RESPONSIBLE INVESTMENT POLICY. Columbia Management Investment Advisers, LLC

Transcription

1 POLICY Columbia Management Investment Advisers, LLC

2 APPROACH TO RESPONSIBLE INVESTMENT COLUMBIA THREADNEEDLE INVESTMENTS This brochure provides a broad outline of the approach to responsible investment employed by Columbia Threadneedle Investments (Columbia Threadneedle). In addition, the document details policies describing the responsible investment activities of Columbia Management Investment Advisers, LLC (CMIA). Also, a description of CMIA s firm-level implementation of the Principles for Responsible Investment (Principles or PRI) can be found in the following sections of this document and on the firm s website. Columbia Threadneedle Investments is the global brand name of the Columbia Threadneedle group of companies. We are a leading global asset management group that provides a broad range of actively managed investment strategies and solutions for individual, institutional corporate clients around the world. With more than 2,000 people, including more than 450 investment professionals based in North America, Europe, Asia and the Middle East, we manage $464 billion* of assets as of March 31, 2016, across developed and emerging market equities, fixed income, asset allocation solutions and alternatives. Global presence na global perspective that allows us to share insights across asset classes and geographies na team-based, performance-driven, and risk-aware investment approach na dynamic and interactive culture Investment Offices Chicago Minneapolis Stamford Providence Amsterdam Luxembourg Copenhagen Zurich Frankfurt Stockholm Portland Menlo Park Los Angeles Boston New York Charlotte London Paris Madrid Seoul Hong Kong Taipei Dubai As of December 31, 2015 Source: Columbia Threadneedle Investments Geneva Milan Vienna Singapore Kuala Lumpur * Source: Ameriprise earnings release. In U.S. dollars as of March 31, Includes all assets managed by entities in the Columbia and Threadneedle group of companies. 2

3 Columbia Threadneedle Investments Our responsible investment commitment At Columbia Threadneedle Investments we strive to be responsible stewards of our clients assets within a framework of good governance and transparency. As an active manager of global equities, fixed income and real estate assets, we seek opportunities that help deliver sustainable growth and returns for our clients. Being a responsible investor is integral to our business proposition and defines how we act in the marketplace. One component of our investment philosophy is the belief that effective stewardship benefits companies, investors and the economy as a whole. We believe that well-governed companies are better positioned to manage the risks and challenges inherent in business and capture opportunities for growth. Consistent with our commitment to being a responsible investor and our duty to act in the best interest of our clients we, both Columbia Management Investment Advisers, LLC (CMIA) and Threadneedle Asset Management, Ltd. (each, a firm), are signatories to the (PRI) Principles for Responsible Investment. How we implement the Principles We will incorporate ESG issues into investment analysis and decision-making processes. We have an integrated approach to responsible investment and ESG research and implement them by making ESG performance ratings and research available to our portfolio managers and analysts in our investment tools. This integrated approach is supported by our culture of collaboration, sharing of research and ideas. In developing our understanding of a portfolio company, we may take into account its approach to managing environmental, social and governance issues. We place emphasis on both internal and external resources to guide and prioritize our work. Among a host of resources, we have access to an external ESG rating provider covering nearly 6,000 companies globally. We will be active owners and incorporate ESG issues into our ownership policies and practices. We actively vote our shares globally and engage with companies on important ESG issues. We follow regional voting principles and take into account local market practice. We will seek appropriate disclosure on ESG issues by the entities in which we invest. We place value on transparency by companies, and may encourage transparency in our discussions around ESG performance. We will promote acceptance and implementation of the Principles within the investment industry. We participate in external forums and discussions where relevant and appropriate and are actively involved with the PRI Secretariat. We will work together to enhance our effectiveness in implementing the Principles. We may engage in meaningful collaboration with other investors in company dialogue and wider ESG issues. In those cases, we take into account consistency of purpose and conflict of interest policies. We will report on our activities and progress towards implementing the Principles. 3

