Stewardship policy

A look inside the Princely Collections For more than 400 years, the Princes of Liechtenstein have been passionate art collectors. The Princely Collections include key works of European art stretching over five centuries and are now among the world’s major private art collections. The notion of promoting fine arts for the general good enjoyed its greatest popularity during the Baroque period. The House of Liechtenstein has pursued this ideal consistently down the generations. We make deliberate use of the works of art in the Princely Collections to accompany what we do. For us, they embody those values that form the basis for a successful partnership with our clients: a long-term focus, skill and reliability.

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Bauer brothers, Hortus Botanicus, detail from “Tropaeolum majus”, 1779 © LIECHTENSTEIN. The Princely Collections, Vaduz–Vienna

Contents

4 Introduction

6 UK Stewardship Code ("Code")

7 Discharging our stewardship responsibilities

8 Controversial weapons policy

9 Coal exclusion policy

10 Monitoring investee companies and funds

12 Voting rights

14 Communicating with other shareholders and

relevant stakeholders

15 Managing conflict of interest

4

Introduction

As a wealth management firm, our responsibility to

look after our clients and their assets is one of our core

values. We do this by offering a bespoke approach to

wealth management, taking into account not only clients'

investment objectives, time horizon and risk profile, but

also any additional needs and ethical views they may have.

Looking after our clients' interests in this manner and

ensuring our investment decisions and recommendations

are taken with our clients' best interests in mind is at the

heart of our stewardship responsibilities.

5

“ To LGT Vestra, effective stewardship means we seek the best outcome for our clients by taking an active interest in both the financial and non-financial aspects of the companies and funds in which we invest on behalf of, or recommend, to our clients.”

David Scott, Chairman LGT Vestra

6

The Code was first issued by the Financial Reporting

Council ("FRC") in 2010, with the latest edition effective

from 1 January 2020. The FRC is an independent

regulator which oversees the areas of auditing,

financial reporting and corporate governance as well

as stewardship in the financial services industry.

The Code sets a clear benchmark for stewardship as

the responsible allocation, management and oversight

of capital to create long-term value for clients and

beneficiaries, leading to sustainable benefits for the

economy, the environment and society. Whilst the Code is

largely concerned with institutional investing, LGT Vestra

considers effective stewardship to be an important duty

we have to all of our clients.

UK Stewardship Code (“Code”)

7

Discharging our stewardship responsibilities

As a wealth manager, our primary duty is to maximise

investment returns for our clients whilst operating within

the confines of our contractual obligations and the

objectives, goals and other parameters we have agreed

with our clients. We look to achieve this through our

sound and thorough approach to identifying suitable

investment opportunities.

Investment opportunities are identified through

comprehensive financial analysis but other aspects of

the company or fund may be given consideration.

Those factors include:

■ Corporate governance

■ Strategy

■ Culture

■ Non-financial performance and risks

■ Capital structure

■ Social and environmental impact

The significance assigned to these factors is considered

on a case–by-case basis at the discretion of our in-house

Research team.

8

LGT Vestra´s approach to excluding inhumane weapons is

in-line with that of our parent company LGT. We do not

invest in companies that are involved in the manufacture,

storage and delivery of controversial weapons, such as

atomic weapons, land mines, cluster bombs and cluster

munitions, as well as biological and chemical weapons.

This means we exclude investments harbouring significant

risks according to environmental, social and governance

(ESG) criteria. We do not invest directly in any countries

that are not signatories to the nuclear non-proliferation

treaty and to international treaties on the prohibition of

landmines and cluster munitions.

Controversial weapons policy

9

Coal exclusion policy

LGT Vestra and our parent company LGT are committed

to combatting climate change and supporting an

energy supply that is consistent with the aims set

forth in the Paris Agreement. Coal is the single largest

source contributing to global temperature increases1

and thermal coal accounts for more than 80% of total

coal production. We therefore exclude thermal coal

production and power generation from thermal coal from

our direct investment universe.

Exclusions include:

■ mining companies deriving more than 5% of their total

revenues from thermal coal production.

