Skip to main content

Training 2000 Limited Retirement and Death Benefit Scheme Implementation Statement

Year ending 31 July 2021

Glossary

Scroll or swipe on small screens to see all table columns

Baillie Gifford

Baillie Gifford & Co Limited

BlackRock

BlackRock Investment Management (UK) Limited

ESG

Environmental, Social and Governance

Investment Adviser

First Actuarial LLP

LGIM

Legal & General Investment Management

Scheme

Training 2000 Limited Retirement and Death Benefit Scheme

Scheme Year

1 August 2020 to 31 July 2021

SIP

Statement of Investment Principles

UNPRI

United Nations Principles for Responsible Investment

Introduction

The Trustees have reviewed the extent to which their policy from the SIP relating to the exercise of rights (including voting rights) attaching to the investments was followed over the Scheme Year and this statement confirms the outcome of that review.

In addition, the statement summarises the voting record of the Scheme’s investment managers and provides information on the significant votes made in respect of the Trustees' equity holdings. Information is also provided on the how the Scheme’s investment managers make use of the services of proxy voting advisers.

Relevant Investments

The Scheme’s assets are invested in pooled funds and some of those funds include an allocation to equities. Where equities are held, the investment manager has the entitlement to vote.

At the end of the Scheme Year, the Scheme invested in the following funds which included an allocation to equities:

  • Baillie Gifford Multi-Asset Growth Fund
  • BlackRock Aquila Life Market Advantage (ALMA) Fund
  • LGIM World Equity Index Fund
  • LGIM World Equity Index Fund - GBP Hedged

Whilst the BlackRock ALMA Fund has an allocation to equities, the exposure is obtained via derivatives which do not have any associated voting rights.

The Trustees' Policy Relating to the Exercise of Rights

Summary of the Policy

The Trustees' policy in relation to the exercise of the rights (including voting rights) attaching to the investments is set out in the SIP. The SIP was updated during the Scheme Year to comply with new legislation which required additional information to be stated about the nature of the arrangements in place with the investment managers. Part of the new wording provided a more detailed explanation of the Trustees' policy relating to the exercise of rights.

A summary of the Trustees' policy in relation to the exercise of the rights (including voting rights) attaching to the investments is as follows:

  • The Trustees believe that good stewardship can help create, and preserve, value for companies and markets as a whole and the Trustees wish to encourage best practice in terms of stewardship.
  • The Trustees invest in pooled investment vehicles and therefore accept that ongoing engagement with the underlying companies (including the exercise of voting rights) will be determined by the investment managers' own policies on such matters.
  • When selecting a pooled fund, the Trustees consider, amongst other things, the investment manager’s policy in relation to the exercise of the rights (including voting rights) attaching to the investments held within the pooled fund.
  • When considering the ongoing suitability of an investment manager, the Trustees (in conjunction with their Investment Adviser) will take account of any particular characteristics of that manager’s engagement policy that are deemed to be financially material.
  • The Trustees will normally select investment managers who are signatories to the UNPRI.
  • If it is identified that a fund’s investment manager is not engaging with companies the Trustees may look to replace that fund. However, in the first instance, the Trustees would normally expect their Investment Adviser to raise the Trustees' concerns with the investment manager.

Has the Policy Been Followed During the Scheme Year?

The Trustees' opinion is that their policy relating to the exercise of rights (including voting rights) attaching to the investments has been followed during the Scheme Year. In reaching this conclusion, the following points were taken into consideration:

  • There has been no change to the Trustees' belief regarding the importance of good stewardship.
  • The Scheme’s invested assets remained invested in pooled funds over the period.
  • The Trustees did not select any new funds during the period.
  • During the Scheme Year, the Trustees considered the voting records of the investment managers over the period ending 31 July 2021.
  • Since the end of the Scheme Year, an updated analysis of the voting records of the investment managers based on the period ending 31 July 2021* has been undertaken as part of the work required to prepare this Implementation Statement. A summary of the key findings from that analysis is provided below.
  • All the investment managers used by the Scheme are UNPRI signatories.

*Note the voting analysis was over the year ending 31 December 2020 (for BlackRock) and 30 June 2021 (for Baillie Gifford and LGIM) because this was the most recent data available at the time of preparing this statement. The Trustees is satisfied that the analysis provides a fair representation of the investment managers' voting approach over the Scheme Year.

The Investment Managers' Voting Records

A summary of the investment managers' voting records is shown in the table below.

Scroll or swipe on small screens to see all table columns

Investment manager Number of votes Split of votes
For Against Did not vote / abstained / withheld
Baillie Gifford 17,000 93% 3% 4%
BlackRock 160,000 85% 10% 5%
LGIM 120,000 78% 21% 1%

Notes

These voting statistics are based on each manager’s full voting record over the 12 months to 31 December 2020 (for BlackRock) and 30 June 2021 (for Baillie Gifford and LGIM) rather than votes related solely to the funds held by the Scheme.

