Responsible Investment

Shareholder Advocacy

Voting
Our policy regarding the governance of the companies in which client funds are invested  is described in our Corporate Governance policy.  The policy covers, amongst other things, our approach to voting, our views on the structure of governance at companies and board compensation.  A further paper, UK Corporate Governance, describes our policy as it applies to voting at UK companies from our London offices and which takes account of governance, regulatory and practical issues specific to the UK.  These documents are currently under review and are expected to be updated later in 2010.

We will always act in the best interests of our clients. To maintain the necessary flexibility to meet client needs, Schroders' offices may determine a voting policy which addresses local market issues and client preferences.  Generally, however, it is the policy of Schroders to vote at all meetings where we hold equity interests.

Where there is insufficient information with which to make a voting decision or where market practices make it onerous, or expensive to vote compared with the benefits of doing so (for example share blocking) we will not vote unless the benefit of voting outweighs those disadvantages.

We will supply details of our voting to clients.

It has not been our policy not to make our voting records more widely available because we consider that public disclosure may damage the process of engagement we have with companies: we make full disclosure, however, where required to do so under relevant regulatory requirements.  Our 2010 policy review is expected to revise our approach to the public disclosure of votes.  It is therefore expected that we will release details of voting later this year.

Engagement
Engagement with companies is part of our investment process. In all intervention and engagement, our strategy is to seek additional understanding, or where necessary, seek change that will either protect or enhance the value of the investments for which we are responsible.  Engagement has the added advantage of enhancing communication and understanding between companies and investors.  

Engagement with companies is under particular focus in the UK at the moment with the forthcoming release of a Stewardship Code and following the publication of the Walker Review.  We believe we already meet the substance of the Stewardship Code and are working to ensure full compliance when it comes into force later this year.  

Integration

Our investment process takes into account the fact that a broad range of both financial and ESG factors can affect the sustainability of a business and, consequently, the financial returns that can be derived from an investment in a company's assets.

Historically this process has been implicit within our investment process but since 2009 we have begun rolling out a process to explicitly capture this information across our equity product ranges.

This ESG analysis identifies issues that either are, or could become, material in the context of corporate performance and market valuation for integration into our stock selection and valuation process.

Ethical Screening

We utilise specialist research to help develop investment universes that reflect our clients' values. Typically these would exclude companies based on certain moral criteria, for example tobacco or alcohol. However we are also able to develop screens for clients that reflect a company's material exposure to a particular issue or that focus on breaches of international standards.

Industry Involvement

Association of British Insurers - we are members and currently sit on the Investment Committee at the ABI.

Carbon Disclosure Project - This project was established to encourage the world's largest companies to improve their transparency on their exposure to climate change. Schroders is a signatory and special adviser to the Carbon Disclosure Project.

Institutional Investors group on Climate Change - The IIGCC was established to increase awareness about the risks and opportunities of climate change to investments within the investment industry and to encourage companies to provide more information on this. Schroders was a founding member of this group and lead the engagement work stream for two years.

UK Sustainable Investment and Finance Association - UKSIF was established to promote responsible investment in the UK. Schroders is a member of UKSIF.

European Social Investment Forum - EUROSIF was established to promote responsible investment in Europe. Schroders is a member of EUROSIF.

UN Principles of Responsible Investment - The UNPRI where developed to encourage the continued development and adoption of responsible investment practices within the investment industry. Schroders is a signatory to the UNPRI.

Corporate Governance Forum - we are members of an informal group of UK institutions that takes the opportunity to discuss and share experiences on corporate governance issues and policies.

Access to Medicine Index - we support this research program which aims to provide a tool for investors and other stakeholders to assess and evaluate pharmaceutical access to medicine programs.