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We believe in being an ‘active owner’ to ensure your investment is contributing to sustainable, long-term wealth generation.

What is an ‘active owner’?

We have a responsibility to allocate your capital to productive purposes in the pursuit of sustainable, long-term investment. As a result, we believe it is part of our stewardship role to make sure our investment managers exercise their rights as shareholders. These include engagement with, and voting on, how a company operates its business. Occasionally, these active owner processes will be inadequate to achieve satisfactory outcomes and, in some instances, we may decide the best option is to divest from the investment altogether.


Why engage with a company?

We believe that the purpose of engagement is to provide feedback and signal concerns to companies about issues that will affect long term company performance. We view company engagement as the first step to affecting positive change. Engagement discussions may cover ‘how’ the company is operating, ‘why’ it chooses to operate in that way and ‘what’, if anything it will change to satisfy the concerns of investors.

Which managers engage with companies?

The degree to which our investment managers may engage with companies will depend on the strategy and nature of their investment process.

How do you engage with a company?

As a result of our monitoring or widespread public concern, we may encourage our investment managers to engage with the company management or collaborate with other investors in an engagement. These issues may relate to climate change, human rights, environmental and resource management amongst others.

As a PRI signatory, we also use the PRI’s collaboration platform, a global online tool for collaborative initiatives. For more information see our investment impact.

Proxy voting

Exercising your right to vote as a shareholder goes hand-in-hand with engagement as a method to influence how a company operates its business.

What is proxy voting and why is it important?

An important shareholder activity, proxy voting is undertaken by investment managers on our behalf to ensure the companies you’re invested in are governed appropriately. At company Annual General Meetings, companies seek shareholder approval for a variety of issues (see examples below).


Investment managers will each have their own approach to deciding on whether to cast a ‘For’, ‘Against’ or ‘Abstain’ vote for each resolution. Some may use specialist service providers for voting and this may involve engagement on issues with the company as part of the process.


Where appropriate to the style of investment strategy, we expect our managers to take an active ownership approach to the companies they’ve invested in on your behalf.

What kind of issues are voted on?

Voting enables investors to have a say in the key strategic decisions of a company.


Where engagement with the company has not had the desired effect, investors can raise or support shareholder resolutions (for example on climate risk disclosure or human rights issues in a company’s supply chain).


Voting on these issues ensures a company is being governed in shareholders' interests, that company management is behaving appropriately and that company risks are being managed effectively – all key to sustainable, long-term investment.

Do we know how our managers vote?

Although we don’t direct our investment managers to vote a certain way, we do want to know how they’re voting on our (and your) behalf. Every year we review detailed reports from our custodians on how our managers have voted on a range of matters.


Some of our managers give insight into their voting for the financial year July 2017 to June 2018 below.



    Generation Investment Management LLP (Generation) is a global equities manager that integrates long-term sustainability trends into traditional investment processes. Generation believes that sustainability factors (including environmental, social and governance criteria) will drive a company’s returns over the long term, so the team combines sustainability research and fundamental equity analysis to build portfolios comprised of high-quality companies that will be able to maintain their profitability and deliver returns throughout prolonged periods of global change.




    resolutions voted on


    voted ‘For


    voted ‘Against’ or ‘Abstain


    votes against management, mostly related to director election and shareholder proposals


    of the 27 votes were governance-related shareholder proposals


    out of these 7 voted ‘against’ as Generation felt the companies involved were sufficiently addressing the risks.

    "We are glad to see the number of shareholder proposals on environmental, social and governance topics continue to increase, and since 2017, the average shareholder support for these has risen from 21% to 24%. However, in our view, this is still a very poor outcome. We will continue to play our part in trying to improve it." — Generation: Global Proxy Voting Summary 2018


    Acadian Asset Management (Acadian) aims to find attractive and unique investment opportunities within global equity markets. Acadian is driven by the discipline and conviction of thirty years of investment experience, with investment decisions based on empirical evidence and processes that are repeatable and transparent.


    company Annual General Meetings participated in


    resolutions voted on

    Some examples of ‘against’ votes

    Company name: Livechat Software SA

    Proposal text: Elect Supervisory Board Member

    Voting policy rationale: Votes against these items are warranted because the company has not disclosed the names of the nominees.

    Company Name: Ainavo Holdings Co., Ltd.

    Proposal Text: Appoint Statutory Auditor Nishio, Tetsuo

    Voting Policy Rationale: A vote against this nominee is warranted because the outside statutory auditor nominee’s affiliation with the company could compromise independence.

    Company Name: Strauss Group Ltd.

    Proposal Text: Reappoint Somekh Chaikin as Auditors and Authorise Board to Fix Their Remuneration

    Voting Policy Rationale: A vote against this proposal is warranted given that the audit fees are not itemized. As such, it cannot be determined if the non-audit fees are excessive.


