RESPONSIBLE INVESTMENT POLICY
Columbia Management Investment Advisers, LLC
RESPONSIBLE INVESTMENT
APPROACH TO RESPONSIBLE INVESTMENT
COLUMBIA THREADNEEDLE INVESTMENTS
This brochure provides a broad outline of the approach to
responsible investment employed by Columbia Threadneedle Investments (Columbia Threadneedle).
In addition, the document details policies describing the
responsible investment activities of Columbia Management Investment Advisers, LLC (CMIA).
Also, a description of CMIA’s firm-level implementation of
the Principles for Responsible Investment (Principles or
PRI) can be found in the following sections of this document and on the firm’s website.
Columbia Threadneedle Investments is the global brand
name of the Columbia Threadneedle group of companies.
We are a leading global asset management group that
provides a broad range of actively managed investment
strategies and solutions for individual, institutional corporate clients around the world. With more than 2,000 people,
including more than 450 investment professionals based in
North America, Europe, Asia and the Middle East, we manage $464 billion* of assets as of March 31, 2016, across
developed and emerging market equities, fixed income,
asset allocation solutions and alternatives.
Global presence
nn A global perspective that allows us to share insights across asset classes and geographies
nn A team-based, performance-driven, and risk-aware investment approach
nn A dynamic and interactive culture
Investment Offices
Amsterdam
Luxembourg
Copenhagen
Chicago
Minneapolis
Zurich
Stamford
Frankfurt
Providence
Stockholm
London
Paris
Portland
Boston
New York
Charlotte
Menlo Park
Madrid
Seoul
Hong Kong
Taipei
Los Angeles
Dubai
Geneva
Milan
As of December 31, 2015
Source: Columbia Threadneedle Investments
Singapore
Kuala Lumpur
Vienna
* Source: Ameriprise earnings release. In U.S. dollars as of March 31, 2016.
Includes all assets managed by entities in the Columbia and Threadneedle group of companies.
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RESPONSIBLE INVESTMENT
Columbia Threadneedle Investments
Our responsible investment commitment
At Columbia Threadneedle Investments we strive to be
responsible stewards of our clients’ assets within a
framework of good governance and transparency. As an
active manager of global equities, fixed income and real
estate assets, we seek opportunities that help deliver
sustainable growth and returns for our clients.
Being a responsible investor is integral to our business
proposition and defines how we act in the marketplace.
One component of our investment philosophy is the
belief that effective stewardship benefits companies,
investors and the economy as a whole. We believe that
well-governed companies are better positioned to manage the risks and challenges inherent in business and
capture opportunities for growth.
Consistent with our commitment to being a responsible
investor and our duty to act in the best interest of our
clients — we, both Columbia Management Investment
Advisers, LLC (CMIA) and Threadneedle Asset Management, Ltd. (each, a firm), are signatories to the (PRI)
Principles for Responsible Investment.
How we implement the Principles
We will incorporate ESG issues into investment analysis
and decision-making processes. We have an integrated
approach to responsible investment and ESG research
and implement them by making ESG performance ratings
and research available to our portfolio managers and
analysts in our investment tools. This integrated approach
is supported by our culture of collaboration, sharing of
research and ideas. In developing our understanding of a
portfolio company, we may take into account its approach
to managing environmental, social and governance issues.
We place emphasis on both internal and external resources to guide and prioritize our work. Among a host
of resources, we have access to an external ESG rating
provider covering nearly 6,000 companies globally.
We will be active owners and incorporate ESG issues
into our ownership policies and practices. We actively
vote our shares globally and engage with companies on
important ESG issues. We follow regional voting principles
and take into account local market practice.
We will seek appropriate disclosure on ESG issues by
the entities in which we invest. We place value on transparency by companies, and may encourage transparency
in our discussions around ESG performance.
We will promote acceptance and implementation of the
Principles within the investment industry. We participate
in external forums and discussions where relevant and
appropriate and are actively involved with the PRI
Secretariat.
