Fisher Investments Shareholder Engagement Policy and Sustainable Finance Disclosure

Shareholder Engagement Policy
(the "Policy")

Fisher Investments Ireland Limited

August 2023


1. Introduction

1.1 Article 3g of the Shareholder Rights Directive II (EU/2017/828) (“SRD II”) requires institutional investors and asset managers to develop and publicly disclose an engagement policy that describes how they integrate shareholder engagement into their investment strategy.

1.2 Fisher Investments Ireland Limited (“FII”) delegates its portfolio management services, as well as other services covered by this Policy, to its parent company, Fisher Asset Management, LLC, trading as Fisher Investments (“FI”), subject to FII’s oversight.

1.3 In compliance with the requirements of SRD II (as transposed in Ireland), FII has put in place and made publicly accessible this Policy describing how FII, and FI on behalf of FII, integrates shareholder engagement into FII’s investment strategy.

1.4 This Policy describes how FII and FI, on behalf of FII:

      1. monitor FII’s clients’ investee companies (the “companies”) on relevant matters (including strategy, financial and non-financial performance and risk, capital structure, social and environmental impact and corporate governance);

      2. conduct dialogue with the companies;

      3. exercise voting rights and other rights attached to shares of the companies;

      4. co-operate with other shareholders;

      5. communicate with relevant stakeholders; and

      6. manage actual and potential conflicts of interests in relation to such engagements.

2. Scope

Consistent with the scope of SRD II, this Policy relates to FI’s management of FII’s client accounts on behalf of FII, which invest in shares traded on a regulated market in the European Economic Area.

3 How FII and FI engage on behalf of FII’s clients

FI is an active investment manager on behalf of its and its affiliates’ clients that engages with companies as part of its fundamental analysis and to clarify or express concerns over potential environmental, social or governance (“ESG”) issues at the firm or industry level.

FI holds meetings with company management as necessary to discuss issues FI feels are pertinent to analysing the company or better understanding peers or relevant industry factors. Relevant information uncovered during engagement is incorporated into FI’s fundamental analysis. Depending on the issue, FI may engage in additional meetings with company management, intervene in concert with other institutions on the issue or meet with appropriate members of a company’s board. FI commonly engages with company management on proxy voting issues, particularly when Institutional Shareholder Services, Inc. (“ISS”) is in disagreement with company management. To encourage a real-time, active engagement dialogue, FI prefers either a phone call or in-person meeting with the company.

FI has dedicated staff who work to identify ESG risks and opportunities and conducts engagement with companies. FI utilizes a combination of qualitative and quantitative information to generate a focus list of potential ESG engagement opportunities. The list is further vetted based on bottom up company research. FI may also conduct shareholder engagement upon request of FII’s institutional clients. As part of the engagement process, FI reviews a wide range of materials, which may include: analysis from FI’s ESG research providers, company financial and sustainability disclosures, research from responsible investment network partners and relevant NGO reports.

3.1 Monitoring of companies

FI monitors FII’s clients’ holdings on an ongoing basis, and engagements are considered whenever concerns arise related to a company’s business. Engagements may also be considered when FI’s third party ESG ratings provider significantly downgrades a company’s rating; a company’s activity results in it being assigned a red flag (severe controversy); FI decides against buying a security in an ESG portfolio for ESG-related reasons; a holding no longer complies with FI’s ESG screens; FI seeks to learn more about an upcoming proxy vote; or at the request of an FII institutional client.

3.2 Dialogue with companies

FI’s experience shows stewardship concerns are usually best resolved by direct contact with company officials—whether at the board or management level. Escalating an issue beyond that point depends on the materiality of the issue, the company’s responses to past communications and whether FI believes such engagement is in the applicable FII’s clients’ best interests. Corporate engagements may consist of letters, emails, conference calls, or in-person meetings with company representatives. Each engagement has a defined objective and may include a plan for follow up with the company. When appropriate, FI monitors the company’s progress and records milestones along the way.

3.3 Voting rights and other rights

FI has policies in place to monitor corporate actions and, if authorized and directed in the applicable investment management agreement or confidential client agreement, ensure the exercise of voting rights.

To the extent FII is authorized and directed to vote proxies on behalf of a client pursuant to the applicable investment management agreement or confidential client agreement, FI, on behalf of FII, utilizes ISS as a third-party proxy service provider. ISS is one of the largest providers of corporate governance solutions with services including objective governance research and analysis, proxy voting and distribution solutions. When FI votes proxies on behalf of FII’s clients, FI partners with ISS to evaluate issues and votes with the best interests of FII’s clients in mind. Additionally, FI has partnered with ISS to create a custom voting policy consistent with FI’s ESG policies made available to all of its, and its affiliates’, institutional clients implementing an ESG strategy or upon request. FI frequently engages with company management on proxy voting issues.

