State Street’s “Making It Plain: Our Asset Stewardship Approach” articulates a financial materiality-centric approach to engagement and proxy voting vis-à-vis its portfolio companies.
Key takeaways include:
Engagement
- State Street focuses on improving practices and disclosure around financially material risks and opportunities
- State Street pursues engagement to effect change in lieu of divestment (e.g., fossil fuel assets)
Proxy voting
- State Street will consider sustainability-related shareholder proposals on a case-by-case basis, but only consider supporting such proposals if they address an environmental or social topic deemed to be financially material to a particular sector.
- State Street supports (and is exploring) increased proxy voting choice for clients.
Limited but important role
- State Street believes, boards—not investors, should determine corporate strategy.
- State Street believes investors should not “micromanage strategy or dictate which assets should be divested.”
- State Street aims to be a constructive partner to its portfolio companies—providing constructive input and seeking select information and disclosures with a view toward understanding and mitigating financially material risks.