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Making It Plain: Our Asset Stewardship Approach

Our Approach: Our Asset Stewardship program is centered on the pursuit of long-term value for our clients’ portfolios through voting at shareholder meetings and engaging with the companies in which we invest on behalf of our clients.

Global Head of Asset Stewardship
Vice President

We believe our portfolio companies must have effective oversight and governance of opportunities and risks that are material to their businesses and that they should disclose how they are overseeing such risks and opportunities to investors. This belief is fundamental to our Asset Stewardship approach.

Our Asset Stewardship program has three principles:

Effective board oversight: Good governance underpins our asset stewardship activities. We trust the boards of portfolio companies and believe they are well-equipped to oversee proper implementation of their businesses’ strategies. We also believe boards are responsible for minimizing the risks that can adversely affect performance of the company, including those related to environmental and social issues. Thus, we hold boards accountable through our engagement and voting activities. We do not seek to micromanage companies and boards.

Disclosure: We promote the disclosure of information on how companies are managing the risks and opportunities related to topics that are deemed material to their business. We will hold boards accountable if we believe they do not sufficiently disclose information that can be deemed important to an investor’s decision-making process.

Shareholder protection: A robust governance process starts by ensuring minority shareholders’ long-term interests are protected against detrimental actions by controlling shareholders. Companies should have appropriate shareholder rights and accountability mechanisms in place, including participation in annual meetings and the right to call special meetings and votes.

These principles serve as the foundation for our engagement and voting activities

Corporate Engagement

Through engagement, we aim to build long-term relationships with the issuers in which we invest on behalf of our clients and to address a broad range of topics relating to the promotion of long-term shareholder value creation. Companies and their boards are usually willing to engage with us independently if we have matters that we would like more information on or would like to discuss.

Engagement versus Divestment

In our view as long-term holders of the companies in which we invest on behalf of our clients, divestment is not an adequate option for investors. Rather than divesting from portfolio companies, our approach is to engage with such companies. We believe that engagement with portfolio companies is an optimal strategy for mitigating risks posed to our clients’ investments, as well as capturing potential opportunities that may exist.

Our focus begins with governance, as we believe that the strength, independence, and effectiveness of boards is critical to ensuring the long-term value of a firm. We use sustained, multi-year engagements to drive improved disclosure and oversight practices and seek the long-term preservation of the value of the companies in which we invest. We believe that portfolio companies are best suited to understand what issues are most impactful for their business and, therefore, these engagements contribute to our evolving perspectives on priority areas. Importantly, State Street Global Advisors does not maintain a firmwide divestment policy.

Figure 1: Our Engagement Standards

Our Approach

Proxy Voting on Sustainability-Related Issues

As environmental, social and governance (ESG) factors have risen in importance to the broader market, State Street Global Advisors has seen a rise in shareholder proxy proposals related to sustainability issues. We consider sustainability-related shareholder proposals on a case-by-case basis and analyze many different factors to determine our approach. As such, we only vote in favor of sustainability-related shareholder proposals when we believe it is both reasonable and likely to maximize long-term value for our clients.

With this in mind, we will only consider supporting sustainability-focused shareholder proposals if they address an environmental or social topic we deem to be material to a particular sector. Figure 2 outlines our proxy voting approach, which is meant to help mitigate risks and promote long-term value creation.

Figure 2: Our Proxy Voting Standards

Our Proxy Voting

With respect to sustainability-related proposals, see our voting record in Figure 3. For environmental and social proposals, we consider the materiality of the environmental and social factors to the company’s business and sector, the content and intent of the proposal and a company's responsiveness to engagement, among other criteria.

Figure 3: Our Support for Incumbent Directors in Proxy Contests Has Risen

Our Support for Dissidents in Global Proxy Contests, 2017-2022

figure 3

Investor Choice

Our Proxy Voting Choice program, which we announced in 2022 and launched in April of 2023, offers investors the ability to direct how shares held in the eligible funds they own are voted. The Proxy Voting Choice program offers eligible investors a range of voting policies that can be applied to the voting of shares held in those funds. Our clients with separately managed accounts (SMAs) already had the ability to direct their own voting, and the program was created to provide investors in pooled/commingled funds with a way to express their voting preferences. Investors who opt into the program can choose from eight voting policies based on which policy best fits their preferences. For clients who do not opt into the program, we continue to vote their shares in accordance with our Global Proxy Voting and Engagement Policy.

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