Investment

ESG factors are core inputs for our fundamental, bottom-up analysis and decision-making. The impact ESG factors have on the attraction of shares as investments, either because of implications for profit pools or likely costs of capital, is clearly material. We seek, through our analysis, to identify significant opportunities and mitigate risks, especially where such trends are nascent. We recognise the importance for all stakeholders to contribute to the minimisation of current and future environmental challenges, promote responsible business practices, encourage diversity, and protect human rights. We understand that as an investment manager, we have a vital role to play in encouraging positive change for future generations.

Each investment team is responsible for considering such factors, including sustainability risk, and their impact on shareholder value throughout the investment process. Conclusions across different teams may vary, as assumptions and interpretations can be subjective.

Examples of issues that are considered as part of our company and industry analysis include:

• Environmental: consideration of the entire value chain (including end product use), monitoring and disclosure of impact, emissions (greenhouse gases and local emissions), hazardous waste, resource and land use.
• Social: sustainable labour practices (competitive pay, labour and management dispute resolutions), support of wider community and equal opportunities (gender, age, social, origin, access to new technology and innovation).
• Governance: board independence, diversity and authority, senior management track record, CEO compensation level and structure, insider trading, special voting rights or restrictions, downside management, equity issuance and buy back history.

Research, monitoring and engagement with companies are fundamental to our investment process. As part of this we seek to build effective relationships and maintain high and broad levels of engagement with management and other stakeholders of the companies to which we allocate capital.

Generally we do not engage publicly with companies on specific issues, but have a long history of interacting directly with management teams to articulate the case for applicable ESG issues. Such debates have, we believe, led to meaningful shifts in company approaches that are economically, environmentally and socially advantageous to the companies, their stakeholders and our clients. We believe that active, fundamental long-term investing is best-placed to achieve such goals, given the depth of dialogues and the linkage between social and economic outcomes.

Proxy Voting

Proxy voting is an important duty of shareholders and reasonable care and diligence must be undertaken to ensure that such rights are properly and timely exercised. When the Firm has discretion to vote the proxies of its clients, it will vote those proxies in the best interest of its clients and in accordance with its Proxy Voting Policy.

Since 2016 the Firm has engaged with Institutional Shareholder Services (“ISS” www.issgovernance.com), the world’s leading corporate governance and responsible investing solutions provider, to facilitate and assist with the voting process. In January 2021 we subscribed to the ISS Sustainability Policy in order to further enhance our ESG analysis and reporting capabilities with regard to Voting and Engagement. The ISS Sustainability Policy is a set of sustainability proxy voting guidelines and seeks to promote support for recognised global governing bodies promoting sustainable business practices advocating for stewardship of environment, fair labour practices, non-discrimination, and the protection of human rights.  Generally, ISS’ Sustainability Policy will take as its frame of reference internationally recognised sustainability-related initiatives such as the United Nations Environment Programme Finance Initiative (UNEP FI), United Nations Principles for Responsible Investment (UNPRI), United Nations Global Compact, Global Reporting Initiative (GRI), Carbon Principles, International Labour Organization Conventions (ILO), CERES Roadmap for Sustainability, Global Sullivan Principles, MacBride Principles, and environmental and social European Union Directives.

The Firm generally votes in favour of routine corporate housekeeping proposals, including election of directors (where no corporate governance issues are implicated). For other proposals, the Firm will assess what is in the best interests of its clients and, in doing so, may take into account the following factors:

• whether the proposal was recommended by management and the Firm’s opinion of management;
• whether the proposal acts to entrench existing management;
• whether the proposal fairly compensates management for past and future performance;
• Environmental, Social and Governance factors, and
• ISS’ Research Reports and Sustainability Policy.

The Firm’s Proxy Voting Policy requires the Firm to identify and address conflicts of interest between its related persons and clients. If a material conflict of interest exists, the Firm will determine whether voting in accordance with the guidelines set forth in the Proxy Voting Policy is in the best interests of the client or whether taking some other action may be more appropriate.

The compliance team reviews the proxy voting records on a monthly basis to ensure consistency with the Proxy Voting Policy.

Participation in ESG Initiatives

The Firm became a signatory of the internationally recognised Principles for Responsible Investment (PRI) in 2020.  The Firm recognises this commitment as a way to embed current and future responsible investment considerations in both the investment process and promote ongoing positive firm culture.

The UK Stewardship Code is aimed at improving governance by encouraging engagement between investors and issuers, including through the use of proxy voting. The Firm committed to the UK Stewardship Code from its inception in 2012. Under the 2020 Stewardship Code, the UK Financial Reporting Council (“FRC”) requires that firms aiming to be signatories must produce an annual Stewardship Report with only those meeting the required reporting standards being admitted as signatories. The Firm is delighted to retain its signatory status for the latest reporting year.

The Firm became a supporter of the Task Force on Climate-related Financial Disclosures (TCFD) in 2021.

The Firm has been a supporter of the Transition Pathway Initiative (TPI) since 2021. The TPI tool is used to support our ESG analysis as well as our engagement with existing and potential investee companies.

The Firm became a signatory of the Climate Disclosure Project in 2022.  The CDP holds the largest environmental database in the world, which is utilized as part of the investment process, in our commitment to responsible investment management.

The Firm is also a member of the Alternative Investment Management Association.

Social

As a Firm we are committed to share our success with those less fortunate by providing firm resources to important causes. Through the Lansdowne Charity Committee, every employee is encouraged on an annual basis to nominate a charity they are involved with, be it through volunteering or fundraising, for a discretionary grant.  In addition to this, the Charity Committee has selected a number of charities to support that have been specifically chosen so that employees can be directly involved in volunteering and fundraising.

The Firm is committed to providing equal opportunities in employment and ensures that it will not discriminate against job applicants or employees on the grounds of their sex, marital status, pregnancy or maternity, sexual orientation, disability, age, race (including colour, nationality or national or ethnic origins), religion or belief or gender reassignment. It is the Firm’s policy to make every effort to provide a working environment free from harassment, intimidation and discrimination.

Since 2021 the Firm has partnered with Arrival Education on its annual mentoring initiative, the Lansdowne Unlocked Programme. Arrival Education is a youth organization that work with businesses to deliver culture change and improve inclusivity and diversity. The programme is a four-month 1:1 programme where university students from Arrival’s network are matched up with a mentor at Lansdowne. Arrival recruits talent from its network that have a stated interest in a career in investment / finance; come from lower financial demographic background; 85% have no personal network in “corporate UK”; are ethnically diverse with a 50/50 gender split and are 1st and 2nd year University students.

In accordance with the Modern Slavery Act 2015, the Firm publishes annually a Modern Slavery Statement regarding the steps we have taken and continue to take to ensure that modern slavery or human trafficking does not take place in our business or our supply chain. To view the full statement, please refer to our website: https://www.lansdownepartners.com/home/modern-slavery-statement/