the Princely Collections For more than 400 years, the Princes of Liechtenstein have been passionate art collectors. The Princely Collections include key works of European art stretching over five centuries and are now among the world’s major private art collections. The notion of promoting fine arts for the general good enjoyed its greatest popularity during the Baroque period. The House of Liechtenstein has pursued this ideal consistently down the generations. We make deliberate use of the works of art in the Princely Collections to accompany what we do. For us, they embody those values that form the basis for a successful partnership with our clients: a long-term focus, skill and reliability.
www.liechtensteincollections.at
Bauer brothers, Hortus Botanicus, detail from “Tropaeolum majus”, 1779 © LIECHTENSTEIN. The Princely Collections, Vaduz–Vienna
Contents
4 Introduction
6 UK Stewardship Code ("Code")
7 Discharging our stewardship responsibilities
8 Controversial weapons policy
9 Coal exclusion policy
10 Monitoring investee companies and funds
12 Voting rights
14 Communicating with other shareholders and
relevant stakeholders
15 Managing conflict of interest
4
Introduction
As a wealth management firm, our responsibility to
look after our clients and their assets is one of our core
values. We do this by offering a bespoke approach to
wealth management, taking into account not only clients'
investment objectives, time horizon and risk profile, but
also any additional needs and ethical views they may have.
Looking after our clients' interests in this manner and
ensuring our investment decisions and recommendations
are taken with our clients' best interests in mind is at the
heart of our stewardship responsibilities.
5
“ To LGT Vestra, effective stewardship means we seek the best outcome for our clients by taking an active interest in both the financial and non-financial aspects of the companies and funds in which we invest on behalf of, or recommend, to our clients.”
David Scott, Chairman LGT Vestra
6
The Code was first issued by the Financial Reporting
Council ("FRC") in 2010, with the latest edition effective
from 1 January 2020. The FRC is an independent
regulator which oversees the areas of auditing,
financial reporting and corporate governance as well
as stewardship in the financial services industry.
The Code sets a clear benchmark for stewardship as
the responsible allocation, management and oversight
of capital to create long-term value for clients and
beneficiaries, leading to sustainable benefits for the
economy, the environment and society. Whilst the Code is
largely concerned with institutional investing, LGT Vestra
considers effective stewardship to be an important duty
we have to all of our clients.
UK Stewardship Code (“Code”)
7
Discharging our stewardship responsibilities
As a wealth manager, our primary duty is to maximise
investment returns for our clients whilst operating within
the confines of our contractual obligations and the
objectives, goals and other parameters we have agreed
with our clients. We look to achieve this through our
sound and thorough approach to identifying suitable
investment opportunities.
Investment opportunities are identified through
comprehensive financial analysis but other aspects of
the company or fund may be given consideration.
Those factors include:
■ Corporate governance
■ Strategy
■ Culture
■ Non-financial performance and risks
■ Capital structure
■ Social and environmental impact
The significance assigned to these factors is considered
on a case–by-case basis at the discretion of our in-house
Research team.
8
LGT Vestra´s approach to excluding inhumane weapons is
in-line with that of our parent company LGT. We do not
invest in companies that are involved in the manufacture,
storage and delivery of controversial weapons, such as
atomic weapons, land mines, cluster bombs and cluster
munitions, as well as biological and chemical weapons.
This means we exclude investments harbouring significant
risks according to environmental, social and governance
(ESG) criteria. We do not invest directly in any countries
that are not signatories to the nuclear non-proliferation
treaty and to international treaties on the prohibition of
landmines and cluster munitions.
Controversial weapons policy
9
Coal exclusion policy
LGT Vestra and our parent company LGT are committed
to combatting climate change and supporting an
energy supply that is consistent with the aims set
forth in the Paris Agreement. Coal is the single largest
source contributing to global temperature increases1
and thermal coal accounts for more than 80% of total
coal production. We therefore exclude thermal coal
production and power generation from thermal coal from
our direct investment universe.
Exclusions include:
■ mining companies deriving more than 5% of their total
revenues from thermal coal production.
■ mining companies producing more than 1% of total
global thermal coal production.
