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 of 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 of voting proxies. This underscores the benefit of aligning voting and engagement activities.
Sustainalytics’ ESG Voting Policy Overlay supports a holistic approach to stewardship by providing voting recommendations that are based on:
ESG Principles & Sustainability Signals
Our policy overlay is designed to provide investors with expert guidance on ESG focused shareholder resolutions and management proposals, looking beyond traditional corporate governance measures to align with Sustainalytics ESG Principles or the SDGs.
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.
As part of our Engagement Services, we explore all avenues of stewardship with a focus on constructive dialogue. An issuer’s willingness to engage and authentically work toward change objectives that are in the best interest of shareholders is a cornerstone of the vote recommendations driven by our policy guidelines.
Key Features and Benefits
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.
Holistic Stewardship Strategy
Seamlessly align voting and engagement activities to shared investor concerns, robust ESG principles and the latest ESG research.
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.
Voting demonstrates a commitment to be a responsible shareholder.
5. Fiduciary Duty
Engaging with 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.
Voting supports engagements, which address material ESG issues that may end up on companies’ AGM agendas.
Post-AGM report on Engagement and Voting Activities
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' ESG principles.
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.
A Single Market Standard
Consistent approach to ESG assessments across the investment spectrum.
Award-Winning Research and Data
Firm recognized as Best ESG Research and Data Provider by Environmental Finance and Investment Week.
End-to-End ESG Solutions
ESG products and services that serve the entire investment value chain.
25+ Years ESG Expertise
350+ ESG research analysts across our global offices.
Largest Second-Party Opinion Provider
As recognized by Environmental Finance and the Climate Bonds Initiative.
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Recent market trends put engagement and voting front and centre for responsible investors
From a market perspective, engagement and voting on governance issues have been used as levers for influence for a long time. On the other hand, environmental and social issues were historically addressed from a values-based perspective or primarily for fact-finding purposes. Today, many responsible investors leverage corporate dialogue as a tool to influence and drive meaningful change and impact
North American Material Risk Engagement Trends: ESG Reporting Frameworks, Emission Reduction Targets and Beyond
There are many factors that rating agencies consider within its overall assessment. For example, ESG rating companies tend to look for at least three years of ESG metrics to determine company trends and long-term ESG targets, goals, and strategies to manage and reduce ESG risks at least five years ahead. Read on to learn about how Sustainalytics' Material Risk Engagement program promotes and protects long-term value by engaging with high-risk companies on financially-material ESG issues. (A North American Snapshot)
Engage on the most challenging ESG issues, from climate change to human capital.
Engage on the most material ESG risks identified by the ESG Risk Ratings.