We will work together to enhance our effectiveness in
implementing the Principles. We may engage in meaningful collaboration with other investors in company dialogue
and wider ESG issues. In those cases, we take into
account consistency of purpose and conflict of interest
policies.
We will report on our activities and progress towards
implementing the Principles.
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RESPONSIBLE INVESTMENT
Responsible Investment — Firm-Level Implementation
Introduction
CMIA’s approach to responsible investment focuses on integrating ESG factors into our investment processes that
build on our culture of fundamental, bottom-up research
and portfolio management. One part of our investment
philosophy is the belief that well-governed companies are
better positioned to manage the risks and challenges inherent in business and to capture opportunities that bear
on sustainability and long-term value creation.
Our approach to integrating ESG factors into our investment processes allows us to consider the risks and opportunities of existing and prospective investments that
may not be captured by conventional analysis. We expect
that this approach may contribute to better informed
investment decisions.
While we believe that integrating ESG factors into our investment processes enables portfolio managers to make
better informed investment decisions, each portfolio
management team within CMIA makes its own investment
decisions. Certain teams may put more or less emphasis
on ESG factors in any given investment decision.
The United Nations-supported Principles for Responsible
Investment (PRI) initiative is an international network
of investors working together to put the six Principles
into practice. Its goal is to understand the implications
of sustainability for investors and support signatories to
incorporate these issues into their investment decision
making and ownership practices1. The initiative is based on
six principles that address the integration of environmental,
social and governance factors into investment decision-making and stewardship practices. As a PRI signatory, CMIA has
committed to considering ESG factors, where appropriate
and consistent with our fiduciary duty, that identify material
associated risks and opportunities that may bear on the
long-term value creation and sustainability of a company.
While we follow the Principles, becoming a signatory to the
Principles does not require the application of specific ESG
restrictions in our investment process, and we may take
actions inconsistent with the Principles if in our judgment it
is in the best interests of our clients to do so.
Our portfolio managers and analysts work collaboratively to
monitor and engage with the companies we invest in, with
a view to understanding the dynamics, opportunities and
risks inherent in the businesses and to protect the interests
of our clients and their invested capital. We also take into
account market practices and regulatory developments that
affect both the companies in which we invest and the overall investing environment.
EXHIBIT 1:
Our key focus as we approach responsible investment
Responsible Investment (RI)
Socially Responsible Investment (SRI)
‘Values-based” investing typically involving screens and exclusions
Environmental, Social and Governance (ESG) Investment
Integrating ESG factors into traditional fundamental analysis
CMIA focus
and capabilities
Impact Investment (II)
Investing directly in projects or institutions to maximize their impact on society
‘Sustainable Investing’ is periodically used by some to describe ESG investing. However,
others may use ‘sustainability’ to describe activities designed to ensure responsible and
ongoing success of a company.
Source: Columbia Management Investment Advisers, LLC.
1
unpri.org
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RESPONSIBLE INVESTMENT
Roles and responsibilities
The responsibility for CMIA’s responsible investment
activties lies with our Chief Investment Officer, and
together with the Director of Responsible Investment and
the heads of our equity and fixed income research teams.
The Director or Responsible Investment has responsibility
for ESG research, integration, stewardship and reporting.
Within our ESG investing approach, portfolio managers
and fundamental analysts take lead responsibility for the
assessment and monitoring of issuers, strategies,
management and performance. The proxy administration team votes client proxies in close coordination with
portfolio managers, research analysts and the Director of
Responsible Investment.
EXHIBIT 2:
Resources
Chief Investment Officer
Colin Moore
Head of Equity Research
Director of Responsible Investment
Head of Fixed Income Research
Integrated Investment
team members
Counterparts at our affiliate,
Threadneedle Asset Management, Ltd.
Supporting functions
Heads of research
Head of governance and
responsible investment
Marketing analyst
Sustainable and
responsible investment
officer
Investment operations
RFP team (Reporting)
Vendor management
Quantitative research
Proxy administration team
Responsible
investment analyst
Marketing
Legal
Data analyst
Responsible
investment analyst
Compliance
Source: Columbia Management Investment Advisers, LLC.
