We have a responsibility to our clients to act with integrity, in good faith and in their best interests at all times. This forms the cornerstone of all our investment activities and supports our responsible investing initiatives and efforts. We assess and engage with our sub-advisors across a number of factors, including: fit for purpose, performance reliability, organizational resilience, and more. For Responsible Investing, we focus on three key pillars: firm-wide commitment, strategy implementation, and active stewardship.
Active stewardship can be a critical part of active management as investment managers may engage with companies to better understand the opportunities and challenges they face and help drive long-term value. We believe that constructive and proactive stewardship can achieve two key objectives: (1) help shape outcomes that align with a Fund’s investment goals and (2) over time it can contribute toward improving risk-adjusted returns.
There are several potential corporate practices that can be improved, including:
More transparent sustainability disclosures
Board competencies and compensation
More transparency around climate risk
More transparency around human rights
Methods for active stewardship differ by investment manager and asset class, but may include2:
Tools and activities for broader stewardship can include:
More generally, there are three actions that may potentially impact a company’s business operations and improve transparency in sustainability – related disclosures.
This refers to the process of entering into constructive discussions with the company’s management and/or directors to exchange perspectives and potentially address concerns. We believe that fostering open discussions and seeking to enhance transparency lies in the best long-term interests of investors.
For equity investors, engagement is generally supplemented by voting activity, including management and shareholder resolutions. The Principles of Responsible Investing (“PRI”) states that “voting on agenda items at annual general meetings (AGMs) is one of the most significant opportunities many investors have for influence.”3
PRI also states that “shareholder proposals are an important corporate engagement mechanism. They allow investors to use their formal rights as owners to publicly and transparently escalate important matters, and directly interact with a company’s board.”4
Sun Life Global Investments provides investment solutions managed by third-party investment sub-advisors, meaning we do not handle individual security selection. Consequently, voting and stewardship activities at the issuer level are the responsibility of the sub-advisors. However, we still maintain a stewardship role. This means we strive to:
a) Assess investment managers: Develop and maintain a good sense of the stewardship activities of our investment managers, and;
b) Engage and influence: Leverage our findings to identify opportunities for sharing our insights, when and as appropriate.
We conduct assessments during the sub-advisor selection process and throughout our ongoing relationship with them, including but not limited to:
Request For Proposal (RFP) |
Finalist Meetings | Annual Due Diligence Questionnaire | Heatmap/Engagement document | Thematic Probes |
|---|---|---|---|---|
Include questions on proxy voting and engagement. |
Assess investment managers on three Responsible Investing pillars: firm commitment, strategy implementation and active stewardship. |
Track developments, including those related to stewardship. |
Populate our internal heatmap to identify strengths and weaknesses and areas to engage on. |
Ask deeper questions on specific topics, often including stewardship-oriented aspects. |
We assess investment managers in several areas including:
Active stewardship is an important part of how we fulfill our responsibility to act in the best interests of our clients. It is a key part of our broader responsible investment commitment and overall journey, and we will continue to evolve our approach as we move forward and the landscape evolves.
1 https://www.unpri.org/stewardship/about-stewardship/6268.article
2 The Tools and Activities outlines are reflective of broader industry practices and may not apply to all subadvisors. They serve as general examples and are not indicative of every sub-advisor’s approach.
3https://www.unpri.org/stewardship/voting/6269.article
4https://www.unpri.org/filing-shareholder-proposals/a-guide-to-filing-impactful-shareholder-resolutions/10995.article
