We believe that responsible investment is an essential component of asset stewardship and that embedding responsible investment (RI) practices into the core of our investment activities is in the best long-term interests of our clients.

We became a signatory to the United Nations Principles for Responsible Investment (UNPRI) in 2007 and since that time have progressively improved our responsible investment practices across our investment teams globally. You can read more about our organisation here.

Our Strategy
Our Progress Our responsible investment strategy is based upon three strategic pillars of Quality, Stewardship and Engagement.

This strategy is underpinned by a strong governance framework and is supported by our responsible investment team.

The team engages the entire business to deliver the strategy which is overseen by the Global Responsible Investment Committee (GRIC), whose role it is to monitor and direct the responsible investment practices across the business.

We take a global approach to disclosing our stewardship responsibilities across our investment portfolios ensuring that client interests are at the core of our investment process.

Our Global Stewardship Principles as fulfilling the requirements of the UK Stewardship Code and other stewardship codes across the world. The principles are underpinned by policies and process which are overseen by the GRIC. These policies include our policy on cluster munitions and anti-personnel mines.

Each of our investment teams has a responsible investment representative who co-ordinates information flows across their respective teams. The RI representatives also sit on an Environmental, Social and Governance (ESG) Committee, which plays a key governance role by representing their teams, reporting on team progress, contributing to thought leadership and looking at new approaches to addressing current and emerging ESG risks and opportunities. The ESG Committee are an important part of ensuring that we have the highest quality of ESG integration embedded within our investment processes across the organisation.
Our Diverse Investment Capabilities
We employ 15 investment teams who are specialists in their respective fields and set their own investment style. Each investment team is structured so that portfolio managers and analysts have a strong sense of portfolio ownership. Incentive structures are directly aligned to the results they deliver for clients. Information on the investment philosophy and approach for each team can be found RI in Practice section of this report.

Our commitment to responsible investment and stewardship is a common thread which runs through these diverse investment capabilities. In particular all teams believe that ESG issues impact investment value and that as a large institutional investor we can achieve better long term investment outcomes through active engagement with companies and by exercising the ownership rights we hold on behalf of clients.

Each investment team's approach to incorporating these factors into their investment process has evolved over time and we believe the diverse approaches are a key strength of our business as it allows us to share ideas and learn from each other. The governance of responsible investment and the systems for cross-collaboration are critical in this regard.

Quality Investment Progress
ESG integration
What you can expect when you invest with one of our teams

While we are proud of our diverse investment capabilities, the following provides and an overarching view of some of the universal expectations for all investment teams.

Each team has a process for identifying and assessing the relevance and materiality of ESG issues for their respective asset classes. For all active equity teams, company engagement is a key source of insights on these risks and opportunities.

These insights, coupled with the best available third party ESG research, are assessed by the relevant company analyst and incorporated into stock notes or reviews. Some teams assign specific ESG scores, while others incorporate the assessment into broader views of company management and business quality. All active equity teams hold regular team meetings to discuss company assessments, including ESG factors.

Our fixed income teams have an assessment process which flows into their view of a particular security, whether through the six-factor model used by the Emerging Markets Debt Team or the ESG score and internal credit rating used by the other Fixed Income and Credit teams.

For all teams, responsibility and accountability for analysis and integration of ESG factors, investee company engagement and rests with each investment professional and the head of the team. Integration and engagement are mutually reinforcing with company analysis driving engagement and engagement outcomes influencing the analysis. This is why we have chosen not to separate proxy voting, engagement or ESG research into a specialised function.

For our Unlisted Infrastructure team, a much more specific approach is possible. This team has developed separate and detailed policies and assessment frameworks while still adhering to the organisation-wide approach.
Company engagement
Engagement with company management is a fundamental part of our teams' investment processes. Through company engagement, we seek to highlight areas for potential improvement and risk reduction, encourage improved disclosure on ESG issues, and commend companies that are making progress in this area. We have guidelines and principles for corporate engagement, which are publicly available on our website.

Engagement is more difficult for fixed income investors. We have, however, effectively engaged with counterparties and semi-government issuers.

For Unlisted Infrastructure, our seats on company boards allow more direct oversight.

Given the varying nature of the asset classes we manage, the geographies in which they operate and the size of our holdings, each of our investment teams' engagement approaches are tailored to individual companies and the specific issues in question.

On occasions where our engagement activities with company management are unsuccessful, we may escalate the issue, for example by writing to, or meeting with, the chairperson or lead independent director, voting against directors who we believe are not providing appropriate oversight, or collaborating on further engagement with other like-minded investors. Ultimately we may choose to sell down holdings in companies where we lose confidence in the management of the business following unsuccessful attempts to engage

Proxy voting

Proxy voting rights are an important asset and part of our stewardship responsibilities. We seek to vote on all possible resolutions at company meetings. Prior to voting, the relevant investment manager and analyst carefully consider each resolution, with guidance provided by our 'Guidelines and principles for corporate engagement on governance, environment and social issues'.

Recommendations from a selection of independent corporate governance research providers are also sought. Our investment teams retain full control over their proxy voting decisions, however, and do not necessarily follow the guidance provided by third party governance research providers.

All teams have an approval and escalation process for proxy votes and maintain records when they vote against management or against the recommendations of the proxy voting adviser.

Teams are responsible for their own voting and from time to time, different teams may vote in different ways on the same issue. To manage this, whilst maintaining team independence, we are developing forums where teams who are voting on the same company can discuss the key issues (while always complying with regulatory requirements related to collusion or takeover provisions).
Quality Investment Progress
Teams not covered by this reporting

Our Realindex team, who manage smartbeta strategies, and Multi-Asset team, do not currently integrate ESG factors in their investment decision-making or engage with companies. The Realindex team do vote all shares, though this is done in line with recommendation of our Proxy Adviser, CGI Glass Lewis. Our short-term investment (cash) team is captured within the Global and Credit and Fixed Income profile as the relevant ESG analysis and engagement is shared between the teams.