Rathbones’ engagement with companies on ESG issues wins recognition

"Underlining our commitment, in 2009, we were one of the first private wealth managers to sign up to the UN-backed Principles for Responsible Investment."

Rathbones has a well-established focus on environmental, social and governance (ESG) issues as part of our strategy to lead the field in responsible investing. Our strategy is guided by four responsible investment principles:

• ESG integration – considering ESG factors in the evaluation of investments to help identify ESG opportunities and risks.
• Voting with purpose – actively voting across over 95% of the value of our holdings, including voting against management where necessary to help drive positive change.
• Engagement with consequences – prioritising engagement where we can make a real difference in addressing the world’s systemic environmental and societal challenges, including reducing our holdings in companies that continue to present an ESG risk over time.
• Transparency ­– as a prominent participant in the financial markets, being transparent about our approach to responsible investment and actively reporting on the progress of our responsible investment activities to our clients, shareholders and other stakeholders.

Underlining our commitment, in 2009, we were one of the first private wealth managers to sign up to the UN-backed Principles for Responsible Investment. Indeed, our specialist ethical, sustainable and impact investment business, Rathbone Greenbank Investments, has been a pioneer in this space for two decades.

A key part of our strategy, as mentioned above, is challenging the management of the companies we invest in. It’s something that recently won recognition from the judges of the 2021 Investors' Chronicle and FT Celebration of Investment Awards, who named Rathbones as ESG Champion of the Year and ESG Champion for Governance, respectively.

We are delighted that our approach to proxy voting as a way of influencing companies to pursue best-practice ESG policies won particular praise from the judges, as well as the way we engage with clients on ESG issues. But what really matters to us is real world change.

The power of a united voice

We believe an active and considered approach to proxy voting is one of the cornerstones of responsible investment. As investors and shareholders, we are, of course, part owners of the companies we invest in on behalf of our clients, and therefore get a say in how the company is run through the voting power delegated to us to represent our clients’ interests.

United, investors’ voices can have a powerful influence over a company’s activities. Proxy voting is a well-established method of bringing those voices together.

In 2021 alone, we voted on 9,348 resolutions at 748 company meetings on behalf of our clients. This included votes against management on resolutions relating to director re-election, executive pay, poor ESG disclosure and approval of accounts and auditors.

Reporting into our responsible investment committee is our voting committee, which has the specific task of developing and maintaining a bespoke AGM voting policy across Rathbone Investment Management that builds on established best practice in line with the UK Corporate Governance Code covering all UK companies. We have also developed a separate, detailed voting policy dealing with collective investment funds and international equities.

To show our commitment to effective engagement and transparency, we have made public our 2022 engagement action plan on ESG issues. Our environmental objectives are to persuade companies in which we invest to commit to rigorous plans for a transition to net zero and to understand the risk of biodiversity loss caused by companies held in our clients’ portfolios during 2022.

Our social objectives focus on combatting modern slavery, while our governance objectives are to persuade companies to promote racial and gender diversity at board level and link ESG metrics to executive remuneration.

Acting in the best interest of our clients

Rathbones Group is an official signatory of the UK Stewardship Code – a major industry benchmark in which our policies, practices and reporting on various aspects of responsible investment are reviewed by the Financial Reporting Council.

The code sets high standards for those investing money on behalf of UK savers and pensioners and comprises a set of 12 ‘apply and explain’ principles for asset managers and asset owners, and a separate set of six principles for service providers.

We see this achievement – and the two recent industry awards – as evidence of our commitment to think, act and invest responsibly and to take our responsibilities as an investment manager, employer and purchaser seriously.

We remain a constituent company of the FTSE4Good Index series and we are a signatory of CDP (previously known as the Carbon Disclosure Project). We submit our own report to the CDP each year and we also support CDP’s encouragement of greater disclosure by companies, investors and government of the impact of their actions on climate, water and forestry. Further evidence of our commitment came in 2021 when we signed up as a group to the UN Global Compact.

"Rathbones Group is an official signatory of the UK Stewardship Code – a major industry benchmark in which our policies, practices and reporting on various aspects of responsible investment are reviewed by the Financial Reporting Council."

Our investment approach gives consideration to ESG factors because we believe it is in the best interests of our clients that the companies we invest in adopt best practice in managing ESG risks. This provides each company with a framework for managing its operations in the long-term interests of its shareholders.

We believe that careful consideration of ESG issues as part of a holistic view of investment opportunity and risk is central to responsible investment and allows us to provide our clients with new investment opportunities, identify high-quality investments and contribute to solving the problems facing society.

You can find more information on our responsible investment and proxy voting online here. 

Our 2022 engagement action plan is available here.