Use of Proxy Voting Advisers

Scroll or swipe on small screens to see all table columns

Investment manager Who is their proxy voting adviser? How is the proxy voting adviser used?
Baillie Gifford No proxy voting adviser All done in-house, manager aims to participate in all votes
BlackRock Several advisers Proxy advisers provide information but voting is determined by BlackRock
LGIM ISS and IVIS ISS and IVIS provide research and ISS administer votes. However, all voting is determined by guidelines set by  LGIM.

The Investment Managers' Voting Behaviour

The Trustees have reviewed the voting behaviour of the investment managers by considering the following:

  • broad statistics of their voting records such as the percentage of votes cast for and against the recommendations of boards of directors (i.e. “with management” or “against management”);
  • the votes they cast in the year to 31 July 2021 on the most contested proposals in nine categories across the UK, the US and Europe;
  • the investment managers' policies and statements on the subjects of stewardship, corporate governance and voting.

The Trustees have also compared the voting behaviour of the investment managers with their peers over the same period.

The Trustees' key observations are set out below.

Voting in Significant Votes

Based on information provided by the Trustees' Investment Adviser, the Trustees have identified significant votes in nine separate categories. The Trustees consider votes to be more significant if they are closely contested. i.e. close to a 50:50 split for and against. A closely contested vote indicates that shareholders considered the matter to be significant enough that it should not be simply “waved through”. In addition, in such a situation, the vote of an individual investment manager is likely to be more important in the context of the overall result.

The five most significant votes in each of the nine categories based on shares held by the Scheme’s investment managers are listed in the Appendix. In addition, the Trustees considered each investment manager’s overall voting record in significant votes (i.e. votes across all stocks not just the stocks held within the funds used by the Scheme).

Description of Voting Behaviour

Baillie Gifford

Baillie Gifford tends to support director proposals, but this is consistent with the investment manager’s active management style – Baillie Gifford has chosen to invest in companies, so it is unsurprising it wishes to support their management.

Although Baillie Gifford tends to support management in director proposals, over the course of the Scheme Year, the investment manager has demonstrated a willingness to vote in favour of shareholder proposals (which typically means voting against management).

BlackRock

The analysis indicates that BlackRock’s voting pattern has changed materially over the last 12 months.

Although the manager tends to vote in favour of management proposals to a greater extent than is the case with many of its peers, there is evidence of BlackRock opposing director proposals on a range of issues.

Last year’s analysis indicated that BlackRock would tend to oppose shareholder resolutions designed to address issues such as climate change, human rights and forced labour. However, this year’s analysis reveals a materially different picture with the manager much more willing to support shareholder proposals of this nature.

The revised voting approach is consistent with public statements made by BlackRock over the last two years. In particular, in January 2020, BlackRock made a public commitment to vote against management when a company’s management team is failing to make progress on climate change issues. Later that year, in July 2020, the manager stated that it had “implemented a new approach to shareholder proposals”. The manager now states that supporting shareholder proposals “plays an increasingly important role in our stewardship efforts around sustainability”.

The analysis identifies that BlackRock’s voting record is now more closely aligned with their stated governance approach.

LGIM

Relative to its peers, LGIM shows a higher tendency to vote against directors’ proposals. The manager has also shown strong support for shareholders’ proposals aimed at tackling a broad range of environmental and social issues.

The manager’s voting policy is detailed and includes clear rationales and rules for when it will vote against directors’ recommendations on a proposal.

LGIM voted against around 20% of director proposals during the year and showed a tendency to do this in contentious votes. This suggests that LGIM is taking its stewardship responsibilities seriously.

Conclusions

Based on the analysis undertaken, the Trustees have no concerns regarding the voting records of Baillie Gifford, BlackRock or LGIM.

The Trustees will keep the voting actions of the investment managers under review.

Signed: L Bloomfield

Date: 27.05.22

Signed on behalf of the Trustees of the Training 2000 Limited Retirement and Death Benefit Scheme

Significant Votes

The table below records how the Scheme’s investment managers voted in the most significant votes identified by the Trustees.

Retirement and Death Benefit Scheme Implementation Statement table

Note

Where the voting record has not been provided at the fund level, the analysis is based on the shares held within the Scheme’s pooled funds as at points during the period. This means it is possible that that some of the votes listed above may relate to companies that were not held within the Scheme’s pooled funds at the date of the vote.

The BlackRock column of the above table has ‘not held’ for every entry, this is because the Scheme’s BlackRock Aquila Life Market Advantage Fund holding gains exposure to equities via derivatives which do not have any associated voting rights.