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2020 – 2021 Annual Stewardship Report: Taking action, delivering outcomes
Purpose in action
Today, our focus is firmly on the future, and our teams integrate environmental, social and governance (ESG) factors into our investment processes across public and private asset classes to ensure that we are managing our clients’ assets with their futures at the front of our minds.
A key aspect of this is not just in how we make our investment decisions, but how we actively manage our investment holdings. We have strong conviction that better management of financially material ESG issues can reduce investment risk and enhance performance. As such, these issues are central to our conversations with portfolio companies around the world, and our investors expect more than simplistic approaches. How a company conducts its business, manages its day-to-day operations, pursues growth and contends with risk intersects with a wide range of complex ESG realities that have implications for companies themselves, but also the broader global system. This report describes the many steps that Nuveen has taken over the last year to push companies further in their “ESG journeys” with the objective of achieving the best financial results for our clients.
Responsible stewardship of client assets translates our purpose into action and results. It involves promoting government and industry awareness and action regarding transparency and best practices; engaging in direct dialogue with company boards and leadership on shareholder and stakeholder concerns; pushing for change related to current and emerging issues, and voting in accordance with client best interests on proposals advanced by both shareholders and company management.
The last year continued to be one of great social and economic disruption and transformation. In the face of challenge and change, engagement with companies on ESG issues expanded, relevant shareholder activism grew and, perhaps most importantly, companies continued to take substantive steps toward greater accountability and progress in such critical areas as climate change; diversity, equity and inclusion, and employee and customer well-being.
As the asset manager for our parent company, TIAA, we have recognized our own accountability toward an ESG journey as well, with our commitment to achieving net zero carbon in the TIAA’s insurance investment General Account by 2050, a goal that requires strategic engagement with companies on climate risk. Diversity, equity & inclusion is also an area where TIAA and Nuveen are prioritizing our own leadership and innovation. Our Inclusion, Diversity & Equity Council is a forum for our most senior executives and associates to collaborate toward supporting even more diversity in the industry and pay and performance equity solutions, while our Be the Change program, launched in 2020, furthers a culture of anti-racism and inclusion. The lessons we are learning on our own journey can help inform our views on best practices and recommendations to companies around these two vital themes.
This report explores our activities, detailing:
- The extent and nature of our interactions with companies regarding relevant ESG issues
- Our record on proxy voting and its connection to our engagement objectives
- The nuances of our stewardship across asset classes, including fixed income, private markets & real assets, and real estate
- Our perspective on critical issues including climate risk; diversity, equity & inclusion (DE&I); management of frontline workers, and racial equity
- Results generated by our stewardship, both company-specific and market-wide.
Raising the bar on stewardship
Client demand for sophisticated ESG reporting has driven our enhanced approach to pursuing and reporting proxy voting and engagement outcomes. In fact, our annual Responsible Investing (RI) survey of 1,000 respondents found that nearly 70% indicated that seeing the specific societal or environmental benefits of their investments is a critical motivator to participating in RI.* In service of this demand, we are striving to continuously raise the bar on what we report and how we report it ─ adding greater clarity and specificity to what we seek from companies, when we expect results, whether success was achieved and why we voted the way that we did.
In this context, standardized, comparable reporting is an essential starting point for any company on the ESG journey, while accountability measures such as policies, oversight structures or commitments demonstrate the real intention behind companies’ ESG claims. Ultimately, we want to help companies move increasingly toward a point where there is measurable, positive change on metrics such as carbon emissions or percentage of women or minorities on boards or in executive leadership. In our view, such changes are characteristic of companies that are achieving genuine "impact" from their ESG management.
Embracing a changing ESG landscape
Whether due to a global pandemic, supply chain disruptions and shortages or the extreme weather impacts of climate change, as crisis has continued to challenge all companies and their stakeholders, we have witnessed a greater awareness and appreciation for long-term thinking and sustainability. Within this ever-changing landscape, Nuveen has worked hard to engage on matters of importance to investors and society at large, such as climate risk, DE&I on corporate boards and among workforces, the interests and welfare of frontline workers, and racial equity issues related to customers and communities. We have tried to capture the full spectrum of our views and breadth of our activities in these pages.
We hope you take this year’s report as a testament to our RI conviction. In the year ahead, Nuveen will continue to deepen the impact of our stewardship activities in service of our clients. In the meantime, we look forward to your consideration and input as you explore the details of our actions and outcomes.