Stewardship Code

EQ Investors has developed this Stewardship Code to guide the firm’s commitment to our role as a steward for clients’ assets. This policy has been adopted by the Board for use across the entire firm. It will be formally reviewed and updated on an annual basis.

EQ applies the United Nations Principles for Responsible Investment definition of Stewardship, namely:

The use of influence by institutional investors to maximise overall long-term value, including the value of common economic, social and environmental assets, on which returns and client and beneficiary interests depend.

Stewardship objectives

The aim of our stewardship activity is to protect our clients’ interests, and the value of their investments. We also apply stewardship activities to improve the sustainability outcomes of our clients’ investments, as we believe that supporting a more equitable and sustainable world is aligned with our long term fiduciary duty.

As a signatory of the UN PRI, EQ Investors implements the following relevant Principles through its stewardship practices:

  • Principle 2: We will be active owners and incorporate ESG factors into our ownership policies and practices.
  • Principle 4: We will promote acceptance and implementation of the Principles within the investment industry.
  • Principle 5: We will work together to enhance our effectiveness in implementing the Principles.

Tools and methods of stewardship

As investors in predominantly pooled, collective investment vehicles, the most appropriate methods of stewardship are the following:

  1. Assessment and Monitoring of external fund managers’ stewardship policies, processes and records
  2. Engagement with external fund managers on ESG/sustainability and stewardship ambition
  3. Collective engagement

Stewardship commitments

Please see below EQ’s commitments across these three methods

1. Assessment and Monitoring of external fund managers’ stewardship policies, processes and records

EQ Investors predominantly invest in funds and investment trusts managed by external, third party managers. The investment team’s focus therefore lies in the assessment and monitoring of their respective stewardship activities, applying shareholder rights on behalf of our clients capital. We have developed an ESG and stewardship assessment methodology that allows the consistent and transparent rating of fund managers engagement and voting policies, processes and records. Our rating methodology distinguishes between engagement intentionality. Here, we distinguish between fund-specific and asset-manager level activities, as well as differentiate between expectations by asset class targeted by the fund mandate.

This assessment of engagement and stewardship forms part of the final fund conviction, and the minimum baseline expectations will influence whether a fund passes the fund selection committee onto the EQ buy-list. The intentionality of a fund managers’ engagement will further influence whether the fund is included in portfolios with sustainability mandates.

For any existing investments, we monitor the level of proxy voting exercised (where applicable), the frequency and nature of engagement and how these feed into the ESG integration of the investment process. We encourage transparent reporting. We use engagement (below) to lift the external fund managers’ stewardship practice with evolving best practice.

2. Engagement with external fund managers on ESG/sustainability and stewardship ambition

EQ engages with external fund managers in order to lift policies, the processes and practice to best practice. The assessment (above) will highlight any weaknesses in stewardship approaches and this will become a focus for our engagement.

EQ also engages on systemic sustainability issues, or thematic engagement topics with all relevant fund managers (see below section on climate-related risks and opportunities).

For funds held in the portfolio strategies that incorporate an explicit sustainability mandate, the engagement goes beyond fund and asset manager level to include security-specific and sustainability outcome engagement.

3. Collective engagement

Collective engagement is the most appropriate and effective way EQ Investors can directly push for positive ESG improvement in underlying companies held within external funds. We join investor collaboration networks on thematic engagements with focused sets of companies, such as decarbonisation, modern slavery or nutrition.

We also collaborate with investors and industry bodies in advocating for sustainable investing, best practice and increased transparency/standardisation of approaches.

Escalation strategies

When a weakness in ESG or stewardship is identified in an external fund managers policies, process or practice (especially when these fail the EQ minimum sustainability standards), the first point of response is dedicated engagement meetings. If fund managers are reluctant to respond constructively to continued engagement attempts in a reasonable time frame, investment analysts will seek to a find a suitable alternative and look to divest from the fund.

Engagement in respect to climate-related risks and opportunities

As a business, EQ Investors has committed to become a carbon net-zero emission business by 2030. While the investment management activities fall out of scope of our direct or indirect emissions (Scope 1, 2 and 3), in light of this commitment, EQ aims to decarbonise the portfolios under our discretionary management in alignment to the decarbonisation pathway that will limit global warming to 1.5 degrees since pre-industrial levels.

EQ engages annually with fund managers and asset management firms on aligning investment strategies with similar goals and uses stewardship tools (voting and engagement) to drive decarbonisation in investee firms. EQ also engages collaboratively with underlying companies, namely through the CA100+ initiative and Shareaction Investor Decarbonisation Initiative.

Conflicts of interest policy

Our staff are trained to always “act…honestly, fairly and professionally in accordance with the best interests of [our] client”, including when they:

  • Gather all relevant and material information from our client; and an appropriate range of product and service providers;
  • Carry out an analysis, and form a view about what course of action to recommend to our clients;
  • Recommend (and only recommend) investments and services that are suitable and appropriate for the particular client;
  • Carefully, thoughtfully and fully record all necessary information and actions.

Staff training takes place when an individual joins the firm; if this policy changes; or if anything happens, which suggests that further training is necessary, appropriate or desirable.

Personal Dealing Accounts Policy (summary): We have established, implemented and maintain adequate arrangements aimed at managing such conflicts of interest. This is to prevent the misuse of information by those who have access to inside information, or to other confidential information relating to clients, when carrying out such personal trades.

Gifts & Inducements Policy (summary): EQ has a strict policy in place to set out circumstances in which EQ may be permitted to give or receive an inducement. EQ requires all staff to declare any gifts or inducements whether they have been accepted or not, where the intended recipient’s ability to demonstrate that they are acting in the best interests of EQ’s clients may be impaired.

Reporting on stewardship activities

We publish an annual impact report that details the thematic engagements EQ has participated in the reporting period. EQ has developed a milestone tracking framework, which communicates the success of engagements.

EQ will use its discretion when disclosing our engagement activity with external fund managers and/or underlying companies, as sometimes public disclosure will interfere with the trust EQ has built and can hinder further future engagements and ultimately the best outcome for our stewardship of clients’ capital.

This policy was approved by the Board on 30 March 2021.