4 Responsible Investment Firm-Level Implementation Introduction CMIA s approach to responsible investment focuses on integrating ESG factors into our investment processes that build on our culture of fundamental, bottom-up research and portfolio management. One part of our investment philosophy is the belief that well-governed companies are better positioned to manage the risks and challenges inherent in business and to capture opportunities that bear on sustainability and long-term value creation. Our approach to integrating ESG factors into our investment processes allows us to consider the risks and opportunities of existing and prospective investments that may not be captured by conventional analysis. We expect that this approach may contribute to better informed investment decisions. While we believe that integrating ESG factors into our investment processes enables portfolio managers to make better informed investment decisions, each portfolio management team within CMIA makes its own investment decisions. Certain teams may put more or less emphasis on ESG factors in any given investment decision. The United Nations-supported Principles for Responsible Investment (PRI) initiative is an international network of investors working together to put the six Principles into practice. Its goal is to understand the implications of sustainability for investors and support signatories to incorporate these issues into their investment decision making and ownership practices 1. The initiative is based on six principles that address the integration of environmental, social and governance factors into investment decision-making and stewardship practices. As a PRI signatory, CMIA has committed to considering ESG factors, where appropriate and consistent with our fiduciary duty, that identify material associated risks and opportunities that may bear on the long-term value creation and sustainability of a company. While we follow the Principles, becoming a signatory to the Principles does not require the application of specific ESG restrictions in our investment process, and we may take actions inconsistent with the Principles if in our judgment it is in the best interests of our clients to do so. Our portfolio managers and analysts work collaboratively to monitor and engage with the companies we invest in, with a view to understanding the dynamics, opportunities and risks inherent in the businesses and to protect the interests of our clients and their invested capital. We also take into account market practices and regulatory developments that affect both the companies in which we invest and the overall investing environment. EXHIBIT 1: Our key focus as we approach responsible investment Responsible Investment (RI) Socially Responsible Investment (SRI) Values-based investing typically involving screens and exclusions Environmental, Social and Governance (ESG) Investment Integrating ESG factors into traditional fundamental analysis CMIA focus and capabilities Impact Investment (II) Investing directly in projects or institutions to maximize their impact on society Sustainable Investing is periodically used by some to describe ESG investing. However, others may use sustainability to describe activities designed to ensure responsible and ongoing success of a company. 1 unpri.org 4

5 Roles and responsibilities The responsibility for CMIA s responsible investment activties lies with our Chief Investment Officer, and together with the Director of Responsible Investment and the heads of our equity and fixed income research teams. The Director or Responsible Investment has responsibility for ESG research, integration, stewardship and reporting. Within our ESG investing approach, portfolio managers and fundamental analysts take lead responsibility for the assessment and monitoring of issuers, strategies, management and performance. The proxy administration team votes client proxies in close coordination with portfolio managers, research analysts and the Director of Responsible Investment. EXHIBIT 2: Resources Chief Investment Officer Colin Moore Head of Equity Research Director of Responsible Investment Head of Fixed Income Research Integrated Investment team members Heads of research Marketing analyst Proxy administration team Data analyst Counterparts at our affiliate, Threadneedle Asset Management, Ltd. Head of governance and responsible investment Sustainable and responsible investment officer Responsible investment analyst Responsible investment analyst Supporting functions Investment operations RFP team (Reporting) Vendor management Quantitative research Marketing Legal Compliance 5

6 Integration approach Consideration of ESG risks may be one of many components in our investment decision-making processes. Our portfolio managers and analysts are encouraged to view ESG as an important factor in the sustainability and longterm value creation of portfolio companies and how ESG factors, in turn, affect investment returns. Where appropriate and consistent with our fiduciary duty, we seek to invest in well-governed companies that appropriately identify, manage and disclose their ESG risks as well as those companies whose approach may present opportunities for long-term value creation through innovative use of their strengths and positioning. To encourage integration of ESG factors into investment decision making, we have developed tools that allow for external ESG risk ratings to be systematically considered in the investment process, and supplement that data with internal and external research. Our culture also provides ample opportunity for discussion, debate and analysis of the identified factors, which serves to deepen the understanding and focus of the risks and opportunities. EXHIBIT 3: Integrating processes Research Investments Stewardship Fundamental Research Proxy Voting ESG Risk Ratings External Thematic ESG Research Internal ESG Research Security Selection Portfolio Construction Tools Engagement EXHIBIT 4: Research and risk ratings For illustrative purposes only. Image on left: Our proprietary research repository facilitates broad dissemination, availability and awareness of internally-produced research by equity and fixed income portfolio managers and analysts around the globe. Images on right: Our interactive data visualization tool allows portfolio managers and analysts to monitor and manipulate ESG data on thousands of issuers, as well as perform top-down portfolio reviews to understand ESG risk exposure. 6

