Active ownership in the European equity space

Phileas Asset Management, the Investment Adviser to the Strategic Europe Quality Fund is committed to ensuring that ESG factors are embedded within the investment process they employ. This includes being an active owner and undertaking regular engagements with investee companies on ESG-related matters.

Fund Commentary
8 Dec 2022

Phileas Asset Management, the Investment Adviser to the Strategic Europe Quality Fund is committed to ensuring that ESG factors are embedded within the investment process they employ. This includes being an active owner and undertaking regular engagements with investee companies on ESG-related matters.

As part of the team’s approach to ESG integration, they closely follow specific factors, which they believe will have a lasting impact on a company’s value. These include:

Environment: Decarbonisation, pollution and waste.

Social: Human capital, customer / supplier relations and product impact.

Governance: Alignment of interest, board independence business ethics and risk management.

In the management of the Fund, the team adhere to our ESG policy and associated exclusion lists, as well as their own exclusion list (which is aligned to the exclusion list issued by the Norges Bank).

Active Ownership

As noted we are committed to being active owners, this includes proxy voting in the best interest of our investors and engaging with the management of companies in which we invest to ensure that our investors’ assets are invested in well-managed companies which exhibit good governance and deliver shareholder value.

The below chart provides insight regarding the proxy voting undertaken by the Fund on a YTD basis to 01/12/2022:

Voting Proxy chart

Across 4,127 unique proposals available to vote, we voted 3,958 for which four proposals were voted in varying ways for the same meeting agenda item, with 87% of votes cast in line with management recommendations and 13% contrary to management recommendations. Further information in this regard can be found on our Proxy Voting page.

In addition to being active in terms of proxy voting, the team have undertaken eight engagements with companies specifically with regard to ESG factors during 2022 as summarised below:


Company Name

Sector
Sustainalytics ESG Score
Engagement Topic
Summary of Topic discussed
RATIONAL Industrials High Strategy Risk and Communication. Limited disclosure on ESG and sustainability roadmap.
Logitech Consumer Discretionary Low Environmental. Climate Risk management.
Capgemini Information Technology Low Social and Ethical. Ability to attract and retain talent.
Saint-Gobain Materials Medium Environmental. Financial communication on green products opportunity and impact.
Vinci Industrials Medium Social and Ethical. Working conditions in Qatar subsidiary.
HelloFresh Consumer Staples Medium Environmental. Controversy on coconut milk.
Teleperformance Information Technology Low Social and Ethical. Labour representation.

Engagement Case Study: Teleperformance

The company was recently mired in a controversy related to working conditions in its Colombian content moderation team.

Whilst the company gave convincing answers on specific points related to pay and benefits, exposure to egregious content, psychological support etc, the team deemed the core issue was rather related to labour representation.

Labour representation within the company, whilst at a good level (40% unionised) is indeed fairly fragmented with large swathes of the company’s geographic footprint without adequate representation; within Colombia for example the company employs 42K staff, who have no proper union, with the company seemingly dragging its feet on recognising one.

The team, therefore, along with other investors actively engaged with the company on the topic. This endeavour was successful, as Teleperformance announced on 1st December 2022 that they reached an agreement with UNI Global Union, which will provide coverage to all employees across the group’s 88 countries in which it operates.

Click Strategic Europe Quality Fund to view further information and the past performance of the Fund.

We invite investors and prospects to contact us should they wish to receive any additional information.

 

Adam TurbervilleAdam Turberville
Director
+44 1481 742380
a.turberville@ericsturdza.com

The views and statements contained herein are those of Phileas Asset Management in their capacity as Investment Adviser to the Fund as of 05/12/2022 and are based on internal research and modelling. Please click on Disclaimer Page to view full disclaimers.