The Edinburgh Investment Trust Plc Annual Financial Report 2022 - Flipbook - Page 26
24 / STRATEGIC REPORT / THE EDINBURGH INVESTMENT TRUST PLC
Section 172 Statement, Company Sustainability
and Stakeholders / continued
ENGAGEMENT WITH INVESTEE COMPANIES
EXERCISE OF VOTING POWERS AND STEWARDSHIP CODE
The Manager is a long-term investor and develops strong
relationships with both investee and potential investee companies
and reports their conversations back to the Board. Both the Board
and the Manager believe that engagement with investee companies
is positive, beneficial and welcomed.
Stewardship
Voting is a key activity in the dialogue with investee companies
and these decisions are reported to the Board on a quarterly basis.
Voting is undertaken by the same team that manages the portfolio
assets rather than it being delegated to an independent third party.
The Board supports the Manager’s approach to ESG in the context
of its management of the portfolio. In July 2021 the Board held a
meeting to which the Head of Responsible Capitalism at Majedie
was invited to provide an overview of developments in ESG and the
implications for the Company.
CONCLUSION
The Directors believe that they have fulfilled their duties
under s172 of the Companies Act 2006 in their deliberations
on all matters. The Board takes into account the interests of
all the Company’s key stakeholders, as outlined above, in its
decision‑making which reflects the Board’s belief that the
long-term sustainable success of the Company is linked directly to
its key stakeholders.
ENVIRONMENTAL SOCIAL AND GOVERNANCE (“ESG”)
MATTERS
As an investment company with no employees, property or
activities outside investment, environmental policy has limited
application. In respect of the Company’s investments, the Manager
and the other members of the investment team integrate ESG risks
and opportunities as part of a material assessment undertaken for
all holdings. Consistent with the Manager’s investment approach,
this analysis is undertaken on a bottom-up, stock basis. The risks
and opportunities that each holding faces over a three to five year
period are then identified and prioritised. Many of these issues
can be sub-categorised as “E”, “S” and “G” issues. The issues that
are identified as the key ones are at the forefront of engagement
discussions on holdings. As part of the materiality assessments,
the manager identifies and prioritises any key issues for a company
over the three to five year period. These frequently include issues
related to global warming, including those focussed on transitional
risks legislation risk, and/or physical risks. The Manager is a
signatory to the Principles of Responsible Investment (‘PRI’). Further
information is available at www.liontrust.co.uk and through the
investment company ESG disclosures at www.theaic.co.uk.
The Board considers that the Company has a responsibility as a
shareholder towards ensuring that high Environmental, Social and
Governance standards are maintained in the companies in which
it invests. To achieve this, the Board does not seek to intervene in
daily management decisions, but aims to support high standards
of governance and, where necessary, will take the initiative to
ensure those standards are met. The principal means of putting
shareholder responsibility into practice is through the exercise
of voting rights. The Company’s voting rights are exercised on an
informed and independent basis.
The Manager has adopted a clear and considered policy towards
its stewardship responsibility on behalf of the Company. The
Manager takes steps to satisfy itself about the extent to which
the companies in which it invests look after shareholders’ value
and comply with local recommendations and practices, such as
the UK Corporate Governance Code. The Manager’s approach to
corporate governance and the UK Stewardship Code can be found
on the Manager’s website at www.liontrust.co.uk together with a
copy of the Manager’s Stewardship Policy and the Manager’s global
proxy voting policy.
Members of the Manager’s investment team are responsible for
overseeing all aspects of the Stewardship process, including voting
on all resolutions at all Annual General Meetings and Extraordinary
General Meetings in the UK and overseas ballots. The Manager
assesses corporate governance, remuneration policies and if
deemed necessary will challenge management where it is felt that
the best interests of shareholders are not being met.
When voting against or abstaining in a vote the Manager may
communicate with management beforehand, either setting out its
position in its regular meetings with the management of investee
companies or in a communication to management.
The Manager discloses its voting record to the Board at each
meeting with notes explaining the reasons for any votes against
resolutions.
In addition, the Manager discloses to all clients an annual Responsible
Capitalism report, providing cumulative voting statistics, full
disclosure on voting policy and extracts of engagement for the year.
The Manager publishes a quarterly voting record for the previous
year on its website www.liontrust.co.uk.
MODERN SLAVERY DISCLOSURE
The Company aims to adopt the highest standards and is committed
to integrating responsible business practices throughout its
operations. The prevention of modern slavery is an important part of
corporate good governance.