Sustainability
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 The Global Smaller Companies Trust’s investment process, with a view to reducing risk and improving returns over the long term – both in financial and sustainability terms.
Our Approach
Environmental, Social and Governance (‘ESG’) issues can present both opportunities and threats to the long-term investment performance we aim to deliver to shareholders. The Board is committed to taking a responsible approach to ESG matters, for which there are two strands.
Firstly, there are the Board’s own responsibilities on matters such as governance. Secondly, there is the more material impact the Trust can have through the investments that are made on its behalf by the Manager, which has long been at the forefront of responsible investment.
Responsible Ownership
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.
Voting on the portfolio investments
We expect the Company’s shares to be voted on all holdings where possible. During the last financial year, the Manager voted at 156 meetings of investee companies held in the Company’s portfolio.
The Manager did not support management’s recommendations on at least one resolution at approximately 54% of all meetings. With respect to all items voted, the Manager supported over 90% of all management resolutions. One of the most contentious voting issues remained remuneration. Either by voting against or abstaining, the Manager did not support approximately 33% of all management resolutions relating to pay, often due to either poor disclosure or a misalignment of pay with long-term performance.
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