■ mining companies producing more than 1% of total

global thermal coal production.

■ utility companies deriving more than 20% of their

total revenues from electric power generation if their

average carbon intensity is above 430 g CO2/ kWh, a

ceiling which will be lowered every year.2

■ utility companies deriving less than 20% of revenues

from electric power generation if their revenue

contribution from thermal coal activities exceeds 5% of

their total revenues.

1 CO2 emitted from coal combustion was responsible for 0.3° Celsius of the 1° Celsius increase in global average annual surface temperatures above pre-industrial levels (International Energy Agency (2019), Global Energy & CO2 Status Report)

2 We follow the maximum carbon intensity trajectory used by the International Energy Agency "2-Degrees" scenario (Energy Technology Perspectives (2017))

10

Monitoring investee companies and funds

Effective monitoring of investee companies and funds

is fundamental to fulfilling our responsibility to our

clients. Each company or fund´s ability to create, sustain

and protect value is central to our investment process.

Therefore, we continually assess the performance and

management of companies and funds in which we have

invested on behalf of our clients to determine if our clients'

interests are being served.

Research and monitoring

Comprehensive and continuous research and monitoring

of investee companies is fundamental to LGT Vestra's

investment process as our investment strategy typically

looks to long-term investment rather than continual

turnover of clients' portfolio holdings. Financial and

non-financial risks are actively considered and detailed in a

specific section within our research reports.

Monitoring of specific companies typically

occurs through:

■ Financial reporting

■ Company meetings

■ News

■ Special announcements

■ Additional research conducted by our Research team

Monitoring of funds typically occurs through:

■ Ongoing returns

■ Holdings based analysis

■ Regular fund manager engagement

11

Market views and industry research are also taken

into account when looking into new investment ideas

or reviewing our recommendations. Where we have

concerns about the performance or strategy of an investee

company/fund or where we have reason to believe that

our clients' rights as shareholders are being compromised

in any way, we will escalate our engagement with the

investee company's management and take any actions or

decisions accordingly.

12

Voting rights

LGT Vestra supports our clients in exercising their right to

vote where deemed appropriate. From time to time, our

research analysts identify a significant issue which could

have an impact on the holdings of our clients. When

this occurs, LGT Vestra exercises the vote on behalf of

shares held by our clients through our nominee. Where

clients identify a vote where they wish to exercise their

rights, they may instruct us to vote on their behalf and

we will cast a vote for the shares held by them through

our nominee.

Where necessary or appropriate, we endeavour to engage

with investee companies regarding significant votes.

Records of our votes on behalf of particular clients are

available to those clients upon request.

We do not use the services of proxy advisers.

We regularly report investment activity to our clients, and

where it is requested by a client, we will report details of

our voting activities.

Examples of voting activities include:

In 2019, we voted at a General Meeting of Capital Gearing

Trust (CGT). We voted in favour of a resolution to allow the

Board to issue shares for up to 30% of issued share capital

without having to return to shareholders for additional

approval. We voted in favour because one of the features

of CGT is the ability of the Trust to issue shares so investors

can buy at net asset value (NAV). As investors, we prefer

this to trading at discount and premium.

13

In October 2018, we voted in our clients´ interests against

Unilever´s proposal to move away from its Anglo-Dutch

corporate structure in favour of a re-domiciling in the

Netherlands. We had concerns about subsequent liquidity

in London, forced selling by passive funds, and the possible

loss of the group´s FTSE 100 status.

Unilever´s stance was based on the fact that more of the

group´s shares trade in the Netherlands than in the UK.

They also argued that the move would simplify the legal

and share structure.

We appreciated that shareholders would see no change

to their economic interest, and we also recognised that

Unilever would enjoy greater flexibility for strategic

portfolio change and share-based acquisitions. More

prosaically, we were also concerned that the proposal to

re-domicile in favour of the Netherlands would expose

Unilever´s UK shareholders to the possibility of a Dutch

withholding tax being levied on dividends. The Dutch

government had announced plans to scrap the tax, but

the issue was contentious (it was being characterised

as a 'gift' to foreign investors) and we were worried that

future administrations could revoke the decision if the tax

was scrapped.

