ESG for Shareholders
City of London Investment Group plc (CLIG) recognises that, within its prime function of managing investment assets on behalf of its clients, the Group has an overriding obligation to meet the highest standards of corporate responsibility to all stakeholders, including clients, shareholders, employees and the communities in which the Company operates. CLIG maintains detailed policies to achieve this objective, which are overseen by the Group Board.
City of London Investment Group believes that it has a responsibility to care for and protect the environment in which we operate. While CLIG’s activities as an investment manager have a relatively modest direct environmental impact, we recognise that society’s collective challenge to minimise environmental risks necessitates a proactive stance to measure and, wherever commercially possible, improve the overall environmental performance. Of course, an additional benefit to these solutions is a reduction in costs due to decreased usage of energy and materials, which we are happy to pass on to shareholders.
- We maximise the use of video-conferencing facilities, which exist in all office locations and which serve to limit inter-office air travel by employees.
- We utilise the UK Government’s Environmental Reporting Guidance and the Department for Environment, Food and Rural Affairs (DEFRA) conversion factors to calculate carbon dioxide emissions for all office locations.
- We utilise electronic media across the Group in place of paper reports.
- Our ‘everyday paper’ across the Group is exclusively paper certified by the Forest Stewardship Council.
- Where possible, we have reduced the volume of hard copy material that is required to be retained and stored for record-keeping purposes.
- We shred and recycle all confidential waste.
- We recycle paper, plastic, cardboard, glass and printer toner cartridges.
- In 2015, all existing light bulbs in our US East Coast office were replaced with LED bulbs.
City of London Investment Group recognises that it has responsibilities with respect to both the welfare and development of its employees as well as the improvement of the communities in which its offices are located.
CLIG meets all statutory obligations which apply to the Group’s activities in each of its locations and is additionally committed to maintaining transparent policies in respect of the following:
- Recognition of diversity through recruitment and promotion based on merit without regard to ethnicity, gender, religion, sexual orientation, physical ability or age.
- Strict adherence to and compliance with the regulatory requirements in force in each of our operating locations by all employees supported by clear guidelines that enable whistleblowing.
- Participation by employees in the Group’s activities through share ownership arrangements that encourage employee retention and minimise turnover.
- Ensuring good practices and creating a workplace free of harassment and bullying and where everyone is treated with dignity and respect.
As at 30th June 2016 the gender ratio on the Board of Directors is 13% female to 87% male (2015: 100% male), of 71 Group employees, 38% are female (2015: 34%), including 20% of senior management (2015: 25%), and 47% of middle management (2015: 40%).
City of London Investment Group is committed to respect all human rights. Our operations and practices relevant to the workplace and community are aligned with the United Nations Universal Declaration of Human Rights.
Training and Development
Our employees are an asset to us. We recognise and support the importance of encouraging all staff to complete professional qualifications relevant to their role, in order to progress and realise their full potential. We partner with our employees and contribute towards their development by sponsoring their studies and providing study leave. This year we have sponsored employees for their IAQ, IOC, CFA & IMC studies, as well as contributing towards an employee’s Master’s Degree. This is in addition to the usual seminars and conferences our employees attend. Anti-money laundering and Code of Ethics training is provided annually to all staff. Employees also take responsibility for their development via our annual appraisal process, where they are able to discuss further training where they feel it is necessary.
We recognise the value of cross-training across our offices and regularly transfer employees amongst offices to obtain experience.
Internal training is available to all employees on the products we offer. Our induction programme for new employees takes place over a period of weeks and is an ongoing process to ensure new employees settle well into the organisation and are confident carrying out the full scope of their duties.
City of London Investment Group seeks to encourage employees to regularly participate in community support activities across a wide spectrum of causes that encompass both monetary and non-monetary efforts to help raise awareness. In turn, this fosters a culture of leadership, teamwork and appreciation within our firm and community. Our long-term goals include:
- Encouraging employee volunteer work in community activities.
- Engaging in programmes that make communities better places to live and work.
- Using local suppliers to help support businesses within the community.
- COLeague News, an internal CLIG document which helps raise awareness, share efforts and spread participation across all our offices.
2015/2016 Highlights include:
- Food Bank volunteer activities to support underprivileged students in surrounding schools as well as adults (US & UK)
- Singapore Community Chest to contribute to various charities (Singapore)
- Blood Drive through American Red Cross (US)
- Habitat for Humanity home building event (US)
- Various runs and walks to support causes such as Juvenile Diabetes Research Foundation, Hearing Loss Association of America (US) and British Heart Foundation (UK)
- Salvation Army gift giving and donations (US)
- Ramadan Community Campaigns to support refugees (Dubai)
- Collaborating with the Coatesville Police Department to provide goods to local organisations that support homeless and under-served within the surrounding community (US)
As a matter of policy, CLIG does not make donations to any client related charity, event or activity, or to any political party or candidate.
City of London Investment Group endeavours to conduct its business according to the highest governance standards, providing shareholders with as much transparency and accountability as possible. To achieve this, we maintain an extensive set of internal policies with which employees are required to familiarise themselves.
