SRD II Disclosures
|1. Shareholder engagement is integrated in investment strategy||Engagement with issuers is a critical part of our investment process. We engage with issuers (a) for insight to better understand what they are doing and (b) for action, to encourage issuers to take actions that are in the best interest of our client clients, creating sustainable long-term cash flows.
Section 4 of AB’s Global Stewardship Statement describes our investment process, including how engagement is integrated.
Section 5 of AB’s Global Stewardship Statement provides further details on our Engagement Policy.
|2. Investee companies are monitored on relevant matters (including strategy; financial and non-financial performance and risk; capital structure; social and environmental impact; and corporate governance);||Once we have made an investment, monitoring our positions is an important component of our Stewardship.
AB’s Global Stewardship Statement describes how we document and track our engagement on strategy, financial and non-financial performance and risk, social and environmental impact and corporate governance and it sets out our guidelines for escalating issues that aren’t adequately addressed through our typical engagement process. Our Engagement Policy is applicable across geographies and asset classes, and includes engaging on the capital structure, changes to it and, factors relevant to different capital structures.
Because tracking, documenting and integrating our dialogues with issuers is a key pillar of a successful engagement program, we’ve developed proprietary systems to advance these efforts. When engagements include a substantive discussion of ESG issues, our analysts document the purpose of the engagement, ESG topics discussed and the outcome in our proprietary ESIGHT system.
Please refer to Section 4 of AB’s Global Stewardship Statement for further detail on our investment process and Section 5 for detail on Engagement.
|3. Dialogue is conducted;||Engaging stock and bond issuers on strategic and financial issues including ESG and climate change issues is critical to our research and investment processes. To engage effectively, we must have an ongoing, open dialogue with stakeholders.
For further detail on how dialogue is conducted, please refer to Section 5 of AB’s Global Stewardship Statement entitled Engaging with Issuers.
|4. Voting and other rights are exercised;||We have a robust, rules and principles based, global in-house Proxy Voting and Governance Policy and process that is applicable to all our voting activities across all geographies. We also disclose the rationales to our significant votes on AB's SRD II Disclosures page (see tab above).
Please also refer to Section 6 of AB’s Global Stewardship Statement to learn more about our voting philosophy, overall policy and process.
|6. Communication with relevant stakeholders;||Our clients are one of our primary stakeholders. Our investment process begins with understanding our clients’ needs. We engage with clients and their advisors to better understand how we may align with their own responsible investing principles and help them meet their own governance and regulatory obligations. This takes place in a variety of ways, including:
(1) customization of investment guidelines to align with clients’ principles; (2) transparency on engagement and voting reporting; (3) communications and thought leadership on key investment and industry matters; and (4) on occasion, providing training to clients’ in-house staff and stakeholders. We also provide extensive reporting to our clients in order to be fully transparent in all that we do, from our philosophy and policies to our investment process and outcomes. This transparency manifests itself in both disclosures and reporting. Please see Section 4 of AB’s Global Stewardship Statement for details on the investment process and Section 7 for details on transparency and reporting.
While AB has robust practices and policies to integrate stewardship and responsible investing within our own activities, that alone isn’t enough because the world of investing is complex and fast-moving. We must stay current on best practices, evolving principles, and changing frameworks and regulatory developments. We can inﬂuence these areas by advocating for progress with issuers, regulators and others as we continue to advance responsible investing and stewardship practices. We can often be more effective at both learning and advocating by collaborating with others. To support these efforts, AB is a proactive and participating member of the global investment community. Please see Section 8 of AB’s Global Stewardship Statement for more information on our engagement with stakeholders in the investment management community.
|7. Actual and potential conflicts of interest are managed.||AB has a duty to address, or at a minimum disclose, potential conflicts of interest that may exist between different clients, between the firm and clients, or between our employees and our clients.
We’ve established and maintain Conflicts of Interests policies and procedures which we believe protect the interests of our clients. These include measures for the identification, mitigation and management of conflicts, including where we can not avoid (or choose not to avoid) conflicts related to the services that s we or our affiliates provide.
