Priority Sustainability and Governance Issues
Our funds are invested across many companies, so it is important that efforts to influence them are focused on the most important, priority sustainability and governance issues. We have a view on these priorities which are shared with Aberdeen as our Investment Adviser, who create their priorities for stewardship activities across their levers of influence.
Aberdeen as Investment Adviser and other Investment Manager funds invested in by our Fund-of-funds use priority issues to focus direct engagement with company Boards or Management Teams, to guide voting decisions in Annual General Meetings (AGMs) and as part of efforts to work with other Investment Managers or Policy makers on system level change.
Environmental
Issues relating to how well the natural environment and natural systems are working, which can have significant effects on the global economy. Companies’ financial success is both dependent on and can affect the environment and nature.
Priority issues:
- Climate/Nature – climate change represents system and company level risks, which will require both mitigation and adaptation.
- Transition – opportunities and challenges as companies across the economy need to plan for and transition to a low carbon sustainable economy.
Social
Issues relating to the rights, well-being and interests of people, which can be employees, across supply chains, customers or broader society. Companies’ financial success is both dependent on and can affect people and society.
Priority issues:
- Human Rights – supply chains are often global, which requires companies to be transparent and accountable in the management of risks.
- Labour Rights – internationally recognised labour rights are important to provide safe and healthy work environments and as a licence to operate.
Governance (how companies are run)
Issues relating to governance and risk management, which is the basis for company decisions, long-term value creation and responsible business practices. Companies’ financial success is dependent on how well it is being run and adapting to change.
Priority issues:
- Board Structure & Executive Pay – effective Board decision making requires a mixture of skills and independence to provide challenge to deliver long-term value. Executive pay should also be reflective structures aligned with stakeholder value.
- Anti-Bribery & Corruption – accountability of companies through effective audit and risk management, with robust internal controls and transparency.
ESG issues
Many priority issues have implications relating to environmental, social and governance factors and as such investors may use stewardship to influence across these areas.
Priority issues:
- Technology – implications for how companies deploy technology, potential security risks, transparency on usage and reliance on third-party providers.
- Responsible AI – implications of AI infrastructure including data centres on the environment and communities, impact on jobs and governance including transparency and accountability.