Proxy Voting Policy

Philosophy

Investing in equities provides investors with ownership and in most cases, voting rights. GESB considers it best practice for the right to vote on securities to be exercised.

Proxy voting forms part of GESB’s approach to stewardship and therefore should be considered together with any engagement activities carried out with investee companies. Collectively, stewardship is carried out with the aim of maximising the overall long-term value of an investment by encouraging improvements in Environmental, Social and Governance (ESG) practices, including company governance and disclosure.

GESB believes its appointed investment managers are generally best placed to exercise proxy voting for the securities they manage on GESB’s behalf and in accordance with GESB’s obligations, policies, objectives, and status as a Western Australian State Government statutory authority.

Voting guidelines

When voting on our behalf, GESB expects its appointed investment managers to:

• Act in the best financial interest of members. This means formulating voting decisions with the aim of protecting and promoting long term shareholder value
• Promote good corporate governance practices. A well governed company is better placed over the long term to manage material risks, such as ESG risks that affect the business
• Encourage transparency. Disclosure and corporate reporting allows investors to better understand, evaluate and assess risk and the potential impact they may have on a company’s long term performance
• Have a robust and long term rationale for climate related resolutions. While it is important to understand the unique circumstances of each company, consideration should be given to the company’s commitment to taking action to reduce their carbon emissions, the adoption of emission reduction targets and ongoing improvements in climate related reporting

The above principles aim to encourage consistent voting behaviours by appointed investment managers and support the ongoing improvements in ESG practices of the companies which GESB invests in.

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2. Roles and responsibilities

The Board

The Board is responsible for maintaining a proxy voting policy, as per the Treasurer’s Prudential Guidelines for Investments. This extends to approving a course of action where a conflict of interest arises.

Investment Committee

The Investment Committee is responsible for reviewing and providing input into the policy prior to submission to the Board.

Chief Investment Officer

The Chief Investment Officer is responsible for overseeing the implementation and monitoring of the policy.

Head of Responsible Investing

The Head of Responsible Investing is responsible for implementation of this policy and to report on proxy voting issues that may impact the Fund. The Head of Responsible Investing is supported by the broader Investments Division.

Appointed investment managers

Investment managers are responsible for determining what course of action to take regarding proxy voting and corporate actions, in accordance with GESB policies, legislative requirements and the investment manager’s documented internal policies.

Custodian

GESB’s custodian is responsible for processing votes cast by the appointed investment managers via its proxy voting platform ProxyEdge, which also provides recordkeeping and reporting of proxy voting actions.

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3. Implementation

Investment managers

GESB’s appointed investment managers, contracted through an Investment Management Agreement, are required to comply with any policy of GESB concerning the exercise of voting rights, or any other corporate actions arising out of the portfolio that the manager is mandated to manage.

In carrying out the above, GESB requires its appointed investment managers to:

• Maintain its own internal voting guidelines or proxy voting policy. This may include guiding principles, the use of third party proxy adviser(s), escalation strategies, consideration of shareholder proposals on ESG matters, conflicts of interest and details on reporting
• Exercise its voting responsibilities in line with its own proxy voting guidelines and with consideration of GESB’s voting guidance detailed above
• Engage collaboratively or individually with the companies they invest in by meeting with company management and boards to raise issues and concerns prior to exercising voting rights. At a minimum, this should include companies that make a significant holding within the portfolio and/or companies with heightened ESG risk as identified by the investment manager, GESB, or an external data source
• Report on voting activities if a vote is inconsistent with internal voting guidelines and/or GESB’s voting guidance
• Provide supporting rationale for a decision, where a proposal is deemed to be contentious either by the manager or by GESB

To ensure that voting rights are exercised in line with expectations, GESB may engage with the appointed investment managers to review their voting behaviours and understand the rationale.

Any shares lent as part of a Securities Lending program will be automatically recalled prior to all votes occurring. This will allow appointed investment managers to execute the voting rights for any upcoming meeting(s).

Where an investment is made via a pooled vehicle, GESB aims to review the investment manager’s policies and practices as part of manager selection, monitoring and appointment process.

External proxy adviser(s) and research

In addition to our investment managers utilising external proxy advisers, GESB may subscribe to research and advice on proxy voting matters. This information may be used to provide guidance relating to voting practices and contentious votes.

GESB’s voting rights and conflict resolution

GESB reserves the right to determine the course of action taken with respect to proxy voting decisions.

This could arise for a range of reasons. For example, where a particular issue is considered by the Board, the Investments Division or the appointed investment manager to create a perceived conflict of interest or heightened reputational risks for GESB or the Government of Western Australia.

In this circumstance, the Chief Investment Officer will make a recommendation to the Board, supported by internal analysis and external advice, on how to vote on a particular resolution and the Board will make its decision. The financial interest of members will take priority when determining GESB’s decision. If required, exercising of shareholder votes will be implemented via voting platforms in conjunction with GESB's custodian.

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4. Reporting and disclosure

GESB requires its appointed investment managers to report:

• At a minimum, all proxy voting activities and corporate actions that it undertakes on GESB's behalf on a biannual basis
• Where an appointed investment manager relies on a proxy adviser to inform its voting, notification is required when the vote cast differs from that of its adviser
• Any votes an appointment investment manager considers to be contentious (which may include shareholder proposals), together with supporting rationale for voting decisions and details of engagement activities undertaken in lead up to the vote

Voting records will be maintained by GESB’s custodian via its preferred platform ProxyEdge and made available at the request of the Board.

Reports summarising GESB’s proxy voting activities will be provided to the Investment Committee on a quarterly basis. Subject to the Committee’s consideration, similar reports may be provided to the Board.

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5. Review

This policy will be reviewed annually or as required.

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This policy has been altered from its internally published version in order to maintain the privacy of its policy managers and owners. The material contained in this version is not otherwise materially different from its internal publication.