Liontrust Responsible Capitalism Report 2021 - Flipbook - Page 32
to the voting deadline, which reduced the amount of time fund
managers had to make voting decisions. However, this occurred
for various reasons, many of which were not within ISS’ control.
ISS
ISS services Liontrust as a proxy voting research provider and
proxy voting administrative platform. During 2022, Liontrust
engaged ISS on a number of areas, including updating its proxy
voting guidelines and seeking clarification about individual votes.
Liontrust found ISS’ client servicing to be helpful, accurate, and
timely. ISS’ service enables the Group to vote its proxy votes
and to receive research before voting. There were times during
the year when the custom research policy was published close
With regard to voting policies, Liontrust engaged ISS on the fact
that many of its policies apply more to large cap companies than
to small cap. There also seems to be little allowance from ISS for
companies’ intentions to be (or to change) positive (for example,
a Group’s intention to improve Board diversity.) ISS listened to the
Group’s feedback and is considering it.
On the whole, Liontrust found that there was no need to escalate issues
with ISS during 2022, as problems or issues were rectified quickly.
RESPONSIBLE CAPITALISM AND PROMOTING
WELL-FUNCTIONING MARKETS
As an asset manager, Liontrust has spheres of influence in which it can
be a helpful influence to the market, to its employees, to stakeholders
and to the environment.
Part of this influence comes in the promotion of well-functioning
markets through its participation in the market and market-related
associations as an asset manager.
PROMOTING WELL-FUNCTIONING FINANCIAL SYSTEMS
In terms of the market and the wider financial system, Liontrust
takes several steps to play its part in ensuring markets function as
efficiently as possible. It does so, partly, by working to mitigate risks
concerning systemic or market-wide risks. Generally, these reflect
situations or conditions under which an investor may experience
a decline in value of their investment due to failings of the wider
financial system, including bank collapse or exchange failure and
may also include risks around broker-dealers placing erroneous
orders on market exchanges. These risks might also include the
collapse of an entire market or financial system.
How Liontrust identifies and assesses market-wide
and systemic risks
As discussed in the Liontrust and Risk section, the Liontrust Enterprise
Risk Management Framework provides a systematic framework
for identifying, assessing, monitoring and reporting on risks. The
Internal capital adequacy and risk assessment (ICARA) process
sits within the framework and provides a top-down view of risks
including harms associated with market-wide and systemic risks.
The ICARA details the risks and controls as well as performing
scenario modelling to examine the impact of market-wide and
systemic risks on Liontrust to demonstrate the firm’s resilience.
32 - Responsible Capitalism Report 2022
Mitigating these risks
To play its part and help mitigate these risks, Liontrust:
• Manages its own risks well by identifying and prioritising its own
inherent and residual risks. The Group publishes a heat map in
the Liontrust Asset Management PLC Annual Report and Financial
Statements that helps put these risks into context (with each other)
and also publishes steps the Group takes to manage several of
the issues it faces. The Board oversees this aspect of the Group’s
business. (For more information, see the Risk section of this report
on pages 24–27.)
• Makes reports to the FCA on suspicious trading activity. Liontrust
will report any suspicious trading it uncovers as part of its
monitoring processes.
• Provides training for fund managers on how to appropriately
manage and avoid inside information and on acting in collusion
to minimise the risk that either action takes place.
• Considers the material risks and opportunities (including those
that are ESG related) in many of our investment processes.
Potential exposures include, but are not limited to, climate change;
biodiversity; diversity and inclusion (D&I); supply chains; human
rights; etc. (For more information on how Liontrust investment
teams look at material risks and opportunities as determined by
their investment processes and engage, see pages 40–91 in
this report.)
• Is well capitalised. The Group has £81.4 million (March 22) of
capital, helping to ensure the efficient running and protection of
the business.