City of London of London Investment Group’s (CLIG) policy to combat bribery and corruption is available to relevant third parties by request. It has been written in accordance with the following applicable laws and guidance: UK Bribery Act and Explanatory Notes;
- US Foreign Corrupt Practices Act (FCPA);
- Singapore Prevention of Corruption Act (the PCA) (Cap 241, 1993 Rev Ed)
- Singapore Penal Code (Cap 224, 2008 Rev Ed).
- U.A.E. Federal Penal Code
- Financial Conduct Authority’s (FCA) Financial Crime Guidance;
- The Resource Guide to FCPA issued by Criminal Division of the U.S. Department of Justice and the Enforcement Division of the U.S. Securities and Exchange (SEC); and
- UK Ministry of Justice Final Guidance on ‘adequate procedures’.
CLIG is committed to conducting business honestly and without corruption or acts of bribery to obtain an unfair advantage. CLIG applies a “zero tolerance” approach to acts of bribery by any employee or third party representative. Any breach of this Policy is likely to result in disciplinary action up to and including summary dismissal. No employee will suffer any adverse consequences for refusing to pay bribes even if such refusal may result in the loss of business for CLIG.
CLIG encourages employees to report suspected violations or concerns as to compliance with laws, regulations or other suspected wrongdoings affecting the Firm or client assets. Employees who raise issues of concern will be protected from any subsequent reprisals for making such a disclosure. The Firm has nominated two non-executive directors as ‘whistleblowing champions’, that is, senior members of the Group who have been tasked with receiving reports of concern and who will lead any required investigation. Concerns may also be reported to the Head of Compliance or the Group HR Manager. CLIG maintains a register of all such disclosures. CLIG’s policy expressly prohibits any employee, manager or director from attempting to restrict or dissuade an employee from seeking to blow the whistle.
CLIG maintains a detailed Policy in compliance with the EU Market Abuse Regulation (Regulation 596/2014) together with its implementing legislation and EU guidelines (MAR), the Criminal Justice Act 1993 (CJA), the Financial Services Act 2012 (FS Act) and the related FCA guidance. This Policy sets the minimum standards for preventing market abuse such as the prohibitions of insider dealing, unlawful disclosure of inside information, and market manipulation and sets out the Firm’s systems and controls that have been established to ensure compliance with the market abuse requirements from both an individual, corporate and group level.
Bona fide hospitality or promotional or other legitimate business expenditure is recognised as an established and important part of doing business. CLIG’s Policy provides that gifts, entertainment and hospitality in connection with business related matters are acceptable provided they fall within reasonable bounds of value and occurrence. Transparency is key and full details of items that exceed a value of £10, or local currency equivalent, are entered into a Gifts and Hospitality Log, which is maintained by the Compliance department. Employees are expected to seek approval before accepting hospitality with an estimated value that exceeds £50, which will be denied if it is considered that acceptance could give rise to a perceived conflict of interest. Certain gifts are prohibited, including those with an estimated value that exceeds £100, any gift of cash or lodging and air travel in connection with any entertainment. An employee must pay for his/her own lodging and air travel expense in relation to any such event unless a director has otherwise agreed that CLIG will pay.
CLIG does not make financial contributions to political candidates or parties, nor does CLIG make financial contributions to charitable fund raising causes with any connection to our clients; we believe that by avoiding any potential perception of conflicts of interest from arising puts all parties in the best possible position when conducting investment business. Investment business is the prime focus of the Firm and our objective is to deliver the best possible investment performance for our clients and investors, without distraction, and to be accountable to our clients and investors on that basis.
CLIG stores electronically private information relating to clients and staff. The Firm acknowledges that it faces the risk of a cyber-attack and has developed and implemented an information security program. CLIG maintains an Information Security Policy to provide a comprehensive and consistent approach to protecting and controlling access to Private Information and the technology used to store, manage and communicate this information. The Policy is the responsibility of the Chief Operations Officer. It is regularly reviewed and updated as required to remain current with changes in technology, applications, procedures, legal and social imperatives, regulatory requirements, and emerging risks.
None of the Directors have been subject to any official public incrimination and/or sanctions by any statutory or regulatory authority (including designated professional bodies) or have ever been disqualified by a court from acting as a director of a company or from acting as a member of the administrative, management or supervisory bodies of a company or from acting in the management or conduct of the affairs of any company in the period since the Company was listed in 2006. No employee has been disciplined or dismissed due to non-compliance with anti-corruption policy/policies. CLIG has never received any fine from any of its regulator nor been subject to any fine or other penalty in relation to corruption.
All CLIG employees are required to act in accordance with the Group’s Code of Ethics (the “Code”) which is overseen by the Board of Directors and is based on CLIM’s fiduciary duty to its clients. The fundamental tenants of the Code include:
- place the interests of clients first at all times;
- conduct personal securities transactions in a manner so as to be consistent with the Code and avoid any actual or potential conflict of interest or any abuse of an employee’s position of trust and responsibility;
- refrain from taking inappropriate advantage of the relationship with the clients;
- maintain the confidentiality of security holdings and financial circumstances of clients; and
- maintain independence in the investment decision making process.
