We at VanEck continue to follow our guiding principle of providing global investors access to forward-looking opportunities that will strengthen their portfolios while demonstrating that we do so both responsibly and with due consideration given to factors that are generally considered environmental, social and governance factors (ESG).
We believe that appropriate consideration of these factors can be an important element of both our investment philosophy and processes. Therefore, as part of our continuing commitment to responsible investment (see VanEck’s Responsible Investment Policy), when material, appropriate and possible, we seek to incorporate them in not only our investment analysis but also in our engagement activities (see VanEck’s Engagement Policy).
Global Memberships: The PRI, CDP and EMIA
As evidence of our commitment to responsible investment, VanEck became a signatory to the Principles for Responsible Investment (PRI) in March 2017. Membership of the PRI’s extensive global network of investment managers, asset owners and others also allows us not only to draw upon but also to share in the experiences and knowledge of other members.
Similarly, as a CDP signatory, in addition to being part of and benefiting from a wide global network, VanEck has access to vital environmental data and insights and can receive support in our corporate engagement activities. The CDP, formerly the Carbon Disclosure Project, runs a global disclosure system for investors, companies, cities, states and regions that helps them manage their environmental impacts. We have been around since 1955 and have always been cognizant of the importance of good governance, but we consider that a better understanding of both the current thinking and developments in thinking around environmental and social issues remains important.
Equally, through our involvement in the Emerging Markets Investors Alliance (EMIA), we hope to help enable institutional emerging market investors to support transparency, good governance, promote sustainable development and improve investment performance in the governments and companies in which they invest.
Integration into Our Investments
Since we are a global firm with separate investment teams in different countries around the world, our approach to responsible investment depends upon not only asset class, region and market, but also client needs, together with both local market practices and regulations.
As a result, implementation of VanEck’s responsible investment principles varies across investment teams. Additionally, it is predicated upon not only the ability of each team, where appropriate, to integrate sustainable factors into our processes and investment approach but also both the markets in which such team operates and our clients’ needs. We may consider any one or more of these factors alongside others, in our active investment decision-making process. And such sustainable factors may, or may not, be given greater weight or consideration than other non-ESG factors.
We also believe that an important part of our responsibility to clients lies not only in encouraging change that can protect, enhance and provide opportunities for them to meet their investment objectives but also in seeking to mitigate associated risks, including those related to environmental, social and governance factors.
Engagement
Active engagement also continues to be an important element of both our investment philosophy and processes.
As part of our bottom-up investment process, our active investment teams seek to meet, when possible, with issuers’ management and representatives of bond issuers, prior to investing. Once we invest, VanEck seeks to continue to have regular dialogue and may raise issues pertinent to that issuer or industry where relevant.
VanEck uses a number of criteria to identify and/or prioritize our engagements regarding ESG practices. Two of the more important criteria are: 1) the disclosure of and transparency around sustainability and other related factors; and 2) their materiality. An example of the criteria evaluated are those specific themes that represent either the highest value at risk or highest potential impact.
Of considerable importance, too, are breaches of international norms. Other criteria reviewed include responses to impacts that have already occurred, follow-up from a voting decision and where and/or in which markets a company or bond issuer either operates or provides funding, for example, a sovereign bond issuer.
We may, in addition, discuss a board’s focus on sustainability or an issuer’s environmental record, safety record, community engagement, energy and resource efficiency or labor relations. When we raise sustainability-related issues during these meetings, we do so (among other reasons) in order not only to gain a better understanding of goals and risks but also to understand better and advocate adherence to best practices. We may also engage on such issues if asked to by issuers themselves.
Importantly, our active investment teams also engage with clients on their concerns, including those around sustainability factors.
Proxy Voting
As one way of realizing our duty as a responsible active investor, VanEck seeks to consider ESG factors when voting securities owned by the clients for which we have been delegated voting authority.
To assist in our responsibility for voting proxies and the overall voting process, VanEck retains the services of an independent third-party proxy voting specialist, Glass Lewis, and has adopted Glass Lewis’ Proxy Voting Guidelines as our guidelines. The services provided by Glass Lewis include in-depth research, global issuer analysis and voting recommendations, as well as vote execution, reporting and recordkeeping. However, in certain circumstances, portfolio managers may vote against Glass Lewis’ recommendations.
Conclusion
As part of our continuing commitment to responsible investing, we seek to give appropriate consideration to environmental, social, and governance factors as important elements of both our investment philosophy and processes. We also understand the importance of active engagement with the issuers in which we invest.
VanEck recognizes that intentions, thinking and evidence in this area continue to develop. We remain committed to trying to identify those factors that can protect, enhance and provide investment opportunities for our clients. VanEck believes that this work helps: 1) us to meet our fiduciary duty to clients; 2) our clients to achieve their objectives; and 3) further foster improved corporate behavior.
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