2020 was a pivotal year for sustainable investing. Despite a period of significant market volatility at the start of the year, inflows to sustainable funds rose significantly, closing the year at an all-time high of USD 1.6 trillion. It is against this backdrop that we highlight our stewardship activities in 2020.
A notable feature of this year’s report is the expansion of stewardship beyond its traditional domain of listed equity. While the investment approach may vary by asset class, the underlying ESG issues have a common relevance. For that reason, many our engagements now include analysts from a variety of disciplines, including equity, fixed income and sustainable investing (SI).
Our approach to engagement is rigorous. Simply asking companies questions without providing feedback and encouraging improvements is not, in our view, sufficient to be classified as an engagement. Rather it is a dialogues between ourselves and the companies we are invested in with the aim of enhancing information and encouraging better business performance.
The report uses figures and case studies to show how we understand and exercise our role as a responsible investor:
• 11,000+ meetings: In 2020 we voted at over 11,000 meetings, or 96% of shareholder meetings where we had an eligible position to vote, across 60 countries. In 64% of the meetings we voted at globally there was at least one resolution with a vote against management and we voted against management on 614 occasions because of a lack of gender diversity. In the first half of 2021 we will add Denmark, Norway and Sweden to our market coverage.
• 429 engagements: During 2020, we conducted 429 engagement meetings representing a 20% increase from 2019. Approximately, 10% of these interactions were in collaboration with other investors through initiatives such as Climate Action 100+, the UK Investor Forum, the Access to Medicine Foundation and the FAIRR initiative.
• Topics: As in previous years, we engaged with companies on a wide range of topics, from corporate governance (50%), business model (41%) and capital management (39%) to environmental (32%) and social issues (24%). Thematic engagements continued to focus on climate change, gender and impact measurement.
• Progress in our Climate Engagement Programme: Raising climate risk issues in dialogue with senior management represents one of the most important mechanisms for translating the integration of climate risks into action with companies. To this end, we conduct a strategic engagement program with companies in those sectors which have the greatest impact on climate. More specifically, since 2017, we have engaged with 509 companies in the energy and utilities sectors, representing 27% of the total emissions of the FTSE developed world Index. Furthermore, our newly expanded range of Climate Aware investment strategies launched in 2020 is underpinned by our dedicated three-year climate engagement program, the outcome of which we will be reporting on later this year.
• Key changes to our proxy voting policy in 2020 include: We may choose to vote against the board chairman of a company when we determine that insufficient progress has been made on specific topics raised during our engagement with companies, particularly in relation to climate change matters discussed as part of our climate related engagement program.
Michael Baldinger, Head of Sustainable and Impact Investing at UBS Asset Management: “Investors have a powerful voice. Stewardship is an important means of communicating our views and driving positive outcomes for our clients. This year we have expanded stewardship beyond its traditional domain of listed equities, with an increased focus on fixed income. Furthermore, we see a growing role for stewardship within the alternative asset classes. While the investment approach may vary by asset class, the underlying ESG issues have a common relevance.”
Here you'll find the complete Stewardship Report 2020 'Aligning activities' from UBS Asset Management.