In the face of widespread UK institutional opposition,

Unilever subsequently withdrew all proposals. As yet, it

has not tabled new proposals.

14

Communicating with other shareholders and relevant stakeholdersLGT Vestra's long-term investment strategy and research

process mean that it will rarely be necessary for us to

co-operate or communicate with other shareholders or

relevant stakeholders. However, if such communication is

deemed to be in the best interests of our clients, it will be

carefully considered and action taken accordingly.

15

Managing conflict of interest

LGT Vestra maintains a policy on managing conflicts of

interest which is designed to ensure its decisions are taken

wholly in the interest of its clients. LGT Vestra aims to

ensure that all potential and actual conflicts are identified,

recorded, evaluated, managed and monitored.

LGT Vestra does not engage in proprietary trading and

therefore any conflict of interest between us and our

clients with regard to the advice we give, investment

decisions we may take on a discretionary basis, or the

exercise of voting rights is eliminated.

LGT Vestra´s conflicts of interest policy is available to clients

upon request.

“ It is one of our core investment values that we do not invest in anything we do not believe in.”

Jonathan Marriott, Chief Investment Officer LGT Vestra

17

Important informationLGT Vestra LLP is authorised and regulated by the Financial Conduct Authority ("FCA"). Our regulation details are set out in the FCA register: Firm Reference No: 471048; register.fca.org.uk/. Registered in England and Wales: OC329392. Registered office: 14 Cornhill, London, EC3V 3NR. LGT Vestra (Jersey) Limited ("LGTVJL") is incorporated in Jersey and is regulated by the Jersey Financial Services Commission in the conduct of Investment Business and Funds Service Business. Registration number: 102243; www.jerseyfsc.org/industry/regulated-entities , Registered office: 30-32 New Street, St Helier, Jersey, JE2 3TE LGT Vestra US Limited (“LGT Vestra US”) is authorised and regulated by the Financial Conduct Authority and is a Registered Investment Adviser with the US Securities & Exchange Commission ("SEC"). Our regulation details are set out in the FCA register: Firm Reference No: 585547; register.fca.org.uk/ and the SEC Investment Adviser Public Disclosure: www.adviserinfo.sec.gov/IAPD/Default.aspx. Registered in England and Wales: 06455240. Registered Office: 14 Cornhill, London, EC3V 3NR. This publication is marketing material. It is for information purposes only. Certain services described herein are not available to retail clients as defined by the FCA or the JFSC, as applicable; please speak to your investment adviser for further clarification in this regard. All services are subject to status and where local regulations permit. The wording contained in this document is not to be construed as an offer, advice, invitation or solicitation to enter into any financial obligation, activity or promotion of any kind. You are recommended to seek advice concerning suitability from your investment adviser. Any information herein is given in good faith, but is subject to change without notice and may not be accurate and complete for your purposes. This document is not intended for distribution to, or use by, any individual or entities in any jurisdiction where such distribution would be contrary to the laws of that jurisdiction or subject any LGT Vestra entity to any registration requirements. When we provide investment advice it is on the basis of a restricted approach that is to say, whilst we review and advise on retail investment products from the whole of the investment market.

Investors should be aware that past performance is not an indication of future performance, the value of investments and the income derived from them may fluctuate and you may not receive back the amount you originally invested.

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LGT Vestra LLP14 Cornhill, London, EC3V 3NRPhone +44 (0)20 3207 8000, info@lgtvestra.com

www.lgtvestra.com

VALUES WORTH SHARING

LGT Vestra LLP15 Queen Square, Bristol, BS1 4NPPhone +44 (0)117 422 4022, info@lgtvestra.com

LGT Vestra (Jersey) LimitedCharles Bisson House, 30-32 New Street, St. Helier, Jersey, JE2 3TEPhone +44 (0)1534 786400, jersey@lgtvestra.com

LGT Vestra US Limited14 Cornhill, London, EC3V 3NRPhone +44 (0)20 3207 8000, info@lgtvestra-us.com