7 Research and ratings The investment universe of our client accounts is large and varied, so we underpin our ESG investment approach with internally generated and externally sourced ESG research, risk ratings and other tools. These sources provide insight into issuers ESG practices and risks, how those practices measure relative to peers and how issuers mitigate these risks. That information then allows us to take a proactive approach to identify and prioritize those companies that appear to be managing ESG well and those where the issues and practices suggest potential risks to our clients interests. Those observations form the basis for our stewardship activities and may inform our investment decision-making. Internal research Our ESG research aims to assess how companies approach and manage ESG issues as part of forming a holistic view on the quality of a company s leadership, the potential risks and opportunities of an investment, as well as to inform company engagement. Internal research that aggregates a variety of quantitative and qualitative data sources is supplemented by observation, analysis and our experience with the company. This approach combines best-in-class considerations with company-specific analysis, taking account of the context, industry and overall performance of the business. External research In addition to internal research and analysis, we obtain research and data from a variety of external sources, as noted below, in Exhibit 5. EXHIBIT 5: Research and information sources Corporations MSCI ESG research MSCI BISR research Brokers focused on ESG research Institutional Shareholder Services, Inc. (ISS) Glass Lewis & Co. Sustainalytics ISS QuickScore Bloomberg Non-Governmental Organizations (NGOs) CFRA Research Academic studies and sources News National and International government bodies Company data and dialogue including traditional and sustainability reporting ESG risk ratings, thematic and issuer-specific ESG research Screening and exclusion tools ESG company, thematic and trend insights Proxy voting research Proxy voting research ESG ratings and research, social impact assessment Governance and compensation ratings and research Current financial and ESG information, alerts and ESG disclosure ratings Thematic trends and issues in regards to ESG issues Forensic accounting research, analytics and alerts Systemic issues and independent evidence Events, public opinion Consultations and regulations 7

8 Stewardship We believe in being active and responsible owners. Targeted engagement with portfolio companies on ESG issues forms an important part of our stewardship activities and our investment approach. Building on our ESG investing approach, our engagement covers a broad range of ESG issues. Prioritization and planning are important factors in shaping our engagement objectives and activities. We generally prioritize any engagement with an issuer where we have either: 1) large relative holdings over a specific, internally-determined threshold, 2) holdings of any reasonable size and the issuer security is held in one or more CMIA focus portfolios and/or 3) coverage of the issuer by our fundamental research analysts. In addition we may engage with an issuer (in accordance with the above priorities) if in our assessment, we believe that their ESG risks and opportunities may bear on the long-term value creation or sustainability of the company. Our ESG exposure assessment identifies issuers: based on screens from our internal resources and tools or from external research sources; based on sustained underperformance; or where we have engaged extensively in the past and where positive progress mitigating risk has not been observed. EXHIBIT 6: Typical engagement cycle Issuer Considers All Investors Feedback: Adopts Changes ENGAGEMENT Off-season engagement to discuss issues Issuer Files Proxy Statement Investors Cast Votes Issuer ENGAGEMENT Files Issuer solicits CMIA Proxy Votes, Statement Feedback On average, each year our Director of Responsible Investment engages with over 100 companies across our client portfolios. Historically, these portfolio companies have been U.S.-based and our engagement conversations generally have covered corporate governance structure and compensation practices (with a particular focus on the structure and efficacy of longterm equity incentives). The table to the right illustrates the range of engagement activities we may adopt in carrying out our stewardship role in clients interests. EXHIBIT 7: Focus Areas for Engagement Preferred holdings Contentious issues Company-initiated dialogue Collaborative initiatives Proxy voting Type of Approach Levels of Engagement Monitoring Provide feedback Investigation Engage for change Electronic or other correspondence Meets with executives (e.g. CEO, Company Secretary, IR, Sustainability team, or others) Discussions with company advisers, stakeholders and analysts Meetings with Chairman, and/or non-executive directors Dialogue and collaboration with other shareholders Proxy voting 8

