Since 1889, Northern Trust Asset Management has been guided by our principles of service, expertise and integrity.

At Northern Trust Asset Management, our primary objective as an asset manager is to create long-term value for our clients. This objective applies to all of our portfolio management decisions, including operating as a responsible investor and engaging with company management and boards of directors. Northern Trust Asset Management believes that being an active owner will help portfolio companies produce sustainable value, and that companies’ long- term financial returns are connected to their strategic, environmental, social and governance performance.

This policy is designed to provide guidance for engagements with any company we are invested in on behalf of our clients.

Governance and Oversight

Northern Trust’s Proxy Voting Committee is responsible for oversight of the Northern Trust Asset Management Engagement Policy.

Scope and Objectives for Engagement

We consider engagement to be an open and ongoing dialogue with investee companies and other market participants to encourage adoption and execution of practices consistent with sustainable long-term value creation. 

Northern Trust Asset Management’s investment analysts engage with hundreds of companies annually on a range of objectives across four principle themes:

Use of Third Party Providers

Northern Trust has entered into an agreement with Hermes Equity Ownership Services (Hermes EOS) to provide additional monitoring and engagement services for select portfolios. Details of the covered portfolios and approach used by Hermes EOS are described in Appendix 2, the EMEA and APAC Supplement to the Northern Trust Engagement Policy.

Engagement Process

Engagements are made on a case-by-case basis where Northern Trust Asset Management, or Hermes EOS acting on behalf of Northern Trust Asset Management, identifies events or decisions on the part of the investee company’s management or board which raise significant environmental, social or governance concerns or identifies serious weaknesses with respect to strategy, risk and corporate communications.

In most instances, engagements will be conducted telephonically or in person with members of management or the board of directors. Engagements may also be conducted in the form of formal letter to the company’s board or management detailing our issues and advocating our recommended solutions, or by attending company briefings, etc.

While we generally refrain from submitting shareholder proposals at companies annual meetings, before a proposal is put on the ballot a good faith effort to engage with management or the board should first have been made.

Northern Trust Asset Management actively participates in a number of investor groups.¹ As members of these initiatives, we regularly engage collectively with other investors through both formal and informal ad hoc collaborations. We typically do this as part of the process of escalation of a significant concern where we believe the collaborative approach will make success more likely, this is also a way of managing the workload involved in our engagements with companies where we are invested solely on a passive or quantitative basis and raising their efficiency.

Exercise of Voting and Other Rights

As with other stewardship activities, in exercising voting and other rights attached to companies we hold investments, (where we have been given authorisation to exercise such rights as proxy on behalf of a client) our primary concern is to act in the best interest of clients/beneficiaries and the value of the investment. To that end Northern Trust Asset Management has adopted global Proxy Voting Policies, Procedures and Guidelines (the Proxy Guidelines),2 setting out how we engage in such activity

Conflicts of Interest

Northern Trust Asset Management has established, implemented and maintains effective arrangements for identifying and managing potential and actual conflicts of interest and inducements, in accordance with internal policies and applicable regulatory requirements. Such management includes in relation to potential conflicts around engagement activity.

The specific elements of the conflicts of interest management for Northern Trust’s proxy voting activities are incorporated within the Proxy Guidelines.²

Communication with Clients

We acknowledge that our stewardship activities are carried out on behalf of our clients and that we have a clear obligation to be as transparent as possible about them. We produce an annual public report on our stewardship activities,³ including company-specific case studies. We are transparent to our clients on our voting decisions, and disclose publicly all voting activity of our pooled funds on our website.⁴ Where a client delegates responsibility for proxy voting to Northern Trust, we provide reports on all voting activity taken on their behalf on a quarter, semi-annual or annual basis as directed by the client. 

Communication with Investee Companies and Third Parties

Our Proxy and Engagement team respond to company requests for engagement on corporate governance and related issues. Companies seeking such a dialogue may send requests to: NT_CorporateEngagement@ntrs.com.