Shareholder Rights Directive II

The amended European Shareholder Rights Directive II (“ SRD II”), which is applicable as of 10 June 2019, includes transparency obligations for European institutional investors – i.e. pension funds and insurers - as well as a European asset managers (e.g. Robeco) to the extent investments in EU equity instruments are made. 

Robeco is very committed and well positioned to adhere to SRD II which aims to encourage long-term shareholder engagement. We have a long-standing focus on responsible investing and long term shareholder engagement. We use our ownership rights to constructively engage with investee companies and to serve the long term interests of our clients.

1. Engagement policy & reporting

Pursuant to SRD II Robeco is required to disclose a shareholder engagement policy on a ‘comply or explain’ basis. This policy must describe how Robeco:
i. monitors investee companies on relevant matters (e.g. strategy, (non-)fin performance, risk, cap. and ESG);
ii. conducts dialogues with investee companies;
iii. exercises voting and any other shareholder rights;
iv. cooperates with other shareholders;
v. communicates with relevant stakeholders;
vi. manage s(potential) conflicts of interests in their engagement.
The Robeco engagement policies, such as the Stewardship Policy, Robeco Voting Policy, Robeco Engagement Policy and the Robeco Exclusion Policy are fully compliant with SRD II and available on our website.
SRD II also requires annual reporting on the policy’s implementation, including a general description of voting behavior, votes casted, an explanation of the most significant votes and the use of proxy advisors. Robeco‘s engagement and voting activities are reported on in our longstanding active ownership report.

Shareholder engagement team

A dedicated team of engagement specialists maintains an active dialogue with some 200 companies a year on financially material themes that we identify in consultation with our investors. This has proven to be a successful means of influencing corporate behavior. Robeco also votes at approximately 5,000 shareholder annual general meetings. All Robeco’s activities are in line with the Principles for Responsible Investing (PRI), which require asset managers to be active owners and incorporate ESG factors into their ownership policies and practices, in addition to SRD II.

2. Mandate and/or fund specific disclosures

SRD II requires Robeco to annually disclose how its investment strategy complies with the mandate we have with an institutional mandate client or a Robeco equity fund an institutional client has invested in, and how it contributes to the medium to long-term performance of the institutional client’s assets. The disclosure obligation can be met by either individual client reporting or by generic publication on our website. 

The disclosure shall include reporting on the key material medium to long-term risks associated with the investments, the use of proxy advisors, turnover and turnover costs, our policy on securities lending and whether conflicts of interests have arisen regarding engagements activities and how we have dealt with them.

Key material medium to long-term risks associated with the investments

Robeco’s mission is to enable our clients to achieve their medium and long-term financial and sustainability goals by providing superior investment returns and solutions. Our investment beliefs also reflect the fact that we are long term investors:
  • As an active asset manager with a long-term investment view, we create added value for our clients
    • Our investment strategies are research-driven and executed in a disciplined, risk-controlled way
    • Our key research pillars are fundamental research, quantitative research and sustainability research
    • We can create socioeconomic benefits in addition to competitive financial returns
    • ESG integration leads to better-informed investment decisions and better risk-adjusted returns throughout an economic cycle

  • ESG integration leads to better-informed investment decisions and better risk-adjusted returns throughout an economic cycle
    • Sustainability is a driver of structural change in countries, companies and markets
    • Companies with sustainable business practices are more successful
    • Active ownership contributes to both investment results and society
As part of the SRD II disclosure requirements we have published information on how we ensure that our equity investment strategies aligns with our clients liabilities and how we make decisions based on our assessments about medium to long-term (non-) financial performances and risks of the underlying investee companies and how we engage with them. This is contained in the document ESG Integration with a long term investment perspective.

The use of proxy advisors

Robeco uses a proxy voting platform and proxy voting recommendations for all of the meetings which we vote. Our proxy voting advisor (Glass Lewis. Co) provides voting recommendations based upon Robeco’s custom voting policy. A Robeco team of dedicated voting analysts then analyze the merit of each agenda item. This analysis, based upon Robeco’s voting policy takes precedence over the recommendations of the proxy voting advisor. This means Robeco’s instructions often deviate from the recommendations of both management and the proxy advisor. 

At least annually basis, we evaluate our proxy voting agent, on the quality of governance research and the alignment of (customized) voting recommendations and Robeco’s voting policy. This review is part of Robeco’s control framework and is externally assured.

Securities Lending

Robeco has a securities lending program for several of its funds. When shares are on loan, Robeco is contractually unable to exercise voting rights for these shares. For our funds we monitor if shares are out on loan for upcoming shareholder meetings. The decision to recall shares, depends on two main guidelines. 
1) In principle we aim to vote on all of our equity positions, with at least the majority of that stake. 
2) In certain cases recalling shares to vote for an even higher percentage is desired when: 
1. The company is a significant holding 
2. The company is subject to our engagement program and / or engagement has proven unsuccessful thus far and 
3. The agenda for the shareholder meeting contains a controversial proposal. 
Robeco’s securities lending program is monitored by our lending agent, J.P. Morgan, including for any misuse of voting rights. For more information about the use of securities lending in a relevant fund, please go to the annual report or prospectus via our fund selector.

Portfolio turnover and turnover costs

For the mandate clients in scope, information on portfolio turnover will be included in the annual MiFID II client report - to be firstly submitted in Q1 2020. Portfolio composition and turnover costs are already part of the MiFID reporting you receive from us on a quarterly basis. 
If you are invested in a relevant equity fund (to the extent investments in EU equity instruments are made), the annual report for that fund contain the SRD II required information on portfolio composition, turnover ratio and turnover costs, please visit our fund information and documentation.