SRD II Disclosures

 
 

Shareholder Rights Directive II (SRD II) Disclosures

Aims of SRD II

The SRD II aims to encourage long-term shareholder engagement and transparency between traded companies and investors. Asset managers and institutional investors can play a vital role in the responsible stewardship of assets.

Impact on AllianceBernstein

The relevant provisions of SRD II apply to UK and European asset managers to the extent that they invest in shares traded on an EU regulated market (or comparable non-EEA market for UK asset managers) on behalf of investors.

 

Article 3g1a. Develop and publicly disclose an engagement policy that describes how:

   
1. Shareholder engagement is integrated in investment strategy Engagement with issuers is an important part of our responsible research and investment processes. We engage with issuers for two main reasons: to generate research insights (e.g., to learn more about an issuer’s corporate strategies and competitive positioning) or for action (e.g., to encourage issuers to better address material ESG risks or take advantage of ESG opportunities, in our clients’ best interests). We believe that as active managers, our position can generate enhanced risk-adjusted returns through our access to and engagement with issuers.

AB’s Global Stewardship Statement and Report describes our approach to responsible investing and 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, we continue to engage with issuers and monitor evolving ESG practices, when material, to help create long-term value for our clients.

AB’s Global Stewardship Statement and Report describes how we document and track our engagement activities, and it sets out our approach 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 engagement, we’ve developed proprietary systems to enhance 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 AB’s Global Stewardship Statement and Report for further detail on our responsible investment process and engagement approach.
3. Dialogue is conducted; Engaging stock and bond issuers on strategic and financial issues including material ESG factors is an important part of our responsible research and investment processes. To engage effectively, we strive to have an ongoing, open dialogue with stakeholders.

For further detail on how dialogue is conducted, please refer to AB’s Global Stewardship Statement and Report.
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.  AB considers every vote to be significant and, in the spirit of full transparency, we disclose all proxy votes approximately one business day after the meeting.

Please also refer to AB’s Global Stewardship Statement and Report to learn more about our voting philosophy, overall policy and process.
6. Communication with relevant stakeholders;

Our fiduciary duty to our clients is paramount. We engage with clients and their advisors to better understand how we may align with their responsible investing preferences and help them meet their governance and regulatory obligations. This takes place in a variety of ways, including:
 

  • Customizing investment guidelines to align with clients’ preferences
  • Providing transparency on engagement and voting activities
  • Implementing, monitoring and transparently reporting specific portfolio-level ESG screens or restrictions
  • Reporting additional agreed ESG metrics for insight and research purposes
  • Helping them meet the applicable regulatory requirements and compiling portfolio specific documentation
  • Providing communications and thought leadership on key investment and industry matters
  • Occasionally providing training to clients’ in-house staff and stakeholders
  • Developing new investment strategies based on market demand and specific client interests
     

We also provide extensive reporting to our clients in order to be fully transparent in all that we do, from our philosophy and practices to our investment process and outcomes. This transparency manifests itself in both disclosures and reporting. Please refer to AB’s Global Stewardship Statement and Report for details on our responsible investment process and transparency and reporting.

While AB has robust practices and policies to integrate stewardship and responsible investing within our own activities, the world of investing is complex and moves fast. We strive to stay current on best practices, evolving principles and changing frameworks, and regulatory developments. AB also views offering opinions, advice, and comments on responsible investing and stewardship to regulators, organizations, and other relevant bodies as an important part of our role as a proactive member of the investment community. To support these efforts, AB is a proactive and participating member of the global investment community. Please refer to AB’s Global Stewardship Statement and Report for more information on our engagement with stakeholders in the investment management community.

7. Actual and potential conflicts of interest are managed. As a fiduciary, we have a duty of loyalty to our investment advisory clients. This includes the duty to address or, at a minimum, disclose 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 we maintain policies and procedures to identify conflicts of interest and, if they are unpreventable, we mitigate and manage those that may arise in relation to the services that we or our affiliates provide.

Conflicts arising from fiduciary activities that we cannot avoid (or choose not to avoid) are mitigated through written policies that we believe protect the interests of our clients. In these cases, regulators have generally prescribed detailed rules or principles for investment firms to follow. By complying with these rules and using robust compliance practices, we believe that we handle these conflicts appropriately.

For further information, please refer to AB’s Global Stewardship Statement and Report, which provides further detail on AB’s governance 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.
 

Article 3g1b. Publicly disclose information explaining:

   
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; AB’s Global Stewardship Statement and Report contains detailed information and statistics on how our Engagement Policy is applied, and it also 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 votes can be found in our vote disclosure dashboard, and are disclosed approximately one business day after a company’s meeting. 
 

Article 3i1. Disclose, on an annual basis, to the institutional investor:

   
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 view transparency, disclosure and our reporting to clients as paramount to effective stewardship and responsibility. We strive to be transparent in what we do, from our philosophy and policies to our investment process and outcomes.

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, and ESG, carbon and/or climate metrics.

Please refer to AB’s Global Stewardship Statement and Report for an overview of our client 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 our ESG research, integration, engagement or proxy-voting activities. We actively exercise our right to vote proxies, and we have a robust rules- and principles-based global in-house Proxy Voting and Governance Policy and process that are applicable to our voting activities across geographies. We’re shareholder advocates, and we make investment and proxy-voting decisions in our clients’ best interests.

We support strong corporate governance structures, shareholder rights and transparency.For further information on the use of proxy advisors, please refer to AB’s Global Stewardship Statement and Report.
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 have entered into securities-lending arrangements with agent lenders to generate additional revenue. We will not be able to vote securities that are on loan under these types of arrangements. However, for AB-managed funds, the agent lenders have standing instructions to recall all securities on loan systematically in a timely manner on a best-effort basis in order for AB to vote the proxies on those previously loaned shares.

Please refer to AB’s Global Stewardship Statement and 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 includes achieving a desired level of investment exposure, risk and return within a given time horizon. Analyzing and assessing current and prospective investments through the lens of long-term value creation often allows us to achieve strong financial outcomes while reducing risk, due to a thorough analysis of the factors that will affect an investment through the investment horizon and beyond. Investment horizons vary by asset class and investment opportunity, but can range from a few months to a many years.

AB has long recognized that material ESG risks and opportunities can affect the performance of investments, and we have worked to formalize the integration of material ESG factors into our investment processes where relevant.

Please refer to AB’s Global Stewardship Statement and Report for a description of our responsible investment process.
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 may include material ESG factors.

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, and ESG, carbon and/or climate metrics.

Please refer to AB’s Global Stewardship Statement and Report for an overview of our client 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.