    Baillie Gifford is an investment manager that is expressly focused on the long-term, with an investment philosophy in equites that is motivated to seek growth opportunities within a global universe. Baillie Gifford’s belief is that sustained growth in company profits leads to higher share prices over time.


    The investment manager explains its voting record:

    “This highlights the fact that we tend to support the vast majority of management resolutions at our holdings throughout the year. Rather than this being seen as somewhat passive, it is exactly what you would expect for Global Stewardship: we set out to invest in the best and most sustainable companies in the world, backing management teams that we favour.”

    Baillie Gifford also engages with company management in order to pass on its views surrounding a range of issues.

    “It would therefore be somewhat unusual if we were voting down large numbers of resolutions. In the limited number of cases where we vote against management, either by opposing a management resolution or supporting a shareholder proposal against management’s recommendation, this will typically follow engagement with management.”




    voted ‘For


    voted ‘Against


    voted ‘Abstain


Our exclusions

We recognise that within a diverse group of individuals there will be various ethical beliefs and values that will shape the approach to investing.

In general, we will not take a position on, or make judgement of, an ethical or socially responsible issue unless it is specific to our investment strategy. However, there may be some ESG risks, ethical issues and circumstances in which we believe it is appropriate to take action, whether that’s through the use of negative screens, exclusions or active engagement with our investment managers. These decisions are not made lightly, and before doing so, we aim to first influence company behaviour through other means. See our engagement and proxy voting approaches for further information.

How do we decide if an exclusion is required?

During the regular monitoring of your investments, there are many questions that concern us. The following need to be asked if we are considering an exclusion:

  • Have you, our customer, provided feedback on this issue?
  • Does the investment contravene global norms, international treaties or conventions?
  • How severe and/or material is the ESG risk?
  • Can the company or its activities be influenced through engagement and/or proxy voting?
  • Will this investment achieve sustainable, long-term wealth protection?


If we decide that the risk is great enough to warrant exclusion, we must be satisfied that your investment is not unduly affected. The following need to be answered satisfactorily:

  • Will your investment still be adequately diversified?
  • Will the investment objectives still be met?

What are our current exclusions?

In addition to those outlined in our Sanctions Policy we have two investment exclusions in place. These are exclusions against controversial weapons producers and tobacco manufacturers. 

What are controversial weapons?

Controversial weapons are those that indiscriminately kill or disproportionately harm people relative to military necessity (as defined by international humanitarian law). Through normal use, these weapons may kill civilians as well as military targets (including after conflict has ended) – thus their use is prohibited and breaches all global conventions on human rights.


Examples of these weapons include chemical and biological weapons, cluster munitions, antipersonnel landmines, depleted uranium ammunition, non-detectable fragments, incendiary weapons and blinding lasers.1


Such weapons are also subject to international laws and conventions that prohibit their manufacture, use, and which control their financing. These conventions include the Inhuman Weapons Convention, the Convention on Certain Conventional Weapons (2001), the Oslo Convention on Cluster Munitions (2008), the Ottawa Convention on Anti-personnel mines (1999), the Chemical Weapons Convention (1993) and the Biological Weapons Convention (1972).


From December 2019, Colonial First State will not invest in securities issued by companies that produce controversial weapons. The list of companies is reviewed and updated in December each year. Our current exclusion list can be viewed here.

Why tobacco producers?

Tobacco production causes many environmental, social and economic risks. The tobacco industry is a large employer of child labour and contributor to modern slavery through bonded labour.2 It is estimated by the International Labour Organisation (ILO) that 1.3 million children are employed worldwide in the sector.3


Environmental damages caused by the tobacco industry include deforestation, soil degradation by land clearing, and land and water pollution due to the extensive use of pesticides and chemicals in the agricultural and manufacturing process. From a social perspective, the product is a highly addictive drug and causes death. There is no safe level of use or exposure as death, disease and health issues arise from primary and secondary consumption.4


Investment in tobacco contravenes three major international treaties, conventions and sets of global norms principles. These include the UN Global Compact (UNGC), the UN Guiding Principles on Business and Human Rights, and the World Health Organisation Framework Convention on Tobacco Control (FCTC).


From December 2019, Colonial First State will not invest in securities issued by companies that produce tobacco. The list of companies is reviewed and updated in January each year. Our current exclusion list can be viewed here.


For further information on our exclusions commitments, please see our investment impact page.


Colonial First State Investments Limited ABN 98 002 348 352, AFSL 232468 (Colonial First State) is the issuer of the FirstChoice range of super and pension products from the Colonial First State FirstChoice Superannuation Trust ABN 26 458 298 557. Colonial First State also issues interests in products made available under FirstChoice Investments and FirstChoice Wholesale Investments. This document may include general advice but does not take into account your individual objectives, financial situation or needs. You should read the relevant Product Disclosure Statement (PDS) and Financial Services Guide (FSG) carefully, assess whether the information is appropriate for you, and consider talking to a financial adviser before making an investment decision. The PDS and FSG can be obtained from or by calling us on 13 13 36.