FI’s Proxy Voting Policy is available on request.

FI’s Corporate Actions Elections Policy is available on request.

3.4 How FI, on behalf of FII’s clients, co-operates with other shareholders

FI recognizes the importance of working together, and FI collaborates with other institutional investors to engage companies when FI believes doing so is likely to advance FII’s clients’ interests, is consistent with FI’s and FII’s policies and procedures and is permissible under applicable laws and regulations. FI seeks to have a clear objective for collaborative engagements. As involving multiple parties in an engagement can increase complexities, FI seeks to ensure all collaborative engagements follow the United Nation’s Principles for Responsible Investment’s “4 Cs” for success: commonality, coordination, clarity and clout. FI evaluates collaborative engagements as it would standalone engagements.

3.5 Communication with relevant stakeholders

Neither FII nor FI systematically communicate with stakeholders of companies regarding the investment decision. However, as part of FI’s due diligence on a company, FI, on behalf of FII’s clients, may review publications or participate in events that may also be attended by other stakeholders. In addition, FI, on behalf of FII’s clients, occasionally participates in collective engagements with other shareholders (as described in Section 3.5), which may include representatives from stakeholder groups.

3.6 Conflicts of Interest

FII and FI have adopted effective written conflicts of interest policies and have put in place procedures and measures for the prevention or management of conflicts of interest including where such conflicts may arise due to how FI, on behalf of FII’s clients, engages with companies FII’s clients are invested in.

4 Disclosure of FII’s, and FI’s on behalf of FII, engagement activities

4.1 Several additional resources that may be of interest are published on the following website: Additional resources available include:

      1. Policies: ESG Policy Statement and Engagement Policy; and

      2. Reports: Proxy Voting and Engagement reports (FII’s institutional clients may request bespoke Proxy Voting and Engagement reports). FII’s clients may receive copies of these reports or view them online.

4.2 The webpage listed above includes disclosure on how this Policy has been implemented for the previous year. Such disclosure will include the following:

      1. a general description of voting behaviour;

      2. an explanation of the most significant votes taken;

      3. information on the use, if any, of the services of proxy advisers; and

      4. information on how FI has cast votes in the general meetings of companies in which FII’s clients hold shares.

Voting in companies which are considered insignificant because of the subject matter of the vote or the size of the holding in the company concerned will not be disclosed.

For FII’s clients that have not authorized and directed FII to vote proxies, because no proxies were voted on behalf of such clients, the Proxy Voting Reports included on the webpage listed above is not applicable. As such, no annual proxy voting disclosure as provided under SRD II will be made available to such clients.

4.3 For FII’s clients that have authorized and directed FII to vote proxies, if in any given year, should disclosure describing how this Policy has been implemented not be publicly available, FII will publicly disclose a clear and reasoned explanation of why FII has chosen not to comply with this requirement.

4.4 If an EU regulated life insurance company or occupational pension scheme (in each case an "Institutional Investor") is an FII client, such Institutional Investor will be provided at least annually with the specific information prescribed in Ireland’s transposition of SRD II

4.5 Where the information to be disclosed in accordance with Section 4.4 is publicly available, FII shall not be required to provide that information to the relevant Institutional Investor directly.

5 Review of the Policy

This Policy will be reviewed and updated on at least an annual basis, and altered from time to time as appropriate. The latest version of this Policy will be available on FII’s website.

Date of Publication: 23 December 2022

To comply with the Sustainable Finance Disclosure Regulation (Regulation EU/2019/2088) as amended (“SFDR”), Fisher Investments Ireland Limited (“FII”) has provided the below sustainability-related disclosures that describe various policies related to sustainability and environmental, social and governance (“ESG”) factors, as well as information on ESG orientated strategies FII has available to high net worth private clients (“private clients”). Because FII delegates its portfolio management services to its parent company, Fisher Asset Management, LLC, trading as Fisher Investments (“FI”), subject to FII’s oversight, such policies and strategies are implemented by FI, but apply to FII’s services provided to FII’s private clients.

If you are an institutional client of FII, please go to the following website to find FII’s SFDR and Taxonomy Regulation disclosures relevant to you:

Information about FI’s Policies on the Integration of Sustainability Risks in its Investment Decision-making Process

FI generally evaluates and integrates Sustainability Risks and ESG factors at multiple stages throughout the investment process. “Sustainability Risk” is defined by SFDR as an environmental, social or governance event or condition that, if it occurs, could cause a negative material impact on the value of the investment.

