We integrate analysis of environmental, social, and corporate governance (ESG) factors into our investment and risk-management processes firmwide — with the aim of better assessing risks and opportunities in client portfolios.
We approach ESG integration as a tailored process that can be applied to all asset classes. Wellington Management’s culture is built to support collaboration and our open-architecture “community of investors” naturally lends itself to the integration of ESG considerations. Our ESG Research team helps our portfolio managers and analysts gather deeper intelligence on ESG topics and integrate these considerations into the investment process. The team also engages with company management on ESG topics and executes proxy voting for over 5,000 company meetings annually.
We partner with a wide variety of clients, from corporate and public pensions to endowments and foundations, to solve investment problems. 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. Read more about Wellington’s ESG philosophy.
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.
We engage directly with company managements to identify and understand ESG risks. We also vote proxies in a manner that we believe should maximize the economic value of our clients’ holdings. Importantly, we evaluate each proposal on its merits and vote according to our own Global Proxy Voting Guidelines, which set forth general guidance. We do not automatically vote proxies either with management or in accordance with the recommendations of third-party proxy providers. Learn more about our Global Proxy Policy and Procedures.
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, CFA, Chairman and Chief Executive Officer
We are signatories to the UN Principles for Responsible Investment (PRI), the PRI Statement on ESG in credit ratings, the Statement of Support for the Task Force for Climate-Related Financial Disclosures (TCFD), the Transition Pathway Initiative, as well as regional and global governance codes, including the Hong Kong Principles of Responsible Ownership, Investor Stewardship Group (US), the Japan Stewardship Code, and the UK Stewardship Code. In addition, we partner with other asset management firms and broader industry organizations to share insights on corporate governance trends and local market considerations. We are members of:
We also engage with a number of other ESG-related initiatives such as:
Wellington Management recognizes that an international transition toward a lower-carbon economy is underway and believes this is important for our clients’ investments, and 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.
Wellington has entered into a collaborative initiative with the Woods Hole Research Center (WHRC) — the world’s leading independent climate research institute — to integrate climate science and asset management. Our new alliance will focus on creating quantitative models to help analyze and better understand how and where climate change may impact global capital markets. A broad range of projects are planned, including developing investor tools and innovative analytical methods seeking to improve climate risk assessment and investment outcomes. Read the full press release.
In emerging markets, companies pursuing high ESG standards really stand out. They are often working to change their business models for long-term sustainability, striving to treat employees better, and incentivizing them for high performance. Shareholder returns are typically a top priority for these companies, and they have the potential to be long-term outperformers.
Juanjuan Niska, CFA, Global Industry Analyst, Emerging Market Utilities
A: ESG stands for environmental, social, and (corporate) governance and is used to describe a group of issues that can have a material impact on the long-term success of the company and, potentially, investment returns. Examples of ESG issues include energy consumption and greenhouse gas emissions, supply-chain risk management, gender diversity, employee productivity, independent board leadership, and CEO compensation.
A: In certain instances, ESG issues can have a material impact on the investment thesis and, as such, should be factored into both investment decision making and engagement activities as appropriate.
A: Our portfolio management and ESG Research teams view ESG analysis and integration as both return enhancing and risk mitigating. Each of our portfolio managers and investment teams develops their own investment approach whereby ESG considerations are integrated into their research and decision-making processes to the extent that they believe these issues may affect the long-term success of a company and investment returns. This can manifest itself within the investment thesis or portfolio weighting for a particular security, as well as within our proxy voting and company engagement efforts.
Corporate governance continues to improve in Japan, as some companies, investors, and asset owners realize these improvements can lead to stronger financial performance over time. We describe what we believe...Read more
Climate change resilience, human capital management, and risk oversight are key ESG considerations for companies across sectors. We believe engagement on these issues can help us identify potential sources of...Read more
Phil Duffy, PhD, president and executive director of the Woods Hole Research Center, spoke at Wellington’s 2018 Research Forum about climate change and key climate-related risks. Watch excerpts of his...Read more
Alan Hsu looks at the disruption transforming the utilities industry and assesses potential opportunities across sectors as diverse as water/waste management, clean transportation, and energy efficiency, in addition to renewable...Read more
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