Responsible Investing

We strive to be a responsible investor and consider environmental, social and corporate governance risks as an essential part of our investment approach

Responsible Investment Policy

Vertium Asset Management ("Vertium") has a fiduciary responsibility to its clients to maximize their investments' risk-adjusted returns. In line with this responsibility, Vertium believes that Environmental, Social, and Governance ("ESG") factors and engagement actions can have a positive impact on long-term risk-adjusted returns.

To fulfil this commitment, Vertium has developed a Responsible Investment Policy that outlines how it integrates ESG risks and opportunities into its investment process. This policy reflects Vertium's belief that a company's approach to ESG factors can significantly impact its financial performance and long-term sustainability.

By considering ESG factors and engaging with companies on these issues, Vertium aims to mitigate risks and identify opportunities that may otherwise go unnoticed.

Responsible Investment Process

Vertium’s Responsible Investment Process has three core pillars:

1. Integration
2. Engagement
3. Reporting

Integration

Vertium's integration of ESG factors into its investment process is a critical component of its Responsible Investment Policy. The company considers material ESG factors across its portfolio at different stages of the investment process to identify risks and opportunities that could impact the value of an investment. Integration takes place through the following three stages:

Due diligence: Prior to making an investment, Vertium conducts an in-depth analysis of ESG risks and opportunities to identify any material issues that could impact the investment's value.
Ownership: As an owner of companies, Vertium exercises its rights to influence improved ESG practices. This includes engaging with company management on ESG issues.
Divestment: Vertium may decide to sell an investment if a company is not making sufficient progress in addressing ESG concerns.

To further detail its integration process, Vertium follows these three steps:

Identification: Vertium identifies the material ESG issues on an individual company basis through in-depth bottom-up company research.
Impact assessment: Vertium assesses the impact of material ESG issues on valuation. For ESG issues that are quantifiable, Vertium reduces the estimate of future cash flows. For nonquantifiable issues, Vertium increases the discount rate applied to future cash flows.
Monitoring: Vertium monitors companies through various channels, including third-party ESG data providers like FactSet, sustainability reports, company announcements, and industry reports. The purpose of this monitoring is to identify potential ESG risks that require further investigation.

Engagement

Vertium engagement process encompasses the following steps:

Dialogue: Vertium believes that constructive dialogue with companies is critical to addressing ESG concerns. Vertium prioritises regular dialogue with companies in our portfolio to monitor progress on ESG issues. If, after multiple interactions, Vertium finds that a company is not making sufficient progress in addressing ESG concerns, it may take steps to reduce its ownership or divest entirely.

Exercising voting rights: Vertium votes in the best interest of its clients, with management's recommendations usually aligned with Vertium's. However, there may be instances where Vertium may vote against management's recommendation if it is in the best interests of its clients. If Vertium does vote against management, the investment team will escalate the matter and explore all available options to resolve the issue. This may include engaging directly with the company's Board of Directors to address concerns, reducing ownership of the company, or ultimately divesting the entire position if a satisfactory outcome is not achieved.

Disclosure: Vertium discloses its engagement policy and reports annually on its engagement activities.

Vertium's engagement policy is available on its website and provides further details on its approach to engagement.

Reporting

Vertium believes that transparent reporting is essential to building trust with its clients and stakeholders. Therefore, the firm reports on its engagement activities, voting practices, and the carbon emissions intensity of its portfolio.

Engagement Policy

Vertium Asset Management (“Vertium”) has a fiduciary responsibility to its clients to maximize the risk-adjusted returns of their investments by actively engaging with company management and participating in shareholder votes. This Engagement Policy outlines how Vertium integrates shareholder engagement into its investment process.

Vertium believes that investing in well-managed companies reduces the risk of shareholder value erosion. Therefore, it's essential for a company to have quality management with effective remuneration, a strong Board, respect for shareholder rights, including transparent communication, and consideration of their environmental and social impact.

Engagement Process

Vertium engagement process encompasses the following steps:

1. Dialogue
2. Exercising voting rights
3. Disclosure

Dialogue with Companies

Vertium regularly engages with companies as part of its investment process, providing additional insights into management quality, business drivers, financial strategy, and ESG factors. Through shareholder engagement, Vertium monitors and holds corporate management teams accountable for their actions.

When assessing investments, Vertium seeks to understand how management teams acknowledge, manage, and reduce ESG-related risks, and engage with portfolio companies on how these risks are being managed.

Vertium believes that constructive dialogue with companies is critical to addressing ESG concerns. Vertium prioritises regular dialogue with companies in our portfolio to monitor progress on ESG issues.

If, after multiple interactions, Vertium finds that a company is not making sufficient progress in addressing ESG concerns, it may take steps to reduce its ownership or divest entirely.

Exercising Voting Rights

Vertium votes in the best interest of its clients, with management's recommendations usually aligned with Vertium's. However, there may be instances where Vertium may vote against management's recommendation if it is in the best interests of its clients.

If Vertium does vote against management, the investment team will escalate the matter and explore all available options to resolve the issue. This may include engaging directly with the company's Board of Directors to address concerns, reducing ownership of the company, or ultimately divesting the entire position if a satisfactory outcome is not achieved.

Vertium also reviews any additional information provided by the company or shareholders and analyses it in conjunction with prior research from proxy advisors. This approach enables Vertium to make comprehensive and well-informed voting decisions that are aligned with its client’s objectives.

Disclosure

Vertium believes that transparency and accountability are critical to building trust with its clients and stakeholders. To that end, Vertium discloses its engagement policy and reports annually on its engagement activities.

You can read more about Vertium's sustainability and engagement practices by reading our 'Sustainability and Engagement Report'. Click here to access it.