The Trustees of the Travel Automation Services Limited Benefits Scheme (the “Scheme”) are required to produce a yearly statement to set out how, and the extent to which, the Trustees have followed the Scheme’s Statement of Investment Principles (“SIP”) during the previous Scheme year, in relation to engagement and voting behaviour, either by or on behalf of the Trustees, or if a proxy voter was used.
This statement should be read in conjunction with the SIP and has been produced in accordance with The Pension Protection Fund (Pensionable Service) and Occupational Pension Schemes (Investment and Disclosure) (Amendment and Modification) Regulations 2018 and the subsequent amendment in The Occupational Pension Schemes (Investment and Disclosure) (Amendment) Regulations 2019.
A copy of the most recent SIP can be found online at:
2. Voting and Engagement
The Trustees are keen that their managers are signatories to the UK Stewardship Code, which they are.
All the Trustees’ holdings are within pooled funds and the Trustees have delegated to their investment managers the exercise of voting rights. Therefore, the Trustees are not able to direct how votes are exercised and the Trustees have not used proxy voting services over the year.
The Scheme invested in the following funds over the year:
- BlackRock BIJF Dynamic Diversified Growth Fund
BMO Global Asset Management (BMO):
- BMO Real Dynamic LDI (fully sold by year end)
- BMO Nominal Dynamic LDI (fully sold by year end)
- Capital Group Emerging Markets Total Opportunity Fund (fully sold by year end)
- Insight Broad Opportunities Fund
Legal & General Investment Management (LGIM):
- LGIM Global Equity Fixed Weights (50:50) Index Fund (fully sold by year end)
- LGIM All World Equity Index Fund
- LGIM Sterling Liquidity (fully sold by year end)
- LGIM Active Corporate Bond – Over 10 Year Fund
- LGIM Over 15 Year Gilts Index Fund
- LGIM LDI Matching Core Long Fund – Nominal
- LGIM LDI Matching Core Short Fund – Real
- LGIM LDI Matching Core Long Fund – Real
- LGIM Over 5 Year Index-Linked Gilts Index Fund
- Ninety One Diversified Growth Fund (fully sold by year end)
The underlined funds are predominantly fixed income and do not hold physical equities and hence there are no voting rights and voting data for the Trustees to report on.
a. Description of Investment Manager’s voting processes
BlackRock describe their processes as follows:
“BlackRock’s proxy voting process is led by the BlackRock Investment Stewardship team (BIS), which consists of three regional teams – Americas (“AMRS”), Asia-Pacific (“APAC”), and Europe, Middle East and Africa (“EMEA”) – located in seven offices around the world. The analysts with each team will generally determine how to vote at the meetings of the companies they cover. Voting decisions are made by members of the BlackRock Investment Stewardship team with input from investment colleagues as required, in each case, in accordance with BlackRock’s Global Corporate Governance and Engagement Principles and custom market-specific voting guidelines. While we subscribe to research from the proxy advisory firms Institutional Shareholder Services (ISS) and Glass Lewis, these are among many inputs into our vote analysis process, and we do not blindly follow their recommendations on how to vote. We primarily use proxy research firms to synthesise corporate governance information and analysis into a concise, easily reviewable format so that our investment stewardship analysts can readily identify and prioritise those companies where our own additional research and engagement would be beneficial. Other sources of information we use include the company’s own reporting (such as the proxy statement and the website), our engagement and voting history with the company, and the views of our active investors, public information and ESG research.
