To help our portfolio managers and investment teams better assess risks and opportunities in client portfolios, we have integrated the analysis of environmental, social, and corporate governance (ESG) factors into our investment and risk-management processes firmwide. Our ESG Research team, part of the central investment research function, provides company- and sector-specific ESG analysis and engages directly with company management teams on ESG topics. The team executes proxy voting for over 5,000 company meetings annually, and performs portfolio reviews with portfolio managers to identify holdings with the greatest ESG risks and opportunities.
“We see it as our fiduciary duty to take into consideration issues that may impact the immediate or long-term financial performance of our clients’ portfolios.”
Brendan Swords, President and Chief Executive Officer
Company engagement and proxy voting are key to our process The goal of our stewardship activities – engaging with company managements and voting proxies on our clients’ behalf – is to support decisions that we believe will maximize the long-term value of securities we hold in client portfolios. As a firm with a long history of conducting independent fundamental research, direct engagement with company management teams on a range of issues, including ESG, has always been a core part of our investment process. The majority of our company research is the result of direct contact with company management, both in our offices and on site, as well as contacts with company suppliers, customers, and competitors. Engaging with company managements on ESG issues plays a critical role in helping to identify, understand, and appropriately consider ESG risks.
Proxy voting is another powerful tool for investors, and we vote proxies on our clients’ behalf in a manner that we believe maximizes the economic value of their holdings. Importantly, we do not automatically vote proxies either with management or in accordance with the recommendations of third-party proxy providers. We vote according to our own Global proxy voting guidelines. While these guidelines set forth general guidance for voting proxies, we evaluate each proposal on its merits.
Working with ClientsWe partner with a wide variety of clients, from corporate and public pensions to endowments and foundations, to solve investment problems. We view ESG criteria as one set of factors among many that should be weighed appropriately to inform investment decision making, and we believe our ability to integrate ESG issues into our investment process contributes to our mission to exceed the investment objectives and service expectations of our clients worldwide.
Collaboration with industry initiatives We are signatories to the UN Principles for Responsible Investment (PRI), the PRI Statement on ESG in credit ratings, the UK Stewardship Code, the Hong Kong Principles of Responsible Ownership, the Japan Stewardship Code, and the Investor Stewardship Group’s Framework for US Stewardship and Governance. We are also members of the International Corporate Governance Network, the Asian Corporate Governance Association, GRESB, and the Global Impact Investing Network (GIIN). Wellington Management engages with a number of other ESG-related initiatives such as the Investor Network on Climate Risk and the UN Global Compact (UNGC). In addition, we cultivate relationships with other asset management firms and broader industry organizations to share insights on corporate governance trends and local market considerations.
Our perspectives on climate change Wellington Management recognizes that an international transition toward a lower-carbon economy is underway and believes this is important not only for our clients’ investments, but for the sustainability of financial markets, the global economy, and our planet.
Climate change and related policy movements toward a low-carbon future may present an array of near- and long-term risks and opportunities. At its core, we view climate change as being about greater volatility and less-predictable outcomes. Read more about our perspectives on climate change.