■ utility companies deriving more than 20% of their
total revenues from electric power generation if their
average carbon intensity is above 430 g CO2/ kWh, a
ceiling which will be lowered every year.2
■ utility companies deriving less than 20% of revenues
from electric power generation if their revenue
contribution from thermal coal activities exceeds 5% of
their total revenues.
1 CO2 emitted from coal combustion was responsible for 0.3° Celsius of the 1° Celsius increase in global average annual surface temperatures above pre-industrial levels (International Energy Agency (2019), Global Energy & CO2 Status Report)
2 We follow the maximum carbon intensity trajectory used by the International Energy Agency "2-Degrees" scenario (Energy Technology Perspectives (2017))
10
Monitoring investee companies and funds
Effective monitoring of investee companies and funds
is fundamental to fulfilling our responsibility to our
clients. Each company or fund´s ability to create, sustain
and protect value is central to our investment process.
Therefore, we continually assess the performance and
management of companies and funds in which we have
invested on behalf of our clients to determine if our clients'
interests are being served.
Research and monitoring
Comprehensive and continuous research and monitoring
of investee companies is fundamental to LGT Vestra's
investment process as our investment strategy typically
looks to long-term investment rather than continual
turnover of clients' portfolio holdings. Financial and
non-financial risks are actively considered and detailed in a
specific section within our research reports.
Monitoring of specific companies typically
occurs through:
■ Financial reporting
■ Company meetings
■ News
■ Special announcements
■ Additional research conducted by our Research team
Monitoring of funds typically occurs through:
■ Ongoing returns
■ Holdings based analysis
■ Regular fund manager engagement
11
Market views and industry research are also taken
into account when looking into new investment ideas
or reviewing our recommendations. Where we have
concerns about the performance or strategy of an investee
company/fund or where we have reason to believe that
our clients' rights as shareholders are being compromised
in any way, we will escalate our engagement with the
investee company's management and take any actions or
decisions accordingly.
12
Voting rights
LGT Vestra supports our clients in exercising their right to
vote where deemed appropriate. From time to time, our
research analysts identify a significant issue which could
have an impact on the holdings of our clients. When
this occurs, LGT Vestra exercises the vote on behalf of
shares held by our clients through our nominee. Where
clients identify a vote where they wish to exercise their
rights, they may instruct us to vote on their behalf and
we will cast a vote for the shares held by them through
our nominee.
Where necessary or appropriate, we endeavour to engage
with investee companies regarding significant votes.
Records of our votes on behalf of particular clients are
available to those clients upon request.
We do not use the services of proxy advisers.
We regularly report investment activity to our clients, and
where it is requested by a client, we will report details of
our voting activities.
Examples of voting activities include:
In 2019, we voted at a General Meeting of Capital Gearing
Trust (CGT). We voted in favour of a resolution to allow the
Board to issue shares for up to 30% of issued share capital
without having to return to shareholders for additional
approval. We voted in favour because one of the features
of CGT is the ability of the Trust to issue shares so investors
can buy at net asset value (NAV). As investors, we prefer
this to trading at discount and premium.
13
In October 2018, we voted in our clients´ interests against
Unilever´s proposal to move away from its Anglo-Dutch
corporate structure in favour of a re-domiciling in the
Netherlands. We had concerns about subsequent liquidity
in London, forced selling by passive funds, and the possible
loss of the group´s FTSE 100 status.
Unilever´s stance was based on the fact that more of the
group´s shares trade in the Netherlands than in the UK.
They also argued that the move would simplify the legal
and share structure.
We appreciated that shareholders would see no change
to their economic interest, and we also recognised that
Unilever would enjoy greater flexibility for strategic
portfolio change and share-based acquisitions. More
prosaically, we were also concerned that the proposal to
re-domicile in favour of the Netherlands would expose
Unilever´s UK shareholders to the possibility of a Dutch
withholding tax being levied on dividends. The Dutch
government had announced plans to scrap the tax, but
the issue was contentious (it was being characterised
as a 'gift' to foreign investors) and we were worried that
future administrations could revoke the decision if the tax
was scrapped.
