At Deutsche Asset Management, we regard good corporate governance as critical to sustainable development, as well as to shareholder return. We actively promote the alignment of Supervisory and Management Board interests with those of shareholders through effective governance measures. To this end, we established a dedicated Corporate Governance team within Deutsche Asset Management’s Chief Investment Office.
Setting high standards for the companies we invest in
We expect a high degree of transparency from the companies we invest in, in terms of reporting, selection, and succession planning of their Boards, as well as detailed descriptions of the qualifications of their members. We also call for transparency around strategy and incentive schemes for Board Members.
We believe that a sound Board structure, with a diversity of skills, professional experience, education, gender, age, and socio-cultural background, is critical to good corporate governance. We also promote the mechanisms that ensure effective balance of power, control, and monitoring. These expectations extend to Supervisory Boards.
Proxy Voting: Policy and Watchlist
We have a consistent and stringent proxy voting process, based on our Corporate Governance and Proxy Voting Policy, as well as a Watchlist of holdings in funds domiciled in Europe, that combines extensive qualitative and quantitative screening with governance ratings.
Our Corporate Governance and Proxy Voting Policy, which is reviewed and updated annually, helps to make our expectations clear to our clients and those companies we invest in. It draws on national and international legal requirements and best practices, as well as globally acknowledged principles of responsible investment, such as the UN Principles for Responsible Investment, to which we became a signatory in 2008; the International Corporate Governance Network (ICGN) Principles of Corporate Governance; and the G20/OECD Principles on Corporate Governance.
Corporate governance engagement
By building an on-going dialog with those companies we invest in, we can challenge companies to perform responsibly with regards to governance and transparency. We actively engage with companies where we have identified serious issues related to their governance structures.
If the feedback we receive as a result of our engagement remains unsatisfactory, we will follow up with further measures such as:
- letters to the members of the Management and—when appropriate—also to the Supervisory Board,
- meetings with the Management and the Supervisory Boards,
- raising our voice at the AGM or via the press and media,
- exercising our rights to vote against the discharge and/or (re-)election of candidates of the Management and the Supervisory Boards or other agenda items proposed by the management,
- filings of shareholder proposals, and
- considering divestment.
In 2016, we actively engaged with 30 companies on corporate governance topics, via meetings with company representatives, including Management and Supervisory Board members. We also sent a letter to all the companies we are invested in in Germany (200 companies), updating them on changes to our voting policy and the rationale behind them, other key issues we would consider when voting, and our general expectations on corporate governance.
This year, we voted at 550 general and special meetings in 40 countries for our funds domiciled in Europe. We also relaunched the websites (dws.de and dws.lu), which show our voting decisions and statistics for our retail funds, so readers can access information interactively at company and fund levels. Bloomberg Business Week ranked Deutsche Asset Management as the only asset manager who voted 100% in favour of 68 climate change related shareholder proxy vote proposals in 2016, while the asset manager with the next highest level of support only voted in favour of 76% of the proposals.