In summary, proxy research firms help us deploy our resources to greatest effect in meeting client expectations
- BlackRock sees its investment stewardship program, including proxy voting, as part of its fiduciary duty to enhance the value of clients’ assets, using our voice as a shareholder on their behalf to ensure that companies are well led and well managed
- We use proxy research firms in our voting process, primarily to synthesise information and analysis into a concise, easily reviewable format so that our analysts can readily identify and prioritise those companies where our own additional research and engagement would be beneficial
- We do not follow any single proxy research firm’s voting recommendations and in most markets, we subscribe to two research providers and use several other inputs, including a company’s own disclosures, in our voting and engagement analysis
- We also work with proxy research firms, which apply our proxy voting guidelines to filter out routine or non-contentious proposals and refer to us any meetings where additional research and possibly engagement might be required to inform our voting decision
- The proxy voting operating environment is complex and we work with proxy research firms to execute vote instructions, manage client accounts in relation to voting and facilitate client reporting on voting”
Insight describes their voting process as follows:
“Insight retains the services of Minerva Analytics (Minerva) for the provision of proxy voting services and votes at meetings where it is deemed appropriate and responsible to do so. Minerva provides research expertise and voting tools through sophisticated proprietary IT systems allowing Insight to take and demonstrate responsibility for voting decisions. Independent corporate governance analysis is drawn from thousands of market, national and international legal and best practice provisions from jurisdictions around the world. Independent and impartial research provides advance notice of voting events and rules-based analysis to ensure contentious issues are identified. Minerva Analytics analyses any resolution against Insight-specific voting policy templates which will determine the direction of the vote. In addition, please refer to our Proxy Voting Policy, which sets out in detail our approach to voting on resolutions:
Legal & General Investment Management (LGIM)
Legal & General Investment Management (LGIM) describe their processes as follows:
“All decisions are made by LGIM’s Investment Stewardship team and in accordance with their relevant Corporate Governance & Responsible Investment and Conflicts of Interest policy documents which are reviewed annually. Each member of the team is allocated a specific sector globally so that the voting is undertaken by the same individuals who engage with the relevant company. This ensures their stewardship approach flows smoothly throughout the engagement and voting process and that engagement is fully integrated into the vote decision process, therefore sending consistent messaging to companies.
LGIM’s voting and engagement activities are driven by ESG professionals and their assessment of the requirements in these areas seeks to achieve the best outcome for clients. Their voting policies are reviewed annually and take into account feedback from clients.
Every year, LGIM holds a stakeholder roundtable event where clients and other stakeholders (civil society, academia, the private sector and fellow investors) are invited to express their views directly to the members of the Investment Stewardship team. The views expressed by attendees during this event form a key consideration as LGIM continue to develop their voting and engagement policies and define strategic priorities in the years ahead. They also take into account client feedback received at regular meetings and/ or ad-hoc comments or enquiries.
LGIM’s Investment Stewardship team uses ISS’s ‘Proxy Exchange’ electronic voting platform to electronically vote clients’ shares. All voting decisions are made by LGIM and they do not outsource any part of the strategic decisions. Their use of ISS recommendations is to augment their own research and proprietary ESG assessment tools. The Investment Stewardship team also uses the research reports of Institutional Voting Information Services (IVIS) to supplement the research reports that they receive from ISS for UK companies when making specific voting decisions.
To ensure their proxy provider votes in accordance with their position on ESG, LGIM have put in place a custom voting policy with specific voting instructions. These instructions apply to all markets globally and seek to uphold what LGIM consider are minimum best practice standards which they believe all companies globally should observe, irrespective of local regulation or practice.
LGIM retain the ability in all markets to override any vote decisions, which are based on LGIM’s custom voting policy. This may happen where engagement with a specific company has provided additional information (for example from direct engagement, or explanation in the annual report) that allows LGIM to apply a qualitative overlay to their voting judgement. LGIM have strict monitoring controls to ensure their votes are fully and effectively executed in accordance with their voting policies by their service provider. This includes a regular manual check of the votes input into the platform, and an electronic alert service to inform LGIM of rejected votes which require further action.
