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The UK Stewardship Code (The ‘Code’) was first published in July 2010 by the Financial Reporting Council (‘FRC’) with the aim of enhancing the long-term returns to shareholders via improvements in the quality and quantity of engagement between investors and companies. The UK Stewardship Code 2020 is a substantial and ambitious revision to the 2012 edition of the Code. The new Code establishes a clear benchmark for stewardship as the responsible allocation, management and oversight of capital to create long-term value for clients and beneficiaries leading to sustainable benefits to the economy, the environment and society.
The purpose of this document is to explain how Brown Shipley and its parent Quintet Private Bank (‘Quintet’) align business decisions and practices to the UK Stewardship Code 2020.
Brown Shipley has integrated responsible investing principles into our policy framework and decision-making process. Our ambition is to be a responsible member of the society in which we live and work. Our investment strategy and, as a result, our investment management decisions are designed around our clients’ personal and financial circumstances, their immediate and long-term goals, their attitude to risk, and their ethical preferences.
Our core offering brings together wealth planning and investment solutions to create a long-term wealth management plan. We also offer lending solutions that help clients to achieve the best results for them and their families. As a company, our goal is to be a trusted fiduciary of family wealth and serve clients through several generations. Our worth is measured by the impact we deliver in the long-term.
Brown Shipley and its parent Quintet maintain detailed policies and governance to integrate stewardship and Environmental, Social and Governance (‘ESG’) considerations into our processes.
Quintet has a formal Responsible Investing (RI) governance structure that includes a RI Board and a RI Committee. Oversight of the RI Policy lies with the RI Board, while the day-to-day activities and decision making are delegated to the RI Committee. The RI governance structure is demonstrated below:
Responsible Investment Governance Structure
Brown Shipley applies stewardship to discretionary portfolio management (assets managed for end-clients on a discretionary basis), advisory (clients who receive advice and make their own investment decisions), and fund management (assets managed through Brown Shipley’s mutual funds).
Brown Shipley has a team of relationship managers that assess clients’ personal and financial circumstances on an annual basis to ensure their investments are suitable. This includes understanding their risk tolerance and capacity for bearing losses in the context of their financial objectives and needs.
Brown Shipley publishes fund factsheets and investment updates on a regular basis to keep clients updated with performance of assets and macroeconomic climate. We frequently communicate our global investment outlook through daily, weekly, monthly and annual Counterpoint publications.
Brown Shipley makes direct investments into equities and bonds within the Brown Shipley funds and private client portfolios. Where suitable, we also utilise third party funds to achieve investment exposures to asset classes.
Research and selection of third party funds is conducted by Brown Shipley and the Group Fund Selection Team. The research and fund selection processes developed by this team are subject to governance of Brown Shipley. We aim to select funds that we believe will add value to our clients’ portfolios. The fund selection process combines both quantitative and qualitative analyses based on a number of factors that have impacted past performance, as well as those that can have a potential impact on future performance. We require third party funds to meet a number of criteria. This includes demonstrating a consistent approach is applied to investment decisions, sufficient resources are allocated to the investment manager, an adequate risk control framework is in place; and, importantly, the fund can meet its objective.
We conduct on-going monitoring to review the performance of funds. In addition, where there are any concerns identified at any point in between annual reviews, we will investigate immediately.
We seek to be an active shareholder and positively influence the behaviour of the companies we invest in. “Active ownership” refers to voting at shareholder meetings and “engagement” refers to dialogue with companies to bring about change.
Quintet works with an engagement partner who has expertise in this area and represents multiple investors. This provides us with better access and more influence. Engagement with issuers can take the form of letter writing; phone calls, or face-to-face meetings. The four main aims of our engagement are to:
Brown Shipley and Quintet escalate stewardship activities via engagement with issuers and voting, which are carried out by specialised partners. Through our engagement partnership we have excellent access to companies’ senior management so that we can escalate issues. Our engagement partner will develop formal plans to influence to companies’ policies, performance and risks related to the environment, social and ethical issues, governance, as well as strategy, risk management, and communication.
Brown Shipley exercises our rights and responsibilities through Quintet, where we work with a specialised voting partner who provider voting services. This includes research and recommendations on the matters put to shareholders for a vote, collection of the ballots for Annual General Meetings (‘AGMs’) and Extraordinary General Meetings (‘EGMs’), and casting the actual votes as part of the voting process.
The voting is monitored by the Quintet Voting Committee, which has the authority to decide whether or not to vote and whether or not to follow recommendations from the voting partner. We publish an Active Voting Report so that our clients and stakeholders can see how many companies we engaged with and how we voted in company meetings.