Sustainable Investing and Proxy Voting

 

Sustainable Investing and Proxy Voting

Proxy voting has become increasingly important for investors globally, as a tool for driving governance change, and as an indicator of how investment fiduciaries are acting on increasingly relevant sustainability issues. Recent trends point to increasing investor support for resolutions addressing ESG concerns.

Our proxy voting efforts are led by our Stewardship team and executed in close collaboration with our Investment teams. We view proxy voting as a critical form of engagement that enables us to use our voice together with other levers of engagement. We evaluate all proxy proposals based on their potential effects on our clients' long-term interests and incorporate vote themes into our ongoing engagement with issuers.  In fact, we have been recognized as one of the firms with the largest year-over-year increase in support of environmental and social proposals, in a Proxy Insight report on the analysis of asset managers with at least $100 billion in assets under management and voting at least 50 proposals each year.

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Sustainable Investing & Proxy Voting Policy

Engagement

The following examples represent engagements that resulted in positive outcomes on varying ESG issues. These engagements are a collaborative effort between our Stewardship and Investment teams.  Engaging with issuers allows us to develop a more complete understanding of each company’s business and offers us the potential to positively influence long-term performance. Although not all of our engagement efforts have led to positive outcomes, the following are examples of positive impacts contributed to by our engagement activities.

Example 1.
Engaging on Climate-Related Disclosure

Enhanced disclosure of climate-related metrics enables more informed investment decisions. We recently voted against management of an American-based transportation and logistics company on a shareholder proposal seeking enhanced climate disclosure. Following our vote, we engaged with the company to share our view and monitor progress toward sustainability-related goals over time. Since the initial engagement, we have observed meaningful progress. The company has published its inaugural Sustainability Report and is implementing more aggressive climate-related initiatives.

Example 2.
Engaging on Equity-related Disclosure

We believe companies that draw from a larger pool of perspectives and attract, inspire, and retain talent from many backgrounds are better positioned for long-term, sustainable success. In 2021, we engaged with a large media company in an effort to improve board and workforce diversity disclosure. While this is an ongoing engagement, the company has made substantial improvements by publishing the racial and ethnic diversity of its board for the first time and committing to improving workforce diversity disclosure through standard reporting, such as a U.S. Department of Labor Employment Information Report (EEO-1) and supplemental disclosure.

Example 3.
Engaging on Board Diversity

We believe a company’s tone on diversity and inclusion must be set at the top. We encourage companies to consider gender, racial, and ethnic diversity in assessing the composition of their boards. In 2021, we engaged with a large U.S.-based electrical equipment company that lacked racial and ethnic diversity on its Board of Directors. We conveyed our belief that companies that are more diverse and inclusive tend to outperform companies that are less diverse and inclusive. The company acknowledged the lack of diversity on the Board and in the months following the engagement announced the addition of a racially diverse member of the Board.

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We offer a range of products that provide non-U.S. resident investors and non-U.S. institutions with access to select Lord Abbett investment strategies.