Participation Policy pursuant to § 185 Austrian Stock Exchange Act (BörseG)
Participation Policy pursuant to§ 185 Stock Exchange Act (BörseG)
This policy takes the requirements of Directive (EU) 2017/828 of the European Parliament and of the Council of 17 May 2017 amending Directive 2007/36/EC with regards to the promotion of long-term shareholder participation into account. The aim of the directive is – among other things – to improve the participation of shareholders or institutional investors. For this reason, the directive requires the creation of a participation policy that describes how shareholders or institutional investors integrate their participation as active participants into the investment strategy.
To achieve this, I-AM strives to strengthen the dialogue with various stakeholders. In the following I-AM describes its active dialogue strategy used to engage with companies.
For Impact Asset Management (I-AM), sustainability means responsible corporate action for long-term economic success in harmony with the environment and society. Sustainability is a central component of its business policy. In the context of fund management, the manager pays attention – in line with the United Nations' definition of sustainability – to a balanced investment that allows needs of today's generation to be met without restricting those of the future.
Monitoring of the invested companies
As a sustainable manager, three sustainability factors such as environment ("E" for environment), society ("S" for social) and responsible corporate management ("G" for governance) are the basis for every investment decision. At various selection stages, sustainable analysis is integrated into fundamental, financial company analysis. In addition to economic factors, such as traditional criteria like profitability, earnings growth and liquidity, ecological and social aspects as well as (good) corporate governance are applied in the selection process. This serves to reduce sustainability risks and to consider the most significant adverse effects of investment decisions on sustainability factors as well as to promote sustainable objectives. This approach is also followed when monitoring invested companies. In doing so, I-AM uses external research sources as well as information available in the market.
By using negative criteria within the investment process, I-AM aims to filter out those issuers that operate in ethically or morally questionable industries (including controversial weapons, coal, shale gas, tobacco and alcohol), violate global norms (UN Global Compact, core labour standards of the International Labour Organization) or are involved in serious controversies.
As a sustainable asset manager, I-AM is aware of its obligations towards investors and other market participants. As part of these duties, I-AM engages in active dialog strategies with companies within its sustainable investments – were reasonably possible.
Active participation instruments therefore include voting, participation in annual general meetings and involvement in collaborative or individual engagements.
In addition to complying with the risk diversification regulations of the InvFG 2011, I-AM pays attention to a high diversification within the scope of its investment strategy, which results in only a small participation in individual companies. For this reason, I-AM does not visit the companies on site, as the effort or costs involved would be unreasonably high and thus not in the best interest of the shareholders. However, cooperation with other shareholders and communication with relevant stakeholders of the invested companies will be sought (see "Cooperation with other shareholders").
In the context of investment funds, where mainly other investment funds (UCITS target funds) are used, I-AM has no significant possibility to participate in decisions of individual companies.
Exercise of voting rights
Voting rights are exercised by means of proxy voting. For the proxy voting, I-AM has selected the independent service provider IVOX Glass Lewis to support in the exercise of voting rights. IVOX Glass Lewis provides a range of proxy voting services including research, analysis and voting recommendations. I-AM uses these services but makes decisions based on its internal I-AM voting policy. The inputs of IVOX Glass Lewis are accordingly of a recommendatory nature only, which means that I-AM does not automatically vote in favour of management or IVOX Glass Lewis' recommendations. I-AM supports shareholder resolutions where possible, particularly with respect to ESG issues (for example, shareholder resolution to prohibit the sale of facial recognition technology to government entities). In general, I-AM tends to support shareholder proposals if they are in line with its global engagement i.e., with the aim of defending fundamental rights (Global Standards), with its policy on controversial activities and with the global commitment to Net-Zero.
I-AM's engagement activities are divided into collaborative (through our ESG research partner ISS) and individual engagement. The collaborative engagement focusses on both thematic (e.g. Net-Zero) and standard-based issues, while the individual engagement can take place either on an event-driven basis (ad-hoc) or through incentives (in the course of bringing about a sustainable change in values with the aim of persuading the companies concerned to adapt to the I-AM Minimum Standards).
Through the collaborative engagement of Institutional Shareholder Services, I-AM participates in a joint dialogue with companies on sustainability-related issues.
Through collaborative engagement, I-AM strengthens its focus on ESG issues while effectively communicating with strong partners & institutions for controversies and concerns about corporate governance. By promoting dialogue with specific companies, for example, transparency may be increased, sustainability performance enhanced or ESG risks mitigated.
Cooperation with other shareholders
In 2011, I-AM was one of the first asset managers in Austria to sign the United Nations Principles for Responsible Investment (UN PRI), committing – among other things – to cooperate with other shareholders to strengthen effectiveness. One possible form of cooperation is the "UN PRI Collaboration Platform". Through this platform, resource pooling, information sharing as well as influence on ESG issues through collaboration among UN PRI signatories is significantly strengthened via a unique forum. By posting on the Collaboration Platform, signatories can invite others to join or support their initiative.
Conflicts of interest
I-AM has its own compliance organization whose tasks include, in particular, supporting employees in identifying potential conflicts of interest, avoiding them in principle and managing identified conflicts of interest in a legally compliant manner in order to prevent investors from being disadvantaged due to conflicts of interest. All employees are obliged to take appropriate measures in order to exclude possible conflicts of interest in advance. A strict four-eyes principle and (random) checks by superiors and Compliance ensure these requirements.
This also applies regarding (potential) conflicts of interest in connection with dialog strategies. In this regard, it should be noted in detail that partners are selected very carefully from among established and reliable providers and great attention is paid to sound governance of the partner companies.
Furthermore, there is no internal commitment to recommendations from partners, externally provided data is checked for plausibility internally and decisions are always made with the aim of safeguarding the best possible interests of investors.