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RESPONSIBLE INVESTMENT
Integration approach
Consideration of ESG risks may be one of many components in our investment decision-making processes. Our
portfolio managers and analysts are encouraged to view
ESG as an important factor in the sustainability and longterm value creation of portfolio companies and how ESG
factors, in turn, affect investment returns. Where appropriate and consistent with our fiduciary duty, we seek
to invest in well-governed companies that appropriately
identify, manage and disclose their ESG risks as well as
those companies whose approach may present
opportunities for long-term value creation through
innovative use of their strengths and positioning.
To encourage integration of ESG factors into investment
decision making, we have developed tools that allow for
external ESG risk ratings to be systematically considered
in the investment process, and supplement that data with
internal and external research. Our culture also provides
ample opportunity for discussion, debate and analysis of
the identified factors, which serves to deepen the understanding and focus of the risks and opportunities.
EXHIBIT 3:
Integrating processes
Research
Investments
Stewardship
Proxy
Voting
Fundamental
Research
ESG Risk Ratings
External Thematic
ESG Research
Security
Selection
Portfolio
Construction
Tools
Engagement
Internal ESG Research
Source: Columbia Management Investment Advisers, LLC.
EXHIBIT 4:
Research and risk ratings
Source: Columbia Management Investment Advisers, LLC.
For illustrative purposes only. Image on left: Our proprietary research repository facilitates broad dissemination, availability and awareness of internally-produced research by
equity and fixed income portfolio managers and analysts around the globe. Images on right: Our interactive data visualization tool allows portfolio managers and analysts to
monitor and manipulate ESG data on thousands of issuers, as well as perform top-down portfolio reviews to understand ESG risk exposure.
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RESPONSIBLE INVESTMENT
Research and ratings
The investment universe of our client accounts is large
and varied, so we underpin our ESG investment approach
with internally generated and externally sourced ESG
research, risk ratings and other tools. These sources
provide insight into issuers’ ESG practices and risks,
how those practices measure relative to peers and how
issuers mitigate these risks. That information then allows
us to take a proactive approach to identify and prioritize
those companies that appear to be managing ESG well
and those where the issues and practices suggest
potential risks to our clients’ interests. Those observations form the basis for our stewardship activities and
may inform our investment decision-making.
Internal research
Our ESG research aims to assess how companies approach
and manage ESG issues as part of forming a holistic view
on the quality of a company’s leadership, the potential risks
and opportunities of an investment, as well as to inform
company engagement. Internal research that aggregates
a variety of quantitative and qualitative data sources is
supplemented by observation, analysis and our experience
with the company.
This approach combines best-in-class considerations with
company-specific analysis, taking account of the context,
industry and overall performance of the business.
External research
In addition to internal research and analysis, we obtain
research and data from a variety of external sources, as
noted below, in Exhibit 5.
EXHIBIT 5:
Research and information sources
Corporations
Company data and dialogue including traditional and sustainability reporting
MSCI ESG research
ESG risk ratings, thematic and issuer-specific ESG research
MSCI BISR research
Screening and exclusion tools
Brokers focused on ESG research
ESG company, thematic and trend insights
Institutional Shareholder Services, Inc. (ISS)
Proxy voting research
Glass Lewis & Co.
Proxy voting research
Sustainalytics
ESG ratings and research, social impact assessment
ISS QuickScore
Governance and compensation ratings and research
Bloomberg
Current financial and ESG information, alerts and ESG disclosure ratings
Non-Governmental Organizations (NGOs)
Thematic trends and issues in regards to ESG issues
CFRA Research
Forensic accounting research, analytics and alerts
Academic studies and sources
Systemic issues and independent evidence
NewsEvents, public opinion
National and International government bodies Consultations and regulations
Source: Columbia Management Investment Advisers, LLC.
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RESPONSIBLE INVESTMENT
Stewardship
We believe in being active and responsible owners.