As a fiduciary, CLIM and its employees owe an affirmative duty of care, loyalty, honesty, and good faith to act in the best interests of its clients. Generally, the Code imposes the following five basic requirements on CLIM and its employees:
- they must comply with all applicable law;
- they must avoid all conflicts of interest and disclose all material facts concerning any conflict that may arise with respect to any client;
- their conduct must conform with the ethical standards set forth in the Code;
- their personal securities transactions must comply with the Code; and
- they must obtain prior approval for securities transactions as required under the Code.
In addition, at the commencement of employment and thereafter annually, all employees must sign an acknowledgment that they have received, read and understand all provisions of the Code and agree to be subject to the Code, and any amendments. Generally, the Code requires employees to obtain pre-clearance of all covered transactions in their own personal accounts as well as accounts held by relatives that are members of their household. In addition, employees must report all investment holdings in these accounts. The Code also requires that employees report all transactions in securities, with limited exceptions, to the Chief Compliance Officer no later than 30 days after the end of each calendar quarter. The Code exempts non-interested board members from pre-clearance requirements on personal securities transactions.
To avoid any potential conflict of interest, the Code prohibits employees from buying or selling any security for his or her account if he or she knows at the time of the transaction that the security is being purchased or sold, or is being considered for purchase or sale by a CLIM client.
Employees are prohibited from participating in an Initial Public Offering (“IPO”). Employees must obtain pre-clearance to participate in any private placement. In addition, no employee may engage in short-term trading, as defined in the Code, of any security. A copy of CLIM’s Code of Ethics is available upon request at email@example.com or firstname.lastname@example.org
As a fiduciary, CLIM has an affirmative duty of care, loyalty, honesty and good faith to act in the best interests of its clients. Compliance with this duty can be achieved by trying to avoid conflicts of interest and by fully disclosing all material facts concerning any conflict that does arise with respect to any client. In addition, the Firm imposes a higher standard by providing that employees must try to avoid situations that have even the appearance of conflict or impropriety.
a) Conflicts among Client Interests
Conflicts of interest may arise where CLIM or its employees have the potential to favour the interests of one client over another client (e.g., larger accounts over smaller accounts, accounts compensated by performance fees over accounts not so compensated). Employees are prohibited from engaging in inappropriate favouritism of one client over another client that would constitute a breach of fiduciary duty.
b) Competing with Client Trades
Employees are prohibited from trading on their personal account in closed-end funds that are within CLIM’s Investible Universe.
c) Disclosure of Personal Interest
Employees are prohibited from recommending, implementing or considering any securities transaction for a client without having disclosed any material beneficial ownership, business or personal relationship or other material interest in the issuer, or its affiliates, to the Compliance Group or, with respect to the Compliance Group's interests, another designated director. If such designated person deems the disclosed interest to present a material conflict, the employee may not participate in any decision-making process regarding the securities of that issuer.
d) Referrals / Brokerage
Employees are required to act in the best interests of CLIM’s clients regarding execution and other costs paid by clients for brokerage services. As part of this principle, employees will strictly adhere to the Firm’s policies and procedures regarding brokerage allocation, best execution, soft dollars and other related policies.
e) Vendors and Suppliers
Each employee is required to disclose any personal investments or other interests in vendors or suppliers with respect to which that person negotiates or makes decisions on behalf of CLIM. Employees with such interests are prohibited from negotiating or making decisions regarding the Firm’s business with those companies.
f) Soft Dollar Commissions
Any soft dollar trades must comply with the “safe harbor” provisions of Section 28(e) of the Securities Exchange Act of 1934, all other regulatory requirements applicable, and any client specific restrictions. CLIM does not participate in Soft Dollar Commissions.
g) Front Running
The Firm forbids employees from purchasing or selling stock before a buy or sell recommendation is made to a client if such transaction will have a material negative impact on the client.
Employees should not effect transactions to generate increased commissions and unnecessary expenses for a client. The volume and frequency of all sales and purchases of securities must be measured against the need and purpose for the activities, a client's investment objectives, and the expenses and benefits to the client. All trading for a client's account must be undertaken solely in the client's interest.
i) Unfair Treatment of Certain Clients vis-à-vis Others
An employee who handles one or more clients may be faced with situations in which it is possible to give preference to certain clients over others. Employees must be careful not to give preference to one client over another even if the preferential treatment would benefit CLIM or the employee. Each situation should be examined closely to determine whether the client has consented to the employee's actions favouring another client and whether the resulting relationship with the client that was not favoured is fair and consistent with the securities laws.
CLIM will always act in the best interests of its clients when placing orders with other entities for execution. CLIG’s Order Execution Policy has been written in accordance with Financial Conduct Authority (“FCA”) applicable regulations and guidance and the fiduciary duty obligation under the Investment Advisers Act of 1940. The Firm is required to ensure that it takes all reasonable steps to deliver the best result possible when executing orders on behalf of clients, taking into account the execution factors. The Best Execution requirements are set out in the FCA Handbook under COBS 11.2, article 27(3) of the AIFMD Level 2 Regulations. A failure to seek best execution is a violation of Section 206(2) of the Investment Advisers Act of 1940.