In the face of widespread UK institutional opposition,
Unilever subsequently withdrew all proposals. As yet, it
has not tabled new proposals.
14
Communicating with other shareholders and relevant stakeholdersLGT Vestra's long-term investment strategy and research
process mean that it will rarely be necessary for us to
co-operate or communicate with other shareholders or
relevant stakeholders. However, if such communication is
deemed to be in the best interests of our clients, it will be
carefully considered and action taken accordingly.
15
Managing conflict of interest
LGT Vestra maintains a policy on managing conflicts of
interest which is designed to ensure its decisions are taken
wholly in the interest of its clients. LGT Vestra aims to
ensure that all potential and actual conflicts are identified,
recorded, evaluated, managed and monitored.
LGT Vestra does not engage in proprietary trading and
therefore any conflict of interest between us and our
clients with regard to the advice we give, investment
decisions we may take on a discretionary basis, or the
exercise of voting rights is eliminated.
LGT Vestra´s conflicts of interest policy is available to clients
upon request.
“ It is one of our core investment values that we do not invest in anything we do not believe in.”
Jonathan Marriott, Chief Investment Officer LGT Vestra
17
Important informationLGT Vestra LLP is authorised and regulated by the Financial Conduct Authority ("FCA"). Our regulation details are set out in the FCA register: Firm Reference No: 471048; register.fca.org.uk/. Registered in England and Wales: OC329392. Registered office: 14 Cornhill, London, EC3V 3NR. LGT Vestra (Jersey) Limited ("LGTVJL") is incorporated in Jersey and is regulated by the Jersey Financial Services Commission in the conduct of Investment Business and Funds Service Business. Registration number: 102243; www.jerseyfsc.org/industry/regulated-entities , Registered office: 30-32 New Street, St Helier, Jersey, JE2 3TE LGT Vestra US Limited (“LGT Vestra US”) is authorised and regulated by the Financial Conduct Authority and is a Registered Investment Adviser with the US Securities & Exchange Commission ("SEC"). Our regulation details are set out in the FCA register: Firm Reference No: 585547; register.fca.org.uk/ and the SEC Investment Adviser Public Disclosure: www.adviserinfo.sec.gov/IAPD/Default.aspx. Registered in England and Wales: 06455240. Registered Office: 14 Cornhill, London, EC3V 3NR. This publication is marketing material. It is for information purposes only. Certain services described herein are not available to retail clients as defined by the FCA or the JFSC, as applicable; please speak to your investment adviser for further clarification in this regard. All services are subject to status and where local regulations permit. The wording contained in this document is not to be construed as an offer, advice, invitation or solicitation to enter into any financial obligation, activity or promotion of any kind. You are recommended to seek advice concerning suitability from your investment adviser. Any information herein is given in good faith, but is subject to change without notice and may not be accurate and complete for your purposes. This document is not intended for distribution to, or use by, any individual or entities in any jurisdiction where such distribution would be contrary to the laws of that jurisdiction or subject any LGT Vestra entity to any registration requirements. When we provide investment advice it is on the basis of a restricted approach that is to say, whilst we review and advise on retail investment products from the whole of the investment market.
Investors should be aware that past performance is not an indication of future performance, the value of investments and the income derived from them may fluctuate and you may not receive back the amount you originally invested.
Baue
r br
othe
rs,
Hor
tus
Bota
nicu
s, "
Liliu
m",
177
6/1
80
4 ©
LIE
CH
TEN
STEI
N.
The
Prin
cely
Co
llect
ions
, V
aduz
–Vie
nna
LGT Vestra LLP14 Cornhill, London, EC3V 3NRPhone +44 (0)20 3207 8000, [email protected]
www.lgtvestra.com
VALUES WORTH SHARING
LGT Vestra LLP15 Queen Square, Bristol, BS1 4NPPhone +44 (0)117 422 4022, [email protected]
LGT Vestra (Jersey) LimitedCharles Bisson House, 30-32 New Street, St. Helier, Jersey, JE2 3TEPhone +44 (0)1534 786400, [email protected]
LGT Vestra US Limited14 Cornhill, London, EC3V 3NRPhone +44 (0)20 3207 8000, [email protected]