Driving change through active ownership

Climate change and biodiversity loss were again at the top of the agenda in 2022. Credit Suisse Asset Management’s Active Ownership team helps investee companies tackle these and other challenges to enable future-proof business models and a more sustainable future for society.

Sustainability is of strategic importance to Credit Suisse Asset Management. Through proxy voting and individual and collaborative engagements, we want to drive change toward a more sustainable future. Our latest Active Ownership Report details our efforts related to our engagement and proxy voting activities conducted in 2022 and highlights the areas in which we want to make an impact for clients this year.

Why should I read the Active Ownership Report 2022?

Learn about our proxy voting framework and voting results
Get insights into our engagement approach, scope, and activities
Read about the significance of thematic engagements
Learn about the importance of responsible consumption and risks related to biodiversity loss
Check out interesting success stories

Download the report

Broadening the scope of our proxy voting activities

After expanding from Europe to North America and the developed Asia-Pacific region (Australia, New Zealand, Japan, Singapore, and Hong Kong) in 2021, we added the first two emerging markets – China and Taiwan – to our proxy voting services in 2022. Our global voting was thus further broadened through the addition of two important markets. We substantially increased our coverage in the small and mid-cap space across the markets, covering nearly 80% more issuers than in 2021.

We continued to follow our best practices approach. Our general focus is on regulations that are already applied or are in the process of being established in the respective markets. We aim to protect the interests of minority shareholders, to avert conflicts of interests between various stakeholders in investee companies, and to strengthen the independence of the highest internal supervisory body.

What is a proxy vote?

A proxy vote is a delegation of voting power to a representative on behalf of the original vote-holder. The concept enables e.g. groups of shareholders to amass greater influence by pooling their votes together.

Our proxy voting framework is focused in particular on the following aspects:

An attractive compensation framework is needed to retain and motivate management personnel. However, it is necessary to bring the long-term interests of the various stakeholders into alignment, especially the interests of the executive management and investors. We put a sharp focus on deferred long-term compensation laid out in the long-term incentive plan (LTIP). We consider an LTIP a mandatory and a best practice element, and most of the companies in which we are invested have such a plan in place.

As a shareholder, we have the fiduciary duty to take a stand on absolute compensation, compensation budgets, and/or remuneration systems in a growing number of countries. We exercise this duty with due care, conducting detailed analyses of compensation reports.

An independent board of directors (BoD) is crucial to the economic success of a company. Business strategies get adjusted much more often these days than some years ago and, consequently, changes to the executive board (CEO, CFO, etc.) occur more frequently than in the past. The independence of the BoD is an important bulwark against potential questionable developments in this area in terms of business policy and strategy.

We take a critical stance on capital increases without preemptive rights for existing shareholders. Our threshold here is a 10% dilution of voting rights, which we consider the current best-practice limit for Switzerland and Europe.

Proxy voting by country and sector

Engaging proactively with investee companies

Since initiating active ownership activities in 2019 and establishing the team in 2021, our objective has been to proactively engage with investee companies. We do this in order to address sustainable investment-related systemic risks and to play an important role in helping drive change and ensuring that international standards are being applied, in line with our fiduciary duty. We analyze the dependencies of companies with regard to ESG-related risk factors and their impact on nature and society. Our engagement efforts are key to addressing broader negative externalities that could lead to inefficiencies in our portfolios. Our approach seeks to benefit all stakeholders in the long term and helps fulfill our fiduciary duty toward our clients.

In 2022, the Active Ownership team initiated 94 engagement interactions with investee companies, with 41 related to investor dialogues and 53 to structured engagements.

What was the focus of our engagement?

Our engagements can be categorized by the type of interaction (individual, collaborative) and key focus of those interactions (thematic engagement, business conduct engagement, and proxy voting engagement).

This type of engagement is based on our ESG initiatives and thematic focus points. To identify the materiality of the individual subject areas, we relate them to our holdings. The core question of the materiality analysis is how a specific ESG issue affects the business model of a particular company (“dependencies”) and how the business model influences the ESG issue (“impacts”). For example, a materiality analysis on climate change might identify the risk of storm damage to a production site as one of the dependencies and company-specific emissions of greenhouse gases as one of the impacts. Thematic engagements take place over a number of years due to the long-term nature of the underlying systemic risks.

Portfolio companies are reviewed systematically by Credit Suisse Group for potential business conduct violations. Critical cases are put on a watch list and may be subject to engagement by the Active Ownership team.

Corporate governance engagements are often determined by our voting at annual general meetings or extraordinary general meetings and mostly encompass agenda items voted on during the general meetings. They thus build a strong connection between our engagement and proxy voting activities

Types of engagements

In terms of thematic engagement, in 2022 we conducted individual and collaborative engagements related to the following themes:

Responsible consumption and production

Biodiversity loss and extinction

Climate change

Corporate governance

What’s in store for the Active Ownership team in 2023?

In the future, we are planning to broaden our activities in proxy voting, engagement, and ESG integration. The following key developments are planned for 2023.

Proxy voting

Gender diversity on board level (developed markets)
Monitoring shareholder proposals on environmental and social topics

Engagement

Thematic engagements on corporate governance
Climate change
Biodiversity
Social: UN Guiding Principles
Business conduct-related violations
Responsible consumption and production

ESG integration

Further disclosure requirements by the EU Sustainable Finance Disclosure Regulation

Check out also

How we can advance sustainability: Active ownership – a powerful tool to bring about positive change.

Jeroen Bos
Global Head of Sustainable Investing
at Credit Suisse Asset Management

Our sustainability framework

ESG approach

Active ownership tools and goals

Sustainable investing

Get in touch with Asset Management

This is a marketing communication. For Information Purposes Only, this presentation should not be used as a basis for investment decision.

The individuals mentioned above only conduct regulated activities in the jurisdiction(s) where they are properly licensed, where relevant.

The abbreviation ESG stands for Environmental (E), Social (S) and Governance (G).

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