Principle 2 - Our policy for managing conflicts of interests
From time to time the company may encounter conflicts of interest in respect of fulfilling its stewardship responsibilities. In all such situations it is our policy to manage such conflicts in a manner that does not compromise or prejudice the primacy of our clients' best interests.
Our approach to conflicts of interest is reinforced by our ESG Investment team having access to senior executives and non-executives who are independent of both our fund management and global client servicing teams. This serves to maintain the integrity of decision making in respect of stewardship related matters. In addition, this arrangement enables us to manage price sensitive information in a compliant way that is consistent with our clients' best interests.
One specific conflict relates to investment in the shares of our parent company. In order to manage this conflict the company does not, as a matter of policy, invest actively managed portfolios in company shares.
Global regulation requires the boards of directors at asset management firms to establish effective frameworks to identify, control and regularly review conflicts of interest. As required by regulators including the Financial Conduct Authority in the UK and the Securities and Exchange Commission in the US, the company has in place a documented process for the identification and management of conflicts of interest.
The process is designed a) to ensure that conflicts between the interests of the company and its clients or between clients of different types are managed appropriately; and b) to ensure that conflicts resulting from personal activities of our people outside of the company (e.g. business ventures, outside appointments, involvement in public affairs, personal political donations) are managed appropriately.
We disclose stewardship specific conflicts, and associated systems & controls, to clients and keep a current record of circumstances in which a potential conflict may arise, or has arisen, as a result of the activities carried out by us. Relevant conflicts of interest are available here:
Potential Conflicts of Interest
The company votes on securities where we have a potential conflict of interest. Securities where we have a potential conflict are highlighted as:
- An investee company that is also a Segregated Client.
- An investee company where an Executive Director or Officer of our company is also a Director of that company.
- An investee company where an employee of Standard Life Investments Limited is a Director of that company.
- A significant distributor of our products.
- Any other companies which may be relevant from time to time.
Systems and Controls
- Governance & Stewardship Principles and Policy guidelines are approved by the Board. These provide a basis for dealing with potential conflicts.
- The ESG Investment team have access to senior executives and non-executives who are independent of both our fund management and global client servicing teams.
- Rationale for voting in a particular direction is recorded.
- Sensitive investee companies are highlighted on the ESG Corporate Governance Database.
- The ESG proxy voting database records where possible conflicts have been considered.
- The company reports on voting for these stocks to Risk and Compliance (USA).
- The Client team holds a list of segregated clients and a list of significant distributors of our products.
- Executive Directors or Officers of our company notify the Company Secretariat about outside appointments.
- Investment employees record their outside appointments on the internal compliance system.
The company's process for the management of conflicts includes the definition of a Conflicts of Interest Policy and the maintenance of a Conflicts of Interest register. The policy and register are reviewed annually by the Board. If you would like more information on this policy please contact us.