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The Credit Suisse ESG framework assumes an active approach to ownership that delivers impactful change and promotes sustainability in our investee companies. Through proxy voting and engagement, we put our values into action, providing leadership in environmental, social and governance issues.
August 21, 2020
Active ownership means the actions that allow us to transform our role from that of a capital allocator into an agent of change. We use two of the most important tools in our repertoire – engagement and proxy voting. On behalf of our clients, we hold significant investments in various companies through our funds and other solutions, which gives us influence over decision-making. Our focus is on establishing continual dialog with management to shift them toward more sustainable practices and ESG excellence. This comes from our belief that it is our duty and responsibility to address ESG issues as part of an open dialog with companies. The prime objective of active ownership is to maintain and increase the value of investee companies so that their sustainability efforts make a positive impact on risk-adjusted investment returns over the long term.
"Active ownership is a powerful tool in our push for a sustainable future."
Proxy voting is the fiduciary exercise of our voting rights at general shareholder meetings. In the context of our ESG approach, it means that we use the voting rights afforded to shareholders whose funds we manage to influence investee companies’ policies and practices in areas critical to ESG issues. Credit Suisse Asset Management is fully compliant with the European Shareholder Rights Directive II (SRD II), which encourages long-term shareholder engagement. We use proxy voting to improve corporate governance, strengthen shareholders’ position and ensure decisions are taken to boost the long-term stability of companies.
The criteria that Credit Suisse Asset Management applies when assessing the corporate governance of investee companies are:
Proxy voting enables us to exert influence over the election of BoD members, as well as over compensation schemes and articles of association. We use our proxy voting power to help elect directors who are committed to a long-term vision of strengthening their companies’ sustainability practices and are sufficiently independent to see those efforts through. By voting to reduce overboarding – where board members are burdened with an excessive workload – we seek to ensure that BoD members are able to focus their efforts on the task of providing the most responsible management to their companies. We also encourage transparent compensation packages that are both attractive and rewarding to directors who demonstrate sustainability leadership through their actions.
In 2019, Credit Suisse Asset Management voted for example to:
We used our influence to make a strong push for governance best practices in our investee companies and ensure that shareholders’ voices are heard.
Engagement is the process of conducting a continual and active dialog with investee companies’ management in order to encourage and assist them in furthering their ESG and sustainability efforts. We believe that Credit Suisse Asset Management’s engagement practices have a positive impact on investment returns over the medium and long term, as well as on society in a broader sense. Through direct, one-to-one conversations with our counterparties’ key stakeholders and meetings where we explain the how and why of our proxy votes, we help direct our partners toward a more sustainable development trajectory.
In 2019, Credit Suisse Asset Management held numerous meetings and conference calls covering various modes of engagement:
We notice a growing understanding of the importance of BoD member independence, particularly among large-cap companies. Our engagement seeks to encourage the proactive adoption of best practices in governance standards before regulators force companies to make changes. In our dialog with firms in H2 2019, we observed openness in our partners, and we will measure the results at the upcoming AGMs.
Credit Suisse Asset Management has also pursued individual engagement with specific investee companies, which includes cooperative planning for leadership transitions that allay shareholder concerns about potential conflicts.
Real estate is an area where we are pursuing specific ESG objectives through dialog, particularly concerning climate change and energy use. Engagement with listed real estate companies showed that there is significant room for improvement by further linking management compensation to sustainability targets, especially when it comes to the environment.
Our engagement in industry-wide initiatives has also allowed us to influence public policy in favor of ESG objectives. We have actively participated in efforts to remove certain weapons manufacturers from equity indices, boost the impact investing market, increase debt transparency, support the transition to a low-carbon economy and shape the EU Action Plan on Sustainable Finance.