Boston Partners is a signatory to the United Nations Principles for Responsible Investment. Boston Partners’ investment process has always stressed investment in companies with good fundamental characteristics, including sustainability, environmental, social and governance factors.
Boston Partners has a sustainability and engagement team headed by Bill Butterly, who is the Director of Sustainability and Engagement. Other team members include Haley Shaw, ESG research analyst, and Marissa Marandola, who is responsible for Boston Partners proxy voting process. The team undertakes original research on issuers held in the Boston Partners portfolios regarding various ESG themes including corporate governance, diversity, executive compensation, supplier oversight, environmental footprint, client base and litigation and regulatory matters. This research is shared with the fundamental analyst team for incorporation into investment recommendations. The Sustainability and Engagement team also undertakes engagement with issuers regarding ESG deficiencies through meetings, calls and correspondence and monitors the issuer’s progress in accepting the team’s recommendations. The team is also responsible for monitoring the voting of proxies in conjunction with the Governance Committee and for communicating to the issuer Boston Partners’ positions on proxy matters.
The Sustainability and Engagement Team undertakes original research on current or prospective holdings reviewing original source material such as company filings as well as any litigation or regulatory filings. The team looks at ratings from our affiliate RobecoSAM but only for corroboration of the team’s research.
We undertake original research into issuers looking at issuer documents such as the annual report and corporate responsibility report and any other disclosures as well as an extensive search for any reports or stories about the issuer regarding anything ESG related, for example, any fines or litigation imposed within the preceding few years. Ultimately, we want to see companies have the following:
- Corporate Responsibility Report. The issuer should have an annual corporate responsibility report that meets a recognized reporting format, preferably the G-4 guidelines. The report should address the following: a. climate change policy; b. greenhouse gas emissions reduction policy and disclosure of GHG emissions measurement; c. corporate governance; d. supply chain management.
- Supply Chain Management Policy. The issuer should have a policy on supply chain management that requires each supplier to adhere to certain standards including no child or forced labor; environmental preservation; reasonable work hours; product quality/product contamination; conflict minerals. The supply chain management policy should include some type of periodic audit or the suppliers for compliance with the terms imposed on the suppliers by the policy.
- CDP. The issuer should be a participant in the CDP, disclosing its carbon usage in accordance with the CDP requirements.
- Corporate Governance. The issuer should have a code of ethics addressing issues such as bribery and relations with governmental clients and other conflicts of interest. The issuer should also have an independent chairman and should provide shareholders with the right to call special meetings or to act by consent based upon the request of 10% of the shareholders.
- Absence of litigation/regulatory actions. The issuer should not be subject to any material litigation involving any of the ESG considerations currently or within the last 3 years and the issuer should not have been subject to any material fines or other regulatory proceedings within the past 3 years.
In addition to the dialogue between the fundamental analyst team and the companies as described above, the Engagement and Sustainability Team will work with the fundamental analysts to correspond formally with companies regarding ESG/Sustainability issues that Boston Partners believes are important to our clients. Boston Partners votes proxies for most of its clients and incorporates an ESG/Sustainability consideration into its proxy decisions. In addition, Boston Partners will address directly with company management Boston Partners’ views on proxy issues where Boston Partners does not support a management position as well as on other ESG matters where Boston Partners considers the issuer deficient.