and ESG

Environmental, Social and Governance issues are central to the Trust’s monitoring of sustainability

Why it matters to us

We work closely with the Columbia Threadneedle Responsible Investment team to systematically integrate environmental, social and governance (ESG) factors into European Assets Trust’s investment process, with a view to reducing risk and improving returns over the long term – both in financial and sustainability terms.

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Our Approach

Environmental, Social and Governance (“ESG”) issues are the three central factors in measuring sustainability and can present both opportunities and threats to the long-term investment performance the Company aims to deliver to Shareholders. Although the Company is not an ESG fund, the Board is committed to taking a responsible approach to ESG matters. There are two strands to this approach:

• The Company’s own responsibilities on matters such as governance; and

• The impact it has through the investments that are made on its behalf by its Manager.

Responsible Ownership

The Board recognises that the most material way in which the Trust can have an impact is through responsible ownership of its investments. The Manager engages actively with the management of investee companies to encourage that high standards of ESG practice are adopted.

The Manager has long been at the forefront of the investment industry in its consideration of these issues and has one of the longest established and largest teams focused solely on ESG.

Engaging actively with companies on significant ESG matters, to reduce risk, improve performance, encourage best practice and underpin long-term investor value forms a fundamental part of the Manager’s approach towards responsible investment. Engagement in the first instance rather than simply divesting or excluding investment opportunities is also part of this approach.

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A city full of glass skyscrapers

Voting on the portfolio investments

We expect the Company’s shares to be voted on all holdings where possible. During the year, the Manager voted at 35 meetings of investee companies. The Manager did not support management’s recommendations on at least one resolution at approximately 88% of all meetings. With respect to all items voted, the Manager supported over 85% of all management resolutions. Two of the most contentious issues voted at meetings were remuneration and the election of board directors. On these issues, an adverse vote was cast at the meeting by either abstaining or voting against management resolutions. Remuneration matters represented approximately 39% of these votes. The rationale centred on a number of issues which did not accord with best practice including poor disclosure or a misalignment of pay with long-term performance. With regards to the election of board directors, this represented approximately 43% of adverse votes, primarily because of independence, over boarding or concerns regarding board composition.

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