Eastspring Investments (Singapore) Limited accepts the “Principles for Responsible Institutional Investors (Japan's Stewardship Code)” in regard to our management of Japanese equities.
Japan's Stewardship Code ("the Code") has been drafted by the Financial Services Agency in February 2014 as a guide for institutional investors to “promote sustainable growth of investee companies and enhance the medium- and long-term investment return for clients and beneficiaries". The Financial Services Agency explains the Code as follows.
In this Code, "stewardship responsibilities" refers to the responsibilities of institutional investors to enhance the medium-to long-term investment returns for their clients and beneficiaries (including ultimate beneficiaries; the same shall apply hereafter) by improving and fostering the investee companies' corporate value and sustainable growth through constructive engagement, or purposeful dialogue, based on in-depth knowledge of the companies and their business environment.
This Code defines principles considered to be helpful for institutional investors who behave as responsible institutional investors in fulfilling their stewardship responsibilities with due regard both to their clients and beneficiaries and to investee companies. By fulfilling their stewardship responsibilities properly in line with this Code, institutional investors will also be able to contribute to the growth of the economy as a whole.
(Source) Financial Services Agency
Eastspring Investments primary responsibility is to fulfill our fiduciary duty to our clients and beneficiaries and in respect to this, we accept the Code.
We aim to generate long-term capital growth on the assets investors entrust to us by pursuing an active investment policy through portfolio management decisions, through voting on resolutions at general meetings and by maintaining a continuing dialogue with company management.
We adopt a value approach to investment, where all portfolios are managed consistently around a single investment philosophy and a common research platform. Our approach is research intensive. It requires a detailed understanding of the fundamentals of each investee company to determine the sustainable earnings of the business.
Policies on the Stewardship Code
As per Japan’s Stewardship Code requirements, we have publically disclosed our response to principles 1, 2 and 5 below.
1.Institutional investors should have a clear policy on how they fulfill their stewardship responsibilities, and publicly disclose it.
We invest significant effort into conducting a thorough qualitative due diligence on each investee company. As part of stewardship activities we focus on company analysis, ongoing engagement and exercising of voting rights based on publicly available information.
As part of a deep due diligence, we consider aspects such as the quality of management, capital efficiency, and the environment in which the company operates. We also assess an investee company for aspects including the quality of corporate governance, with an emphasis on the interests of shareholders. We engage in face-to-face meetings with company management to support and promote increasing shareholder value and the delivery of sustainable earnings by investee companies.
2.Institutional investors should have a clear policy on how they manage conflicts of interest in fulfilling their stewardship responsibilities and publicly disclose it.
Eastspring Investments has established appropriate risk management and compliance frameworks to ensure that the interests of clients and beneficiaries are the highest priority and if conflicts of interest arise they are appropriately managed.
For example, proxy voting proposals may raise conflicts between the interests of our clients and the interests of Eastspring Investments and its employees. We must take certain steps to ensure a decision to vote the proxies that are in the clients' best interest and are not the product of a conflict.
To find out more about our approach, please read a summary of our Proxy Voting Policy
5.Institutional investors should have a clear policy on voting and disclosure of voting activity. The policy on voting should not be comprised only of a mechanical checklist; it should be designed to contribute to the sustainable growth of investee companies.
Eastspring Investments follow a principles based approach. All votes we exercise are considered in the context of the principles as set out in our proxy voting policy.
As a general policy we are supportive of the management of the companies in which we invest. However, when companies consistently fail to achieve our reasonable expectations we will actively promote changes. These changes might range from the formulation of a new strategy to the appointment of new management or non-executive directors.
An active and informed voting policy is an integral part of our investment philosophy. Voting should never be divorced from the underlying investment activity. By exercising our votes we seek both to add value and to protect our interests as shareholders. We consider the issues, meet the management if necessary and vote accordingly. We would always seek to discuss any contentious resolutions before casting our votes in order to ensure that our objectives are understood and our votes will be cast in the best interests of our clients.
To aid the process of making proxy voting decisions we use a proxy advisor. We review, from time to time, the policies and guidelines of the proxy advisor to understand the nature of their recommendations and test their compatibility with our requirements. However, specific policies and advice from the proxy advisor are not applied mechanically. We always apply our judgment and decide how to vote each resolution on its merits in the context of principles of our proxy policy.
To find out more about our approach, please read a summary of our Proxy Voting Policy.
Proxy voting results shall be made available to our clients upon request