2021 – 2022 Annual Stewardship Report: Driving toward new frontiers

• Welcome to the Nuveen 2021-22 Stewardship Report. For more than 120 years, along with our parent company TIAA, we have helped millions of investors achieve long-term financial health.

Purpose in action

A letter from Jose Minaya, Chief Executive Officer, Nuveen and Amy O'Brien, Global Head of Responsible Investing, Nuveen.

We are pleased to introduce Nuveen’s 2021 – 2022 Stewardship Report, outlining our efforts to engage investment issuers and vote in companies’ annual meetings on behalf of our clients. In it, you will see our commitment to promoting value- and/or risk-focused management of critical environmental, social and governance (ESG) factors with portfolio companies, while advocating for consistent, clear and market-wide ESG reporting and standards. Developing a greater understanding of these factors is an important part of our investment process, and raising issues with portfolio companies about their implications is crucial to fulfilling our fiduciary responsibility to both safeguard and improve investment outcomes for our clients.

To be sure, the past year was marked by sweeping change and heightened global challenges, but it also offered fresh evidence of the depth of human adaptability.

As the world emerged from pandemic lockdowns, we’ve had to contend with supply chain disruptions, a “great resignation,” record inflation, geopolitical turmoil and intensifying climate risks. The fact that we’ve seen growing regulation and political discord on ESG is, to us, a sign of progress. Markets grow when a necessity for greater consistency and clarity becomes evident, and in 2022 we saw new technology and innovative business approaches surface to address emerging realities, as well as systemic social and environmental issues such as financial inclusion and climate change.

Staying the course amid turbulence

Landmark policies and regulations were introduced to accelerate the transition to a low carbon world and add clarity to ESG investing and sustainable finance. At the same time, shareholders became more engaged than ever before on ESG issues: related shareholder proposals that we voted on increased by more than 25%, reflecting changes to SEC guidance and proponents dedicated to holding companies accountable for ESG issues.

Headlines about “ESG” abounded, some raising — others distorting — vital issues. The market grappled with the growing pains of evolving reporting expectations, conflicting regulation, new types of data and analysis, and emerging investment frontiers.

Yet, in the face of this shifting environment, we have remained true to our strongly held convictions:

• ESG data can be an important, financially material component of the investment process
• Monitoring our portfolios for ESG issues, actively engaging companies and setting expectations for best practice are all in the best interests of our clients
• Strong management of ESG issues can mitigate risks and create long-term, sustainable value

Our stewardship efforts demonstrate both these convictions and our long-standing commitment to helping participants and clients achieve lifelong financial well-being.

Driving toward new frontiers

With a maturing landscape has come a need for us to not only adapt to new market and regulatory realities, but to evolve and innovate to stay at the forefront of investment stewardship. Throughout the last year we have continued to enhance our engagement and proxy voting activities and sought to drive additional clarity and granularity in our reporting.

While last year we created a companion website to our stewardship report that discloses our proxy vote rationales for each shareholder proposal received by S&P 500 companies, this year we have expanded on that level of transparency, including rationales for votes against directors at those companies.
Explore more: Our key proxy vote rationales

In order to create more structure and connectivity between our engagement and proxy voting we developed a three-year escalation strategy in 2020 that would give us a roadmap for pushing companies when they are not responsive to our engagement and significantly lag our ESG expectations. This has allowed us to more directly connect unaddressed environmental and social issues, not just governance concerns, to shareholder proposal and director voting. This year’s report includes situations where escalation was deployed.

Beyond this, we developed a unique framework to organize the ESG information that our stewardship team is absorbing from companies and clearly communicate positive outcomes without overstating what they achieve. Our framework buckets key performance indicators (KPIs) based on the objectives they service: transparency, accountability or impact. For example, we recognize that a company newly publishing its climate risk and carbon footprint (transparency) or setting a net zero commitment (accountability) are important outcomes. However, those outcomes don’t yet rise to the level of a company decarbonizing its business (impact). We have found that distinguishing metrics and results based on where they fall in this framework adds value to our conversations with investee companies, gives us a strong foundation for regular evaluation of progress, and resonates with clients who want to understand the value of stewardship and seek credibility from asset managers.

Stewardship is a powerful component of responsible investing and we appreciate the trust that investors and participants have placed in our efforts.