Top-Down Investment Process

Sustainability Risks and ESG factors are among the many drivers considered by FI’s Capital Markets Analysts and FI’s Investment Policy Committee (“IPC”) when developing country, sector and thematic preferences. Environmental regulation, social policy, economic and market reforms, labour, and human rights are among the ESG factors assessed when determining country and sector/industry allocations and shaping an initial prospect list of portfolio positions.

FI’s IPC, with the assistance of FI’s Securities and Capital Markets Analysts, determines the materiality of the ESG considerations based on the exposure among publicly-traded companies in these categories. Higher materiality could imply larger ESG-related risks or opportunities, and may influence sector and country weight preferences as well as individual stock selection. The investment strategy and positioning reflects FI’s outlook over a 12-18 month horizon.

Bottom-Up Investment Process

FI’s Securities Analysts perform fundamental research on prospective investments to identify securities with strategic attributes consistent with FI’s top-down views and competitive advantages relative to their defined peer group. The fundamental research process involves reviewing and evaluating a comprehensive set of qualitative and quantitative data, including ESG factors, prior to purchasing a security. Factors considered in portfolios include, but are not limited to: shareholder concentration, corporate stewardship, environmental opportunities & liabilities, and human or labour rights controversies. FI would choose not to invest in companies when, in its opinion, security level ESG issues: (i) violate a client mandated ESG policy, (ii) present an inordinate risk to a company’s operational or financial performance or (iii) appear to present undue headline risk to share price performance.

Information on Integration of Sustainability Risk in FII’s Remuneration Policy

Given that FII outsources the portfolio management function to FI, it is not currently envisaged that the consideration of Sustainability Risks will be of primary relevance to the functions performed by FII staff. Accordingly, FII does not currently anticipate consideration of Sustainability Risks as being a significant factor in the assessment of FII’s staff members’ variable remuneration.

No Consideration of Adverse Impacts of Investment Decisions on Sustainability Factors

Notwithstanding that the consideration of Sustainability Risks is integrated into FI’s investment decision-making process, by virtue of FII’s size, FII is not required and currently elects not to consider the adverse impacts of its investment decisions on environmental, social or employee matters, respect for human rights, or anti-corruption or anti-bribery matters (“Sustainability Factors”) in respect of all portfolios it manages. However, with respect to strategies that promote environmental or social characteristics or have a sustainable investment objective (an “ESG Strategy”), the sustainability-related disclosures provided below for each ESG Strategy describes how principal adverse impacts on Sustainability Factors are considered by FI, including to what extent the indicators listed in Table 1 of Annex I of the Commission Delegated Regulation (EU) 2022/1288 (the “SFDR RTS”) are taken into consideration by FI. Furthermore, for private clients who have one or more ESG Strategies implemented in their investment portfolio, such private clients will receive pre-contractual disclosures related to their investment portfolio that will describe how principal adverse impacts on Sustainability Factors are considered by FI in their investment portfolio.

Sustainability-Related Disclosures

FII makes available to its private clients certain ESG Strategies that can be implemented in a private client’s investment portfolio. By implementing an ESG Strategy in a private client’s investment portfolio, such portfolio is considered to be an Article 8 or Article 9 financial product under SFDR, which requires certain portfolio-specific disclosures to be provided on FII’s website. However, FII considers the management of its private client’s investment portfolio to be confidential, and will not publish portfolio-specific sustainability disclosures on its website. Instead, FII publishes the below information about the ESG Strategies at the model level, which will include SFDR periodic reporting on the performance of such ESG Strategies from a sustainability perspective.

Euro Fixed Income ETF ESG

Global Total Return ESG

Global Total Return SRI

Global Total Return ESG ETF

Amendments to this Disclosure

Should any changes be made to this disclosure in the future, a clear explanation of such changes will be published here.

Implemented Changes

In January 2022, this disclosure was updated to reflect:

  • the postponement of the SFDR RTS effective date to January 2023;
  • SFDR Article 11 disclosures provided for the ESG Strategies;
  • adding disclosures regarding the Taxonomy Regulation; and
  • a change in FII’s SFDR categorization methodology for private client portfolios.

In December 2022, this disclosure was updated to:

  • update the sustainability-related disclosures for the ESG Strategies to comply with the SFDR RTS;
  • remove the principal adverse impact statement that was originally posted to comply with SFDR on a high level, principles basis; and
  • remove disclosures not required under SFDR or the Taxonomy Regulation (Regulation EU/2020/852).