9 Stewardship Collaborative engagement Where appropriate, we prefer to engage in private to enable honest, open and frank discussions to take place with the companies in which we invest. We may engage with other shareholders on issues we believe have significant implications for our clients investments. We may engage through collaborative bodies such as PRI investor networks, or bilaterally with other shareholders. Where we do not have major holdings, but share concerns raised by other shareholders, we may lend them our support and endorsement when we deem doing so to be appropriate from a regulatory and fiduciary perspective. There may also be limited occasions, on matters that are public, where we will make our views and concerns known publicly. In exceptional circumstances, where we decide that it is necessary and appropriate, we may comment publicly about a controversial matter at a company. In addition to individual company engagements, we may look to engage collaboratively with other investors and asset owners across a range of areas: Public policy; Regulatory issues; Best practice frameworks; Sector and market issues; and Thematic and company specific issues Each year we vote proxies for more than 5,500 shareholder meetings in 56 countries around the globe. Approximately 60% of the meetings voted were for U.S.-domiciled companies. Per client request, we can apply a custom proxy voting policy (i.e., sustainability, religion, SRI, etc.) to voting on securities held in client accounts. Proxy voting CMIA is committed to sound stewardship principles and actively carries out proxy voting activities in accordance with our Proxy Voting Policy (Policy) on behalf of our clients. The policy is designed to address our fiduciary obligations in situations where we have been vested with proxy voting authority. In voting proxies on behalf of our clients, we apply the following general principles: Vote in clients best economic interests Consider all relevant factors; and Vote without undue influence from individuals or groups. We have adopted the CMIA Proxy Voting Guidelines (Guidelines) covering certain types of proxy proposals for equity securities. These guidelines indicate whether we vote for, against or abstain from voting a particular proposal, or whether the matter should be considered on a case-bycase basis. When vested with proxy voting authority and in the absence of specific client guidelines, we will generally vote client proxies in accordance with our Guidelines and in furtherance of the general principles listed above. We will provide a copy of the Policy or the Guidelines to any client or prospective client upon request, and both are also available on our website at com/responsible-investment. The administration of our proxy voting process is handled by a dedicated central point of administration at our firm (the Proxy Administration Team). The team has ultimate responsibility for the implementation of the Policy and the Guidelines. The Director of Responsible Investment analyzes certain proxy resolutions and has the responsibility to engage with portfolio companies in relation to controversial proxies as well as for ongoing monitoring of ESG issues and opportunities. The proxy voting committee, which is comprised solely of portfolio managers and analysts, oversees the activities of the proxy team and reviews and approves the Policy and Guidelines. CMIA utilizes the proxy voting platform of Institutional Shareholder Services, Inc. (ISS) to cast votes for client securities and to provide record keeping and vote disclosure services. We have retained both Glass, Lewis & Co. and ISS to provide proxy research services to ensure quality and objectivity in connection with voting client securities. 9

10 Investment approach and capability The integration of ESG factors into our portfolio construction tools provides us with the ability to offer certain specialized product offerings that meet specific requirements. Certain investors may have particular ethical requirements on controversial issues, or may wish to exclude companies from certain industries and hold only those securities that are consistent with their values. While we believe that certain investment areas have complex characteristics, we do not exclude them from our investment universe for mainstream client mandates. The following table (Exhibit 8) outlines CMIA s ESG investing capabilities relative to the top seven responsible investment strategies outlined in 5th Annual Sustainable and Responsible Investment Study by the European Forum for Sustainable Investment (Eurosif), published When clients desire specific portfolio exclusions we work together to understand their requirements and meet their needs. EXHIBIT 8: Responsible investment strategy Where is it applied? What does it involve? CMIA Sustainability themed Investment in themes or assets linked to the development of sustainability Yes Best-in-Class Selecting leading or best-performing investments according to selected criteria relating to ESG Yes Norms based screening Specialist separate accounts Screening of investments for compliance with international standards and norms (e.g. OECD or UN related) No Exclusion screening Systematic exclusion of investment according to selected criteria (e.g. ESG or ethical criteria or by sector or country) Yes Impact Investment Investments targeted at generating a desired form of social or environmental impact No ESG Integration Engagement Mainstream mandates Inclusion of selected ESG analysis (re: opportunities and risks) into financial analysis and investment decision-making Engagement activities and active ownership (including the voting of shares) Yes Yes Source: Eurosif and CMIA Upon client request, we will apply separate account investment screens and exclusions based on individual client risk tolerance and specific ESG criteria. In addition, custom proxy voting policies (i.e., Sustainability, SRI, etc.) can also be applied to voting on securities held in client accounts upon request. 10

11 FOR MORE INFORMATION: responsible-investment Contact information Mr. Mac Ryerse Director of Responsible Investment Columbia Threadneedle Investments (Columbia Threadneedle) is the global brand name of the Columbia and Threadneedle group of companies. Securities products offered through Columbia Management Investment Distributors, Inc., member FINRA. Advisory services provided by Columbia Management Investment Advisers, LLC Columbia Management Investment Advisers, LLC. All rights reserved