Targeted engagement with portfolio companies on ESG
issues forms an important part of our stewardship activities and our investment approach.
Building on our ESG investing approach, our engagement
covers a broad range of ESG issues. Prioritization and
planning are important factors in shaping our engagement
objectives and activities.
We generally prioritize any engagement with an issuer
where we have either: 1) large relative holdings over a
specific, internally-determined threshold, 2) holdings of
any reasonable size and the issuer security is held in one
or more CMIA focus portfolios and/or 3) coverage of the
issuer by our fundamental research analysts.
In addition we may engage with an issuer (in accordance
with the above priorities) if in our assessment, we believe
that their ESG risks and opportunities may bear on the
long-term value creation or sustainability of the company.
Our ESG exposure assessment identifies issuers:
based on screens from our internal resources and tools or from external research sources;
based on sustained underperformance; or
where we have engaged extensively in the past and where
positive progress mitigating risk has not been observed.
EXHIBIT 6:
Typical engagement cycle
Issuer Files
Proxy Statement
ENGAGEMENT
Issuer
Files
Issuer solicits CMIA
Proxy
Statement
Votes, Feedback
Issuer Considers All
Investors Feedback:
Adopts Changes
ENGAGEMENT
Off-season
engagement
to discuss issues
Investors Cast
Votes
Source: Columbia Management Investment Advisers, LLC.
On average, each year our Director of
Responsible Investment engages with over
100 companies across our client portfolios.
Historically, these portfolio companies have
been U.S.-based and our engagement
conversations generally have covered
corporate governance structure and
compensation practices (with a particular
focus on the structure and efficacy of longterm equity incentives).
The table to the right illustrates the range of
engagement activities we may adopt in
carrying out our stewardship role in clients’
interests.
EXHIBIT 7:
Focus Areas for
Engagement
Preferred holdings
Contentious issues
Company-initiated
dialogue
Collaborative initiatives
Proxy voting
Levels of
Engagement
Monitoring
Provide feedback
Investigation
Engage for change
Type of Approach
Electronic or other correspondence
Meets with executives (e.g. CEO, Company Secretary, IR,
Sustainability team, or others)
Discussions with company advisers, stakeholders and analysts
Meetings with Chairman, and/or non-executive directors
Dialogue and collaboration with other shareholders
Proxy voting
Source: Columbia Management Investment Advisers, LLC.
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RESPONSIBLE INVESTMENT
Stewardship
Collaborative engagement
Proxy voting
Where appropriate, we prefer to engage in private to
enable honest, open and frank discussions to take place
with the companies in which we invest. We may engage
with other shareholders on issues we believe have significant implications for our clients’ investments. We may
engage through collaborative bodies such as PRI investor
networks, or bilaterally with other shareholders. Where
we do not have major holdings, but share concerns
raised by other shareholders, we may lend them our
support and endorsement when we deem doing so to be
appropriate from a regulatory and fiduciary perspective.
CMIA is committed to sound stewardship principles and
actively carries out proxy voting activities in accordance
with our Proxy Voting Policy (Policy) on behalf of our clients.
The policy is designed to address our fiduciary obligations
in situations where we have been vested with proxy voting
authority. In voting proxies on behalf of our clients, we apply
the following general principles:
There may also be limited occasions, on matters that
are public, where we will make our views and concerns
known publicly. In exceptional circumstances, where we
decide that it is necessary and appropriate, we may comment publicly about a controversial matter at a company.
In addition to individual company engagements, we may
look to engage collaboratively with other investors and
asset owners across a range of areas:
Public policy;
Regulatory issues;
Best practice frameworks;
Sector and market issues; and
Thematic and company specific issues
Each year we vote proxies for more than 5,500
shareholder meetings in 56 countries around
the globe. Approximately 60% of the meetings
voted were for U.S.-domiciled companies.
Per client request, we can apply a custom
proxy voting policy (i.e., sustainability, religion,
SRI, etc.) to voting on securities held in client
accounts.
