2022 Semi-annual Stewardship report

The value of assets managed by exchange traded funds globally has grown to over US$10 trillion, increasing by an astonishing 3000 per cent since 2003 according to Statista. As a result, alongside active managers, ETF managers are increasingly expected to develop their investment objectives beyond growth and performance. At VanEck, we believe we have a clear responsibility to strive to invest in companies that contribute to and/or consider a sustainable environment, have equitable social structures, and are well governed entities. Core to our investment process is transparency as a means to innovate and change.

As a shareholder, VanEck increased its engagements with investment companies to 15 consultations over the first six months of 2022, from 10 over the same period last year. When meeting with businesses, we discussed topics such as female representation on boards, ESG matters, and executive remuneration.

“The main avenue we have for influencing the companies in which we invest in is the way we vote in the company’s formal proceedings and companies are now paying much more attention to improve their ESG ratings,” Alice Shen (CFA), senior associate – Investments & Capital Markets, said.

In August, VanEck released its Stewardship Report which outlined its engagement with the companies it is invested in. Our Stewardship Report gives our investors the opportunity to monitor and analyse the implementation of our investment strategy.

Voting and Engagement

Voting is one aspect of stewardship activity and often focus on corporate governance matters raised at AGMs.

VanEck voted on almost 21 thousand management proposals over the first six months of the year and engaged with 15 companies.

VanEck utilises Glass Lewis, one of the largest proxy voting companies to cast votes on our behalf. We align our sustainability views by using Glass Lewis' ESG proxy voting guidelines.

Highlights

• Voted against the board on 508 motions regarding insufficient female board representation.
• VanEck is top-15 shareholder in AGL Energy. VanEck engaged with the senior management of AGL Energy, the potential takeover entity Grok Ventures as well as an independent investor group regarding a demerger plan and board reshuffle.
• VanEck is top-20 shareholder in Scentre. VanEck engaged with the company to discuss the board election and ESG related matters such as elevated use of temporary staff and high staff turnover. According to MSCI, the company also lagged peers in adopting strong measures such as annual surveys to gauge employee morale. Scentre is aiming to improve turnover data and is becoming more accountable on flexible work arrangements during Covid-19.
• VanEck is top-10 shareholder in Dexus. VanEck discussed strategies, management, governance, remuneration and other board related matters with the board and company management.
• VanEck is a top-40 shareholder in Santos. VanEck discussed with the company proposals regarding how company funds were being spent and whether in a manner that furthered Santos’s stated climate objectives.
• VanEck is a top-40 shareholder in Bega Cheese. We consulted with the Company Secretary due to the company’s MSCI ESG rating downgrade from AA to A. Bega addressed our concerns and has recently revised its target to reduce water consumption by 30 per cent by 2030 across the business.

VanEck expects to bolster its company engagement in FY23 as climate goals and decarbonisation become increasingly important, and, as society demands greater social responsibility from corporations.

You can read the full stewardship report here.