Responsible Investing Policy

Parametric believes that most capital markets are highly efficient and that risk control, diversification, and careful cost management can make or break long-term investment success. Accordingly, we offer transparent, rules-based portfolio solutions that don’t require tactical insights into valuations or market direction and that take a long-term view on a broad, global set of publicly traded equities.

This long-term view provides impetus for us to encourage good corporate governance practices that benefit shareholders while continuing to deliver the underlying strategy return. That’s why our approach to responsible investing focuses on exercising ownership rights, reserving specialized portfolio construction techniques primarily for client-directed mandates in separately managed accounts.

This policy describes our responsible investing philosophy, the oversight we apply to this discipline, the approach we take, our commitment to reporting, and our affiliations.
Good governance includes a consideration of the environmental and social impact of a company’s activities. We believe this helps both reduce unnecessary risks and improve the company’s competitive position. We acknowledge that some aspects of a company’s operations may be difficult to quantify, forecast, and consequently embed into a company’s valuation.

Therefore, our starting point is to encourage companies to take reasonable steps to provide greater transparency to the market around these issues and rectify clear lapses in oversight, rather than seeking out or avoiding companies based on perceived mispricing. We believe this approach can help strengthen companies, protect shareholder capital, and benefit economies and communities.

Responsible investing is a firmwide capability at Parametric. It isn’t restricted to a subset of products or employees. We’ve established a dedicated team to implement this policy under the chief investment officer, but all employees are expected to be familiar with Parametric’s philosophy, approach, and available ESG data.

Parametric’s Stewardship Committee, composed of senior employees, translates our views on good corporate governance into our ownership practices and oversees the communication of these activities to investors and companies. Our primary mechanism for this is proxy voting. Parametric’s Proxy Voting Guidelines are applied consistently, regardless of portfolio construction, wherever we have voting authority.

With regard to ESG incorporation, portfolios are managed by the same portfolio managers and teams and with a similar oversight structure as those without any ESG incorporation.


Active ownership
Parametric’s active ownership practices focus primarily on proxy voting, but we also value direct engagements with companies. We believe that targeted conversations can be a powerful way to promote good corporate governance practices and to encourage companies to reduce ESG risks or improve disclosure. We may support certain collaborative engagements if we believe they’re in the best interest of our investors and are consistent with our views on corporate governance.

Parametric’s Proxy Voting Guidelines are designed to encourage high ESG standards and safeguard investor capital over the long run. We do this by supporting qualified, independent boards that show accountability to shareholders and responsiveness to prudent and relevant shareholder proposals. In this effort, we consider the work of recognized corporate governance experts, outside research providers, and collaborative investor groups. We use these guidelines to vote all accounts for which we have voting authority.

ESG incorporation
Parametric’s long-standing and well-established portfolio management practices allow us to incorporate ESG considerations into any separately managed account at the client’s request. These practices have evolved through more than 20 years of practice and are intended to help us respond to each client’s unique requirements. Through screens, quantitative integration techniques, or both, Parametric takes a rules-based approach to ESG incorporation, and we subscribe to hundreds of ESG metrics we can use for this purpose. Absent client specification, no ESG incorporation is applied.

Parametric publishes an annual stewardship report that highlights our proxy voting and shareholder engagement activities. Additionally, we publish our Proxy Voting Principles, which outline our corporate governance expectations for the companies in which we invest. We also provide account-level reporting that includes summary information on the ESG characteristics of the underlying companies, tailored to the specific client mandate. This information is only made available to the beneficiary owners of the account.

Parametric is a signatory to the United Nations’ Principles for Responsible Investment. We are also members of the Council of Institutional Investors, the Coalition for Environmentally Responsible Economies, and the Interfaith Center on Corporate Responsibility.

These affiliations allow us to participate in the broader conversation on responsible investing and help us fulfill our clients’ needs more effectively. We selected these groups based on their compatibility with our investment philosophy and activities.