The table below explains the approach that Northern Trust has taken with respect to the key recommendations. We believe that we comply with the majority of recommendations of the UK Stewardship Code.
|Principle 1: Institutional investors should publicly disclose their policy on how they will discharge their stewardship responsibilities||
The Northern Trust Proxy Voting Policies, Procedures and Guidelines are published on our website and applied globally to issuers of all securities. In this, we explain our approach to the proxy voting aspect of our stewardship responsibilities. This is complemented by a Proxy Voting Committee, dedicated corporate governance specialists and analysts that enable monitoring of investee companies. As an asset manager with a primary footprint in passive management, we hold small amounts of a large number of global securities. To ensure the effectiveness of our time, we prioritise our efforts on the issuers where we have the largest holdings in aggregate. The first step in our shareholder engagement is to provide issuers where we have our largest holdings with details of our proxy voting policies, so that they understand our approach. We expect our engagement to develop in line with the growth of our asset management franchise, and will publish updates as appropriate.
For our passive investment strategies we believe that client's objectives are facilitated by following the benchmark detailed in their mandates, but can work with clients to create flexible and appropriate benchmarks that suit their needs in relation to specific issuers or corporate, environmental and social responsibility factors. Our stewardship responsibilities complement the investment process rather than form part of an investment decision for passive investment strategies.
|Principle 2: Institutional investors should have a robust policy on managing conflicts of interest in relation to stewardship and this policy should be publicly disclosed.||We explain our approach to managing conflicts of interests in relation to our voting activity in section 5 of The Northern Trust Proxy Voting Policies, Procedures and Guidelines, which is available on our website.|
|Principle 3: Institutional investors should monitor their investee companies.||
Our monitoring of investee companies is proportionate to the size of holdings, and complemented by the support of our outsourced agent that implements our custom voting policy.
We maintain an audit trail of meetings held with companies in relation to corporate governance, and any voting decisions.
As an asset manager holding small amounts of a large number of companies, it is neither practical nor the most effective use of our time to attend general meetings. We expect this could develop in line with the growth of our asset management franchise and if we were the largest shareholder in the issuer.
|Principle 4: Institutional investors should establish clear guidelines on when and how they will escalate their activities as a method of protecting and enhancing shareholder value.||We consider escalation on a case by case basis. As a global asset manager we focus our time and contact with the management of issuers where we have the largest holdings. UK issuers may not represent the largest holdings globally. We generally do not seek to make public statements or submit resolutions at shareholders meetings as our investment strategy is not "activist" in nature.|
|Principle 5: Institutional investors should be willing to act collectively with other investors where appropriate||Where permitted by law and regulation and when we believe that collective engagement is appropriate we will collaborate. Any collaboration would naturally ensure adherence to internal policies relating to conflicts of interest and market abuse.|
|Principle 6: Institutional investors should have a clear policy on voting and disclosure of voting activity.||We disclose our approach to voting and seek to vote our proxies where possible. We provide details on voting to clients that wish to receive this information. For our US mutual funds details of our voting is published on our website. We are considering how we can meet client's needs further for our pooled funds domiciled in Ireland.|
|Principle 7: Institutional investors should report periodically on their stewardship and voting activities.||In conjunction with our thinking on voting disclosures for pooled funds, we are considering how we can meet client's reporting needs further and will publish a statement in due course.|
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