For more information on how we use the services of proxy providers, please refer to the following document available on our website: https://www.lgim.com/landg-assets/lgim/_document-library/capabilities/how-lgim-uses-proxy-voting-services.pdf
b. Summary of voting behaviour over the year
|Fund name||Dynamic Diversified Growth Fund|
|Approximate value of Trustees’ assets||£11.4M as of 31 March 2022|
|Number of meetings eligible to vote||1013|
|Number of resolutions eligible to vote||13303|
|% of resolutions voted||12458 votes | 93.65%|
|% of resolutions for votes||11409 votes | 85.76%|
|% of resolutions against votes||819 votes | 6.16%|
|% of resolutions voted with management||11679 votes | 87.79%|
|% of resolutions voted against management||781 votes | 5.87%|
|% of resolutions abstained||182 votes | 1.37%|
|% of resolutions withheld||33 votes | 0.25%|
|Fund name||Broad Opportunities Fund|
|Approximate value of Trustees’ assets||£13.2m as of 31 March 2022|
|Number of equity holdings in the fund||11|
|Number of meetings eligible to vote||12|
|Number of resolutions eligible to vote||141|
|% of resolutions voted||100%|
|% of resolutions voted with management||99.3%|
|% of resolutions voted against management||0.7%|
|% of resolutions abstained||0.0%|
|% of resolutions voted, for which at least one vote was against management||8.3%|
A summary of voting behaviour over the period is provided in the tables below.
|Fund name||All World Equity Index Fund|
|Approximate value of Trustees’ assets||£8.7m as of 31 March 2022|
|Number of equity holdings in the fund||3833|
|Number of meetings eligible to vote||6519|
|Number of resolutions eligible to vote||64607|
|% of resolutions voted||99.83%|
|% of resolutions voted with management||80.66%|
|% of resolutions voted against management||18.06%|
|% of resolutions abstained||1.28%|
|% of resolutions voted, for which at least one vote was against management||60.03%|
c. Most significant votes over the year
Legal & General Investment Management (LGIM)
Legal & General Investment management (LGIM) describes its process for determining the ‘most significant’ votes as follows:
“As regulation on vote reporting has recently evolved with the introduction of the concept of ‘significant vote’ by the EU Shareholder Rights Directive II, LGIM wants to ensure they continue to help their clients in fulfilling their reporting obligations. LGIM also believe public transparency of their vote activity is critical for their clients and interested parties to hold LGIM to account.”
For many years, LGIM has regularly produced case studies and/or summaries of LGIM’s vote positions to clients for what they deemed were ‘material votes’. LGIM are evolving their approach in line with the new regulation and are committed to provide their clients access to ‘significant vote’ information.
In determining significant votes, LGIM’s Investment Stewardship team takes into account the criteria provided by the Pensions & Lifetime Savings Association consultation (PLSA). This includes but is not limited to:
- High profile vote which has such a degree of controversy that there is high client and/or public scrutiny;
- Significant client interest for a vote: directly communicated by clients to the Investment Stewardship team at LGIM’s annual Stakeholder roundtable event, or where LGIM note a significant increase in requests from clients on a particular vote;
- Sanction vote as a result of a direct or collaborative engagement;
- Vote linked to an LGIM engagement campaign, in line with LGIM Investment Stewardship’s 5-year ESG priority engagement themes.
LGIM provide information on significant votes in the format of detailed case studies in our quarterly ESG impact report and annual active ownership publications.
The vote information is updated on a daily basis and with a lag of one day after a shareholder meeting is held. We also provide the rationale for all votes cast against management, including votes of support to shareholder resolutions.
If you have any additional questions on specific votes, please note that LGIM publicly discloses its vote instructions on our website at: https://vds.issgovernance.com/vds/#/MjU2NQ==/
The Insight Broad Opportunities Fund invests predominantly in non-direct equities, and when it does invest in equities, it is typically via listed closed-end investment companies. The governance framework of these vehicles, with an independent board acting on behalf of shareholders, generally limits contentious issues that can arise with other listed entities. As a result, examples of significant votes cast that may be comparable to other listed entities are not applicable to the strategy’s exposures.