Vote in clients’ best economic interests
Consider all relevant factors; and
Vote without undue influence from individuals or groups.
We have adopted the CMIA Proxy Voting Guidelines (Guidelines) covering certain types of proxy proposals for equity
securities. These guidelines indicate whether we vote for,
against or abstain from voting a particular proposal, or
whether the matter should be considered on a case-bycase basis. When vested with proxy voting authority and in
the absence of specific client guidelines, we will generally
vote client proxies in accordance with our Guidelines and in
furtherance of the general principles listed above. We will
provide a copy of the Policy or the Guidelines to any client or
prospective client upon request, and both are also available
on our website at www.investor.columbiathreadneedleus.
com/responsible-investment.
The administration of our proxy voting process is handled
by a dedicated central point of administration at our firm
(the Proxy Administration Team). The team has ultimate
responsibility for the implementation of the Policy and the
Guidelines. The Director of Responsible Investment analyzes certain proxy resolutions and has the responsibility to
engage with portfolio companies in relation to controversial
proxies as well as for ongoing monitoring of ESG issues and
opportunities. The proxy voting committee, which is comprised solely of portfolio managers and analysts, oversees
the activities of the proxy team and reviews and approves
the Policy and Guidelines.
CMIA utilizes the proxy voting platform of Institutional Shareholder Services, Inc. (ISS) to cast votes for client securities
and to provide record keeping and vote disclosure services.
We have retained both Glass, Lewis & Co. and ISS to provide proxy research services to ensure quality and objectivity in connection with voting client securities.
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RESPONSIBLE INVESTMENT
Investment approach and capability
The integration of ESG factors into our portfolio construction tools provides us with the ability to offer certain
specialized product offerings that meet specific requirements. Certain investors may have particular ethical
requirements on controversial issues, or may wish to
exclude companies from certain industries and hold only
those securities that are consistent with their values.
While we believe that certain investment areas have
complex characteristics, we do not exclude them from our
investment universe for mainstream client mandates.
The following table (Exhibit 8) outlines CMIA’s ESG investing capabilities relative to the top seven responsible
investment strategies outlined in 5th Annual Sustainable
and Responsible Investment Study by the European Forum
for Sustainable Investment (Eurosif), published 2013.
When clients desire specific portfolio exclusions we work
together to understand their requirements and meet their
needs.
EXHIBIT 8:
Responsible investment strategy
Where is it applied?
What does it involve?
CMIA
Sustainability themed
Investment in themes or assets linked
to the development of sustainability
Yes
Best-in-Class
Selecting leading or best-performing
investments according to selected
criteria relating to ESG
Yes
Screening of investments for compliance
with international standards and norms
(e.g. OECD or UN related)
No
Exclusion screening
Systematic exclusion of investment according to selected criteria (e.g. ESG or
ethical criteria or by sector or country)
Yes
Impact Investment
Investments targeted at generating a
desired form of social or environmental
impact
ESG Integration
Inclusion of selected ESG analysis (re:
opportunities and risks) into financial
analysis and investment decision-making
Yes
Engagement activities and active ownership (including the voting of shares)
Yes
Norms based screening
Specialist separate
accounts
Mainstream mandates
Engagement
No
Source: Eurosif and CMIA
Upon client request, we will apply separate account investment screens and exclusions based on individual client risk tolerance and specific ESG criteria. In addition, custom proxy voting policies (i.e., Sustainability, SRI, etc.) can also be applied to voting on securities held in
client accounts upon request.
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FOR MORE INFORMATION:
www.investor.columbiathreadneedleus.com/
responsible-investment
Contact information
Mr. Mac Ryerse
Director of Responsible Investment
[email protected]
Columbia Threadneedle Investments (Columbia Threadneedle) is the global brand name of the Columbia and Threadneedle group of companies.
Securities products offered through Columbia Management Investment Distributors, Inc., member FINRA. Advisory services provided by Columbia Management Investment Advisers, LLC.
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