For further information, please refer to Section 2 of AB’s Global Stewardship Statement which provides further detail on AB’s Governance, Responsibility and our Code of Business Conduct and Ethics, which summarizes our values, ethical standards and commitment to addressing potential conflicts of interest that arise from our activities.
|1. Annually, how the engagement policy has been implemented, including a general description of voting behaviour, an explanation of the most significant votes and the use of the services of proxy advisors;||Section 6 of AB’s 2020 Stewardship Report contains detailed information and statistics on how our Engagement Policy was applied. Section 7 of the same report provides similar information on the application and results of our Proxy Voting.|
|2. Where an asset manager implements the engagement policy, including voting, on behalf of an institutional investor, the institutional investor shall make a reference as to where such voting information has been published by the asset manager.||AB’s significant vote rationales can be found on our SRD II Disclosures page (see tab above).|
|1. How their investment strategy and implementation thereof complies with their arrangement with the investor and contributes to the medium to long-term performance of the assets of the institutional investor or of the fund;||We are transparent in reporting to clients on such medium and long-term risks as risk/return performance of investments (including commentary on both macroeconomic and idiosyncratic factors), proxy-voting reports, engagement activities. We typically provide formal reports on our engagement activities and ESG, carbon and climate metrics. Please see Section 7 of AB’s Stewardship Statement for an overview of our client reporting. AB’s 2020 Stewardship Report also provides an overview of our 2020 reporting, in addition to detailed Engagement and Proxy Voting statistics and examples.|
|2. The use of proxy advisors for the purpose of engagement activities;||We do not outsource or use proxy advisors for the purpose of engagement activities. We actively engage and exercise our right to vote and have a robust, principles-based, global in-house Proxy Voting and Governance Policy and process that is applicable to all our voting activities.
For further information on the use of proxy advisors please refer to Section 6 of AB’s Global Stewardship Statement.
|3. Policy on securities lending and how it is applied to fulfil its engagement activities if applicable, particularly at the time of the general meeting of the investee companies;||Many of our clients enter into securities lending arrangements. Our policy on securities lending is set out in Section 6 of AB’s Global Stewardship Statement and Section 6 of our 2020 Stewardship Report.|
|4. Whether, and if so how, investment decisions are made based on evaluation of the medium to long-term performance of the investee company, including non-financial performance;||AB focuses intently on our clients and their needs, which are often centered on achieving a desired level of risk and return. Analysing and assessing issuers through the lens of long-term value creation often allows us to achieve strong ﬁnancial outcomes while reducing risk through a more thorough analysis of all the factors that will impact a security throughout the course of the investment horizon and beyond. Our investment process is inherently long term in nature and focused on both fundamental and ESG aspects of performance, including climate change.
Please see Section 4 of AB’s Global Stewardship Statement for a description of our investment process and Section 5 of AB’s 2020 Stewardship Report for how we applied that process in 2020.
|5. Key material medium to long term risks associated with the investments;||The key material medium and long term risks associated with the investment will vary by product and include both financial risks and non-financial risks, such as ESG and climate change factors.
We are transparent in reporting to clients on such risks as risk/return performance of investments (including commentary on both macroeconomic and idiosyncratic factors), proxy-voting reports and engagement activities. We typically provide formal reports on our engagement activities and ESG, carbon and climate metrics. Please see Section 7 of AB’s Global Stewardship Statement for an overview of our client reporting.
AB’s 2020 Stewardship Report also provides an overview of our 2020 reporting, in addition to detailed Engagement and Proxy Voting statistics and examples.
|6. Portfolio composition, turnover and turnover costs.||Direct Fund Clients: Portfolio composition is set out in the annual report of the relevant fund. Depending on the fund, turnover may be disclosed in the annual report or can be obtained upon request. Depending on the fund, turnover costs may be disclosed in the EMT or can be obtained upon request.
Separately Managed Account Clients: Portfolio composition and turnover and turnover costs are provided as part of our client reporting.