ESG Voting Policy Overlay

Align Your Voting with ESG Research and Engagement Signals

New regulations and stakeholder pressure are creating the need for investors to demonstrate their commitment as responsible owners that view corporate accountability as a means to achieving greater long-term value. In Europe, the Shareholder Rights Directive II requires transparency around voting and engagement and, in North America, voting is considered part of investors’ fiduciary duty with engagement being a natural extension thereof. This underlines the need to align voting and engagement activities. Sustainalytics’ ESG Voting Policy Overlay supports a holistic approach to active ownership by providing voting recommendations that are based on:

esg principles

ESG Principles & Sustainability Signals

For all ESG focused shareholder resolutions and management proposals, we recommend voting in favor if the spirit thereof is aligned with Sustainalytics ESG Principles or the SDGs

research signals

Investor Driven Research Signals

Based on the previous proxy season’s proposals and votes, we identify ESG topics that have strong support among investors. Sustainalytics’ ESG Risk Ratings are then used to identify companies where the management of these issues is assessed as weak. For these companies, we will recommend voting against specific resolutions, such as the re-election of a board member or their reports and accounts.

engagement signals

Engagement Signals

As part of our Engagement Services, we explore all avenues of active ownership with a focus on constructive dialogue. When ongoing attempts to engage with a company are unsuccessful, the engagement team may recommend voting against specific issues, such as the re-election of a board member or their reports and accounts.

    • Key features and benefits
stewardship responsibilities

Comply with Stewardship Responsibilities

Choose your level of participation and where to focus your own efforts while leveraging Sustainalytics’ support to meet stewardship responsibilities and comply with relevant regulation.

ownership strategy

Holistic Active Ownership Strategy

Seamlessly align voting and engagement activities to shared investor concerns, robust ESG principles and the latest ESG research.

    • Use cases

1. Portfolio Management

Voting seeks to influence corporate behavior in clients’ holdings and the societies in which they operate.

2. ESG Integration

Voting on research signals enables fuller ESG integration and aligns messages across different products.

3. Shareholder Collaboration

By voting in alignment with Sustainalytics research and principles, clients will, together with likeminded peers, collaboratively advance their sustainability agendas.

collaboration
engagement

4. Stewardship

Voting demonstrates a commitment to be an active and responsible shareholder.

5. Fiduciary Duty

Performing active ownership on high risk portfolio companies is a key element of stewardship codes and guidelines for responsible investors, such as EU Action Plan on Sustainable Finance on Long Term Shareholder Engagement, the EU Shareholder Rights Directive II and more.

6. Engagement

Voting supports engagements, which address material ESG issues that may end up on companies’ AGM agendas.

report

Deliverables

Voting recommendations

Post-AGM report on Engagement and Voting Activities

  • Sustainalytics’ ESG Principles

Sustainalytics’ mission is to provide the insights required for investors and companies to make better informed decisions that lead to a more just and sustainable global economy. We believe that when investors and companies embrace ESG meaningfully, it will create long-term value that benefits all stakeholders, including shareholders. The cornerstone hereof is mutual trust, which is built on transparency. We have captured these values in a set of principles that are aligned to widely accepted norms, standards and sustainability objectives. For more information, please see sustainalytics.com/esg-principles

  • Corporate Governance Voting Items

Sustainalytics’ ESG Voting Policy Overlay is intended to work in tandem with traditional corporate governance voting policies, supplementing it with guidance, analyses and recommendations on ESG topics. It can be used in combination with clients’ own policies or that of a third-party policy and provider. With regards to corporate governance voting items, Sustainalytics supports the International Corporate Governance Network’s (ICGN) Global Stewardship Principles and Global Governance Principles as overarching guidelines on best practice.

    • Related Solutions

A proactive engagement service focused on companies with the greatest unmanaged financially-material ESG risks

An incident-driven engagement service where we engage alongside investor clients with companies that severely and systematically violate international standards

Proactive engagement services that focus on tackling the most challenging ESG issues, from climate change to child labor

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