BlackRock describes its process for determining the ‘most significant’ votes as follows:
“BlackRock Investment Stewardship (BIS) prioritizes its work around themes that we believe will encourage sound governance practices and deliver sustainable long-term financial performance at the companies in which we invest on behalf of our clients. BIS’ year-round engagements with clients to understand their focus areas and expectations, as well as our active participation in market-wide policy debates, help inform these priorities. The themes we have identified are reflected in our global principles, market-specific voting guidelines and engagement priorities, which underpin our stewardship activities and form the benchmark against which we look at the sustainable long-term financial performance of investee companies.”
BIS periodically published “vote bulletins” on key votes at shareholder meetings to provide insight into details on certain vote decisions we expect will be of particular interest to clients. These bulletins are intended to explain our vote decisions relating to a range of business issues including ESG matters that we consider, based on our global principles and engagement priorities, potentially material to a company’s sustainable long-term financial performance. Other factors we may consider in deciding to publish a vote bulletin include the profile of the issue in question, the level of interest we expect in the vote decision and the extent of engagement we have had with the company. The bulletins include relevant company-specific background, sector or local market context, and engagement history when applicable.
BIS publishes vote bulletins after the shareholder meeting to provide transparency for clients and other stakeholders on our approach to the votes that we consider to be most significant and thus require more detailed explanation. We publish details of other significant votes (including vote rationales, where applicable) quarterly on the BIS website.
Our vote bulletins can be found here: https://www.blackrock.com/corporate/about-us/investment-stewardship#engagement-and-voting-history
d. Most significant votes over the year by Fund
Most Significant votes for BlackRock:
BlackRock – Dynamic Growth Fund
Below are some examples of significant votes over the period, more information is available on request:
Most Significant Votes for Insight
Insight – Broad Opportunities Fund
Insight do not provide significant votes for their funds, see above, therefore there are no examples to show.
Most Significant Votes for LGIM
LGIM – All World Equity Index Fund
|Vote 1||Vote 2|
|Company name||Apple Inc.||Microsoft Corporation|
|Date of vote||2022-03-04||2021-11-30|
|Approximate size of fund’s holding as at the date of the vote (as % of portfolio)||3.847691||3.578468|
|Summary of the resolution||Resolution 9 – Report on Civil Rights Audit||Elect Director Satya Nadella|
|How you voted||For||Against|
|Where you voted against management, did you communicate your intent to the company ahead of the vote?||LGIM publicly communicates its vote instructions on its website with the rationale for all votes against management. It is our policy not to engage with our investee companies in the three weeks prior to an AGM as our engagement is not limited to shareholder meeting topics.||LGIM publicly communicates its vote instructions on its website with the rationale for all votes against management. It is our policy not to engage with our investee companies in the three weeks prior to an AGM as our engagement is not limited to shareholder meeting topics.|
|Rationale for the voting decision||Diversity: A vote in favour is applied as LGIM supports proposals related to diversity and inclusion policies as we consider these issues to be a material risk to companies.||LGIM expects companies to separate the roles of Chair and CEO due to risk management and oversight|
|Outcome of the vote||53.6%||94.7%|
|Implications of the outcome eg were there any lessons learned and what likely future steps will you take in response to the outcome?||LGIM will continue to engage with our investee companies, publicly advocate our position on this issue and monitor company and market-level progress.||LGIM will continue to vote against combined Chairs and CEOs and will consider whether vote pre-declaration would be an appropriate escalation tool.|
|On which criteria (as explained in the cover email) have you assessed this vote to be “most significant”?||LGIM views gender diversity as a financially material issue for our clients, with implications for the assets we manage on their behalf.||A vote linked to an LGIM engagement campaign, in line with the Investment Stewardship team’s five-year ESG priority engagement themes|
Approved by the Trustees of Travel Automation Services Limited Retirement Benefits Scheme 13 October 2022.