UOBAM believes in the value of engagement and aim to enhance risk-adjusted returns of our investments and shareholders’ value in the long run. We identify a range of thematic and material ESG issues that can affect our investee companies in the long run, and engage with them to ensure that they are well prepared to mitigate these issues.
Throughout the engagement process, we can gain valuable insights into our investee companies’ propensity deal with ESG issues and whether they will take the appropriate measures to manage these issues. Engagement acts as an important information source to aid our investment decision.
By engaging with companies, we can also encourage improvement in their ESG disclosure, identify the need to advocate positive change, communicate our concerns and improve its practices on ESG issues, where necessary.
We prioritise our engagement based on geography of companies and size of holdings, severity of identified material ESG issue, potential to generate long-term value following a successful engagement, and specific client request(s).
UOBAM engages with companies via the following channels:
- Ongoing communications and interactions between UOBAM and companies which includes ongoing updates, addressing specific material ESG concerns, and/or setting targets for companies to meet our engagement objectives. This can be done through the following communication channels:
- Emails to companies
- Meetings and/or calls with board/senior management
- Meetings and/or calls with the CSR, IR or other management
- Visits to operations
- Visits to supplier(s) in supplier(s) from the company’s supply chain
- Proxy Voting: UOBAM takes into account ESG considerations when voting and we have the fiduciary duty to vote proxies in the best interests of our clients. We may engage with companies in advance of their Annual General Meeting or as a follow-up from a voting decision e.g. companies which have agenda items during the AGM that we voted against, based on the potential materiality of the issue.
UOBAM also considers collaborative engagement with other stakeholders in the event we believe the efficacy and chance of success of the engagement can be enhanced.
Over the course of the engagement process, UOBAM would pursue a number of courses of action should the company constantly fails to meet the standards expected.
UOBAM will vote against management at the annual company meetings if we are not satisfied with managements’ response to the ESG issues raised and ability to mitigate the identified risks. UOBAM may also consider voting for shareholder resolutions initiated in response to the ESG issues.
Ultimately, if the company still continuously fails to meet the standards expected after the engagement timeline, UOBAM will decide to reduce our exposure to investment holdings size or divest our investment in the company.
UOBAM aims to vote on the vast majority of proposals raised at every company meeting in a timely manner. UOBAM has engaged the services of proxy voting agent, Institutional Shareholder Services Inc. (“ISS”) to provide us with proxy voting services and proxy voting research and recommendations.
While UOBAM has authorized ISS to vote on its behalf, UOBAM retains full discretion over all voting decisions and reserves the right to vote contrary to the recommendations of ISS. This can occur when UOBAM have a differing view that these vote recommendations are not in the best interest of its clients, after taking into account relevant information in its decision e.g. engagement outcome, internal research, etc.
There may be situations where UOBAM may choose not to vote or abstain from voting:
(a) where administrative or other procedures result in the costs of voting outweighing the benefits;
(b) the voting securities are part of a securities lending program and UOBAM is unable to vote securities that are out on loan;
(c) a meeting notice is delivered close to the meeting date and UOBAM has insufficient time to adequately assess the issues being tabled at the shareholders’ meeting and / or process the vote;
(d) UOBAM sells shares prior to a company's meeting date and decides not to vote those shares, on the basis that UOBAM shall not be restricted from trading in a security due to an upcoming shareholder meeting; and
(e) voting securities have been blocked from trading in order to be tendered for voting purposes and UOBAM believes that preserving the ability to trade the security is in the best interest of the beneficiaries;
(f) in event of a situation where regulatory obligations and rulings of the SIC imposed on UOB Group that also apply to UOBAM, may prohibit UOBAM from voting on securities due to its deemed affiliation for a corporate action.