UK Stewardship Code and Proxy Voting
The UK Stewardship Code (the “Code”) is a voluntary code which sets out a number of principles relating to engagement by investors. Under FCA regulatory standards, Edgbaston Investment Partners LLP (“Edgbaston”) must either state the nature of its commitment to the Code or, if it chooses not to commit in full, its reasons for adopting that stance.
Edgbaston is not a signatory to the 2012 version of the Code. This position will be re-assessed with reference to the 2020 version of the Code in due course. Currently, whilst Edgbaston generally supports the objectives that underlie the Code, it does not consider it appropriate to commit to any code of practice relating to any individual jurisdiction. The firm does however recognise the need to engage with the management and directors of its portfolio companies and to exercise its proxy voting rights with a view to enhancing its clients’ long-term investment values. More detailed information on Edgbaston’s approach to stewardship and its policies with respect to proxy voting and corporate governance can be found here.
As value investors, we invest in the cheapest quartile of our universe. We consider environmental, social and governance (“ESG”) issues amongst a broader group of factors when making a quality assessment of an investment. These assessments feed into the valuation we are prepared to pay for any business. Higher levels of aggregate risk (lower quality) require a bigger margin of safety.
Within the valuation discipline, our approach is to engage with companies to encourage better practices on ESG issues. Companies in the cheapest quartile are often unfashionable and overlooked but many are still working towards improving their standing in these areas or can be encouraged to do so.
Our full ESG policy is available to download here.