Responsible Investing

Yes, our current policy is the 'Responsible Investment Policy'.

The primary motivation for adopting a responsible investment approach was to align our objectives as an institutional investor to those of society at large. Moreover, we believe that a responsible investment approach can lead to a comprehensive understanding of a range of material issues which should ultimately lead to lower risk, resulting in the improved long-term performance of our investment portfolios.

By integrating sustainability considerations such as ESG as well as other factors, such as disruption, into our investment process and approaching the ownership of equity from a long-term perspective, we are exercising our responsibility as an investment manager to act in the best interests of our clients.

Yes. Our current policy can be accessed here.

Our investment team are active participants in corporate governance matters that arise as a result of investments in securities. We think of ‘active ownership’ as the support of good corporate governance in companies and seeking to achieve change where we think that governance is poor or less than ideal.

We delegate proxy voting discretion to Portfolio Managers, as voting is a matter relating to the investment decision-making process. In voting proxies, we are guided by the law and our general fiduciary principles. Our goal is to act prudently, solely in the best interest of the beneficial owners of the accounts we manage. We attempt to consider all factors that could affect the value of the investment and will vote proxies in the manner that we believe will be consistent with efforts to maximise shareholder value.

Yes, our Modern Slavery Statement is available here, and our Third-Party Supplier Code of Conduct is available here.

Yes, as a signatory, our commitment to the six Principles for Responsible Investing is outlined below:

• Principle 1:  Incorporating ESG is integral to our investment process, from both a fundamental research and portfolio construction perspective, and is the responsibility of our specialist investment team.
• Principle 2: We are active managers and incorporate ESG issues into all our ownership policies and practices. We pursue ESG matters with companies in both formal and informal settings, including: meeting with senior management and their peer companies;  speaking with other investors;  writing letters to Boards of Directors and making submissions to regulators.  We also engage with many other industry participants regularly.
• Principle 3: We regularly seek appropriate disclosure on ESG issues by the entities in which we invest.
• Principle 4: We promote acceptance and implementation of the Principles within the investment industry through client communications and industry-related events.
• Principle 5: We work collectively with the PRI in one-on-one discussions and also in group forums, particularly on issues that relate specifically to the listed infrastructure asset class.
• Principle 6: We report on ESG related activities (both positive and negative) each quarter or as required, to clients, asset consultants and research houses. We have also presented on ESG topics at industry events, conferences and webinars.

When we become a shareholder in a company, we expect to be so for some years, and the relationship with management is an important part of the process. We believe that meeting a company’s management is essential in gaining a deep understanding of the company’s strategy and operations, and to test our investment thesis. As a long-term investor, we have good access to management and company boards. Contact with companies is through:

• Company site visits or conference calls
• Meetings with senior management
• Company roadshows
• Meetings at conferences.

Our investment team also engages with management on ESG and related issues in regular meetings and conversations. These discussions seek to provide feedback to companies on:

• Corporate strategy, encouragement to consider long-term value creation and long-term risk management, including ESG issues
• Capital management and structure
• Executive remuneration and incentive schemes, ensuring that executive remuneration is both appropriate for the asset and that incentives are aligned with the interests of long-term shareholders.

In addition to executive management, the investment team engages with the Chair where this is separate, and the supervisory board in a two-tier structure. Discussion topics include, among other issues:

• Remuneration policy of the board, and in particular decisions around incentive related pay.
• Succession plans, for the senior leadership team and the next level of executives.
• Reporting policy and other governance-related issues.
• Where there are any issues raised, the information is recorded in the company research database.

As a signatory to the PRI since 2008, we recognise its responsibilities and accountabilities in relation to responsible investment, and as such, we regularly consult with other stakeholders, including regulators and government policymakers.

In 2021, ClearBridge Investments also joined the Net Zero Asset Managers Initiative (NZAMI). To find out more about our commitment to support the goal of net zero greenhouse gas emissions click here. 

Infrastructure and utility companies have a critical role to play in achieving the UN SDGs, so as a shareholder we utilise the opportunity to engage with Management, Boards and other shareholders on E, S, and G issues and actively utilise our voting rights (where practicable) to reinforce our view.

We would also engage in areas of opportunity (such as energy efficiency) and other sustainability related factors such as disruption.

Additionally, we actively participate in conferences and industry events and embrace available opportunities to discuss our approach to responsible investment in the infrastructure asset class.

Responsible investing is an integral part of our investment process, from both a fundamental research and portfolio construction perspective. As such, it is not the responsibility of one dedicated individual, but rather the responsibility of the entire investment team. Oversight of the sustainability investment process within the infrastructure investment team is the responsibility of our Sustainability Committee that comprises two Portfolio Managers and a Senior Portfolio Analyst.

Our specialist infrastructure investment team have continually evolved our responsible investing process, having incorporated sustainability into cash flows, and a governance factor into our hurdle rate since our inception. We have expanded this to broader ESG factors by engaging Sustainalytics (as their first Australian client) in 2012. We continue to evolve our approach to ESG through the current proprietary scorecard introduced in 2020.