Germany’s Union Investment expands engagement and voting operations for institutional clients

Union voted on their behalf at 1046 AGMs last year, up 25% from 2012

Union Investment, the Frankfurt-based asset manager, has published its second engagement report, saying that on behalf of institutional clients it voted at 1046 annual general meetings (AGMs) in 2013, up 25% from the previous year. Union is unique among domestic German asset managers in that it is the only one publishing a comprehensive engagement report. It began offering proxy services for institutional investors in July 2011, after winning its first two clients, German church bank KD-Bank and KZVK Rheinland-Westfalen, a pension fund for church employees. Those clients now number 40. In its latest report, Union said that of the 1046 AGMs it voted at last year, the most (293) were in the US. This was followed by Japan (197), Germany (99), the UK (86), Australia (69) and France (59). As in 2012, Union voted most often on appointees to the management board (44.9% of total). Executive compensation was the second most important issue (9.6% of total votes) for Union during AGMs. The remainder included capital hikes (7.7%), the hiring of the accountant (6.1%), supervisory board appointments (3.6%) and board discharge (1.5%). The share of “other issues,” including environmental ones, made up 16% of the Union votes cast at AGMs. The report also provided details on how Union engages with investees and whether the engagement has had any impact. At Daimler, for example, Union said a critical speech it gave in 2012 about the health hazards of a cooling agent prompted the German auto giant to ban the substance from its vehicles.Union also said that following meetings it held with Swiss chocolatiers Barry Callebaut and Lindt regarding child labour in the cocoa industry, both firms began investing in measures to prevent it. At technology firm Siemens, on the other hand, supervisory board appointees Nicola Leibinger-Kammüller (CEO of medical technology firm TRUMPF), Michael Diekmann (CEO of insurer Allianz) and Gérard Mestrallet (CEO of French energy firm GDF Suez) were elected despite ‘no’ votes from Union. Union opposed them on the grounds that they already have huge executive responsibilities as CEOs. At their respective AGMs, Union also criticised the €9.9bn worth of unfunded pension liabilities at Deutsche Telekom and German energy giant RWE, but so far, it said, the companies have done little to resolve the issue.
In related news, Union said that as of June 30, its sustainably managed funds held €7.2bn in assets, up from €6.5bn a year earlier. Investor inflows accounted for half of the €700m gain and market appreciation the other half. The €7.2bn figure puts Union as Germany’s biggest provider of sustainable funds. Union, which is owned by German cooperative banks, has €219bn in total assets under management.