Marketplace

Transparency, accountability and sustainability are essential to the success of our business and have become increasingly prominent in the light of market events in recent years. At Schroders, we put our clients first and we are committed to developing sustainable relationships. Treating clients fairly is an important principle for our business. Our long-term values are embedded in our culture and can be seen in the integrity with which we behave. In providing solutions to address our clients’ investment needs, we seek to communicate clearly the services we offer.

We regard corporate engagement as integral to our investment process. It is essential to understanding the sustainable value of the companies in which we invest on behalf of our clients. During 2010, our equity fund managers and analysts attended over 10,000 meetings with companies to discuss issues such as financial performance, strategy and management.

Our global ‘Investment and Corporate Governance Policy’ sets out our approach to the governance of companies in which we hold equity investments and our approach to conflicts of interest. During the year, we voted in over 4,700 company meetings as part of our aim to vote at all company meetings where we have an equity holding.

We are committed to the UK Stewardship Code published by the Financial Reporting Council in July 2010 and we outline in detail how we comply with the code on our website.

We will engage and normally vote on any issue affecting the long-term sustainable value of a company in which we invest. Our focus will primarily be on issues material to the value of the company’s shares.

In the UK we vote at all meetings except where there are onerous restrictions, for example, where trading is restricted prior to a meeting in shares committed to vote. We will usually only vote in cases where the benefit of voting outweighs the ability to trade.

We publish details of our voting record on our website, after a suitable period to ensure that the publication of voting does not influence the outcome of discussions with companies. Voting reports are also provided quarterly to Institutional clients. We believe effective engagement must sometimes be confidential, for example when publicity is more likely to entrench positions than resolve issues.

As a leading asset management group, we also recognise our responsibility in ensuring that we engage with companies to assess not only the financial risks but also the environmental, social and governance (ESG) risks that can impact long-term value.

Our ‘Global Equity Responsible Investment Policy’ outlines our approach as responsible equity investors and how we integrate an analysis of ESG issues into our investment process and our intention to engage with companies to enhance our ESG understanding. This policy meets the Association of British Insurers Disclosure Guidelines on Socially Responsible Investment and endorses the Voluntary Code on Shareholder Activism issued by the Institutional Shareholders Committee. We are also a signatory to the United Nations Principles for Responsible Investment which serves to reinforce our commitment to integrating ESG issues into our investment decision making.

We are a founding member of the Institutional Investors Group on Climate Change, signatories to the Bali Communique issued by the Corporate Leadership Group on Climate Change and a member of the Carbon Disclosure Project. Our investment process incorporates ESG research into the corporate responsibility performance of companies and we engage with companies where their ESG practices fall short of acceptable standards.

During 2010, we engaged in dialogue with 81 companies (2009: 87 companies) on specific ESG related issues. Overall, we voted on 116 shareholder resolutions of a social, ethical or environmental nature (2009: 99 resolutions).

We also utilise the Ethical Investment Research Service to screen investible universes in order to reflect clients’ values in their investment portfolios. At the end of 2010, we had £8.3 billion of funds under management which had some form of ethical criteria attached to them (2009: £3.8 billion).