Active Ownership

UTAM is an active owner, meaning that we bring a responsible investing view to the exercise of shareholder voting rights, our engagement with public companies and our advocacy efforts.


Proxy Voting

The public equity securities in our Pension and Endowment portfolios typically extend the option to participate in proxy voting. Where possible, we direct the voting and require ESG factors to be taken into account.

Proxy voting is one of the most important rights available to public equity investors. UTAM’s approach to proxy voting reflects our fiduciary duty to act in the best interests of our client. We also expect our third-party investment managers to act in the best interests of their clients when they vote proxies. To that end, we routinely review the proxy voting practices of our public equity investment managers as part of our due diligence reviews.

As a responsible investor and PRI signatory, UTAM has adopted the Institutional Shareholder Services (ISS) Sustainability Guidelines for proxy voting. These guidelines are consistent with the objectives of investors who take an integration approach to responsible investing. We apply these guidelines wherever possible. The guidelines, updated annually by ISS and disclosed on our website, reflect the following considerations:

ISS recognizes the growing view among investment professionals that sustainability or environmental, social, and corporate governance (ESG) factors could present material risks to portfolio investments. Whereas investment managers have traditionally analyzed topics such as board accountability and executive compensation to mitigate risk, greater numbers are incorporating ESG performance into their investment-making decisions in order to have a more comprehensive understanding of the overall risk profile of the companies in which they invest to ensure sustainable long-term profitability for their beneficiaries. 

ISS has developed proxy voting guidelines that are consistent with the objectives of sustainability-minded investors and fiduciaries. On matters of ESG import, ISS’ Sustainability Policy seeks to promote support for recognized global governing bodies promoting sustainable business practices advocating for stewardship of environment, fair labor practices, non-discrimination, and the protection of human rights.

On matters of corporate governance, executive compensation, and corporate structure, the Sustainability Policy guidelines are based on a commitment to create and preserve economic value and to advance principles of good corporate governance.

In the following section, we provide a summary of proxy voting statistics for public equity mandates where the ISS Sustainability Guidelines were applied in 2018.

Our proxy voting record

In 2018, we voted at over 350 meetings representing over 3,400 proposals and agenda items in 20 countries. Management put forth over 3,302 of the voting proposals. In 11% of cases, we voted against management.


Meetings voted by market

39%

Canada

15%

US

5%

Europe

32%

Asia

9%

Other


Proposals voted by category

39%

Board and audit committee appointments

20%

Capital structure

19%

Anti-takeover, merger and acquisition related

17%

Compensation matters

3%

Amendments to articles

2%

Other

In 2018, shareholder proposals were focused on governance matters. We voted on 102 shareholder proposals, in most cases supporting them; 28% of shareholder proposals were passed.


Examples of shareholder proposals supported

Voting MatterNumber of
Shareholder Proposals 
Our Position
Votes to encourage
disclosure on
environmental and
social matters
17We voted to support
proposals for increased
accountability and
disclosure on
environmental matters
and increased board
diversity.
Proxy access and other
voting matters
19We voted to support
proposals that give
shareholders a
meaningful say in
director nominations.
Independent board chair8We voted to support
proposals that reinforce
strong board leadership.
Votes to address
compensation matters
14We voted in favour of
proposals that would
improve compensation
disclosure and alignment
of interests between
executives and shareholders.

Engagement

UTAM also brings an ESG perspective to our engagement with public companies, whether in direct consultation with boards and management or – more typically, given the scale of our assets under management – through formal and informal collaborations with other institutional investors. Our overarching goal is to deepen accountability on ESG-related issues, which is increasingly vital to companies’ effective operations, risk management and long-term performance.

One of the pillars of a best-in-class active ownership approach is engagement with the management and boards of equity and fixed income issuers on ESG considerations. The objectives of engagement include seeking a better understanding of a company’s position on various issues and communicating our views with the goal of improving management of ESG risks and opportunities at portfolio companies. We believe that sound management of ESG risks and opportunities is essential for long-term outperformance.

Given our size and our practice of investing through third-party investment managers, we typically undertake engagement activities as part of formal and informal collaborative groups. We believe that the combined influence of like-minded investors with substantial combined holdings will typically lead to better outcomes than we could achieve on our own.

Since 2008, we have worked in collaboration with other institutional investors through our membership in the Canadian Coalition for Good Governance, which promotes sound governance practices to the boards and management of issuers in Canada.

Following our commitment in 2018 to the 30% Club Canada, an initiative to promote the inclusion of women on the boards and at the executive management level of public companies, we will participate in engaging with companies on this topic.

Additionally, through our commitment to Climate Action 100+, an initiative to directly engage with some of the world’s largest corporate greenhouse gas emitters, we are active participants in encouraging companies to recognize and address carbon risk in the management of their operations.

We augment these efforts – particularly with regard to issuers outside Canada – by adopting reo®, the responsible engagement “overlay” service provided by BMO Global Asset Management. This service identifies ESG risks and opportunities in select companies within its clients’ equity portfolios, then initiates dialogue with the companies’ leaders to help ensure these risks are effectively managed. Through constructive dialogue, reo® works to drive changes in policies and behaviours to optimize long-term investment performance.

The reo® service comprises:

  • PRIORITY ENGAGEMENTS – in-depth, frequent interactions with companies that have significant ESG risks.
  • THEMATIC ENGAGEMENTS – aimed at improving ESG practices in specific areas across groups of companies. Examples of recent themes include executive remuneration, US pharmaceutical pricing and the impacts of water, food and energy shortages.
  • REACTIVE ENGAGEMENTS – responding to current controversies or breaches of the UN Global Compact on human rights, labour, environmental protection and anti-corruption.

By adding reo® to UTAM’s multi-pronged engagement approach, we leverage the influence of a larger asset base, extending the reach of responsible engagement to represent our ESG concerns to issuers globally.

Companies engaged via reo® on our behalf in 2018

The goal of the reo® engagement approach is to drive companies’ behavioural change with regard to ESG-related issues and risks. Successful outcomes are noted as “milestones” – changes in corporate policies or behaviours following engagement.

The following graphics summarize reo® engagement activities with companies in the Pension and Endowment portfolios during 2018.


Companies engaged by country

Pie graph

506

Companies engaged

178

Milestones achieved

39

Countries covered


Milestones achieved by issue


Advocacy

Advocacy refers to interactions with law makers, regulators and governments with respect to responsible investing considerations. We often work with other investors on these initiatives because we believe that our impact is magnified when we join forces with other like-minded investors. As part of our advocacy efforts, we encourage policy makers to place more emphasis on corporate governance and shareholder accountability. We have also written letters to the Government of Canada asking that it update and strengthen our national commitments to the emissions reduction goal of the Paris Agreement, and that it take immediate and effective measures to eliminate child labour by 2025, as well as forced labour, human trafficking and all forms of modern slavery. Such advocacy is consistent with our PRI commitment and our ESG-integration approach to responsible investing.


Responsible Investing Affiliations

Consistent with our belief that we can achieve more in collaboration with other like-minded investors, we have joined or aligned with a number of organizations and initiatives that are beneficial to our responsible investing approach and our engagement and advocacy objectives.

View Our Responsible Investing Affiliations