What is governance and stewardship?
Good governance is about ensuring that a company’s policies and practices are robust and effective. It defines the extent to which a company operates responsibly in relation to its customers, shareholders, employees, and the wider community.
Stewardship is very much linked to good governance. As an asset manager, we have a fiduciary duty to our clients to preserve and enhance value in the companies we invest in, over the long term.
Why is it so important?
Change across the world at country and company level is happening at an increasingly rapid pace. Without robust policies and processes, such change is at best disruptive and at worst, potentially highly damaging.
Markets and companies where good governance is clearly in evidence are also much more likely to deliver sustainable, long-term investment performance.
What does good governance mean to Aberdeen?
Good corporate governance is at the heart of Aberdeen’s business: we are actively committed to implementing robust policies and practices. As a global asset manager, connectivity and teamwork are especially important to us, to ensure that everything we do is executed to the same high standards around the world. We maintain and promote these standards through disciplined management, local decision-making and a team-based approach.
Aberdeen Stewardship Principles
Our Corporate Governance Guidelines and Approach to Investment, provides a framework for investment analysis, engagement and proxy voting for investee companies worldwide. We invest for our clients’ portfolios in companies internationally, with a global understanding of what amounts to best practice. We actively target investment in those companies with sound corporate governance practices, and will work proactively with our investee companies to seek improvements over time.
Aberdeen’s approach to Stewardship
Aberdeen actively considers its obligations of ownership and stewardship on behalf of clients. With low turnover across our investment approaches, we prefer to hold our investments in companies for the long term and we are committed to performing the stewardship role actively to support the creation of long-term value by those investments. Aberdeen is committed to exercising responsible ownership with a conviction that companies adopting best practices in corporate governance will be more successful in their core activities and deliver enhanced returns to shareholders.
UK Stewardship Code update September 2018: Under the UK Stewardship Code asset managers are encouraged, but not required, to have their stewardship statements independently verified. For a number of years both Aberdeen Asset Management and Standard Life Investments successfully obtained appropriate independent assurance over the policies and procedures which underpin each asset manager’s stewardship policy statements.
Subsequent to the August 2017 merger of Aberdeen Asset Management and Standard Life, significant progress has been made with integrating the policies and procedures of the two asset managers. However, that process has not yet completed, and we believe that this situation adds a layer of complexity to any verification activity and could potentially lead to confusion for our clients and potential clients. On this basis, we have decided to forego the verification of our 2017-2018 stewardship statements and instead focus on having everything in place for verification of a combined stewardship statement issued by the two asset managers under the Aberdeen Standard Investments brand for the year beginning October 2018.