We are a fiduciary with respect to our clients.
We are committed to transparency and honesty in our positioning. We invest within client-led guidelines and each Investment Franchise is afforded the flexibility to meet its unique clients’ needs.
We do not impose our views of the world on our clients, and, as such, you will not see Victory Capital committing to every ESG initiative.
However, we are cognizant that some clients may want to invest their money with specific views and values considered, whether it be by excluding certain industries, gaining exposure in companies that create impact or by targeting certain environmental goals within their portfolios. As such, we aim to offer a diverse range of solutions with the intention of satisfying an array of investor objectives.
Some clients desire separately managed portfolios that seek to deliver both strong risk-adjusted returns and meet sustainability objectives. Victory Capital manages separate accounts with client-driven restrictions on investments in certain securities or types of securities, such as companies operating in particular countries or industries. Our shared service model and centralized operations allow for us to easily integrate and accommodate client-driven ESG preferences.
Victory Capital labels Responsible Investing intentions into three distinct classifications:
- ESG Integration: The systematic and explicit inclusion of ESG factors as a supplement to the financial analysis traditionally performed by investment managers with the goal(s) of risk mitigation or alpha generation.
- Exclusions: Avoiding companies, sectors, or countries in an exclusionary manner based on ESG controversies or certain standards, values, or norms (e.g., Norms-Based Screening, Faith-Based Investing, etc.).
- Sustainable & Impact: Examples include positive screening (i.e., selecting companies in an inclusionary manner based upon certain ESG criteria); thematic (i.e., investing in companies whose activity is focused on some form of sustainable development, such as diversity and inclusion), and impact investing (i.e., investing with the disclosed intention to generate and measure social and/or environmental benefits, alongside a financial return).
ESG Integration
Each Investment Franchise owns its unique investment process, which involves extensive proprietary research. Through this research each team looks at a wide range of factors, which may include ESG factors if they determine them to be material to the investment risks and opportunities.
Integrating ESG factors does not mean that ESG information is the sole or primary consideration for an investment decision. The relevance of ESG considerations to investment decisions varies across asset classes, strategies, stated client objectives and our Investment Franchises.
For us, the consideration of material ESG factors is not political. Where applicable, the incorporation of these issues into decision-making process represents good corporate governance, potential alpha generation, and prudent risk management consistent with our fiduciary duty.
Victory Capital provides all Investment Franchises with access to ESG data, tools, and training, which they can utilize at their own discretion. Analysts often use this external data to complement internal research when developing an overall assessment of a company.
Exclusions
Victory Capital does not have any firm-wide exclusions in place concerning ESG criteria. Some of our strategies have specific ESG exclusions, and we have technology infrastructure to seamlessly implement client-led mandates, upon request.
Sustainable & Impact
The majority of strategies that qualify as Sustainable and/or Impact are typically driven by client specific guidelines or restrictions.
Our Investment Franchise New Energy Capital is an alternative asset manager investing across the capital structures of clean energy infrastructure projects and companies.
Engagement
As active investors, direct engagement with company management forms an important part of many of our Investment Franchises’ analysis. Collectively, our Investment Franchises have thousands of meetings with company management every year.
Discussions with company management allow each team to learn about a company's perspectives and approaches, provide feedback, and raise any concerns that have been identified during the team’s investment research process.
Proxy voting
Victory Capital seeks to actively exercise its proxy voting rights and responsibilities on behalf of clients and believes it is an essential part of maximizing shareholder value, ensuring good governance, and delivering investment performance aligned with our clients’ long-term economic interests.
Victory Capital has a Proxy Voting Committee "PVC", which is responsible for creating guidelines that oversee the voting process. The PVC is comprised of Victory Capital employees who represent vital areas within the company and provide a range of diverse knowledge that enhances the PVC’s decision-making capabilities.
To assist the PVC with implementing its proxy voting strategy, Victory Capital retains the services of an independent Proxy Voting Advisor, ISS. ISS’s responsibilities include monitoring company meeting agendas and items to be voted on, evaluating each vote in-line with Victory Capital’s Proxy Voting Policy, the "policy", and providing research and voting recommendations based on the "Policy". It also identifies resolutions that require specific shareholder judgement, which enables Victory Capital to review situations where additional consideration may be needed to determine the proxy vote decision.
Our Proxy Voting dashboard, which is available here, includes additional information, including our Proxy Voting Approach.
UN Principles for Responsible Investment
The United Nations-supported Principles for Responsible Investment "UNPRI" is the world’s leading proponent of responsible investment. It works to understand the investment implications of ESG factors and to support its international network of investor signatories in incorporating these factors into their investment and ownership decisions.
While we can trace Investment Franchise membership back to 2016, Victory Capital became an enterprise-wide signatory to the UNPRI in 2020. As a signatory, we commit to the following six principles:
- We will incorporate ESG issues into investment analysis and decision-making processes.
- We will be active owners and incorporate ESG issues into our ownership policies and practices.
- We will seek appropriate disclosure on ESG issues by the entities in which we invest.
- We will promote acceptance and implementation of the Principles within the investment industry.
- We will work together to enhance our effectiveness in implementing the Principles.
- We will each report on our activities and progress towards implementing the Principles.
Victory Capital reported to the UNPRI for the first time in 2023. Victory Capital’s public Transparency report is available on the UNPRI data portal.