UK Modern Slavery Act Statement

Pzena Investment Management – Modern Slavery Act 2020 Statement


This statement is issued by Pzena Investment Management, LLC on behalf of itself and its UK subsidiary, Pzena Investment Management Limited, pursuant to section 54 of the UK Modern Slavery Act 2015 in respect to the financial year that ended 31 December 2019.

Pzena Investment Management, LLC is a global investment management firm with headquarters in New York City and business development offices in London and Melbourne. We apply a classic value approach to investing that requires a commitment to research-driven stock selection. Our team focuses on research that yields a deep understanding of the long-term prospects and intrinsic value of a company.

We believe our success and reputation depends on both the quality of our products and services, and on how we conduct our business. We therefore aim to be a responsible corporate citizen with a strong adherence to environmental, social, and governance (“ESG”) standards. Responsibility, sustainability, and respect for human rights are integrated into our business and due-diligence models and in the way we serve our clients and manage our investments.

We believe that given the nature of the services that we offer that the risk of our involvement in modern slavery and human trafficking is low.

Our Investment and Proxy Voting Process:

As long-term investors who seek to buy good businesses that are built and managed to deliver superior long-term value, we have always believed that ESG factors, where material to a company’s operations from a risk or an opportunity perspective, have the potential to impact future profitability and shareholder returns. Consistent with this belief, since we began managing assets in 1996, our research and engagement process has taken relevant ESG factors into consideration. To help facilitate this, we added a dedicated ESG Analyst to our research team, which has allowed us to improve our process in several ways. We have enhanced our ESG stock write-ups; bettered our engagement tracking; and added ESG materials to our marketing materials and our website. Our ESG analyst has also trained our investment team on several material investment issues.

Our approach to ESG analysis is best described as integrated, wherein material ESG risks and opportunities are a primary and transparent component of our fundamental investment analysis. We do not conduct explicit ESG screening – either positive or negative – as a primary ESG strategy, and instead we view integration as a more active approach to understanding ESG issues as potential drivers of long-term performance and profitability. We also view active ownership, as opposed to exclusion, as a valuable tool to encourage positive change. In line with these beliefs, while we have access to a variety of third-party ESG performance ratings, we view these as merely supplemental to our own independent evaluation and resulting investment conviction.

Certain industries are naturally more exposed to risks of modern slavery, namely those that rely on low-cost labor with complex supply chains, such as construction, agriculture and apparel manufacturing. For those industries, we take a specific look at modern slavery disclosures, policies, and procedures and engage management to understand how they think about these risks. As appropriate, we advocate for changes to a company’s actions. In instances where a new issue comes to light through ongoing research monitoring or from other sources, we address it as part of our ongoing company engagement and reassess as necessary. If we identify the use of child labor or involvement in human trafficking and management does not have a clear plan to remediate, then we may avoid investing or exit an existing position altogether.

We also became a signatory to the Principles of Responsible Investing (“PRI”). We believe that the PRI principles are broadly aligned with our long-term classic value investment approach, which is inherently contrary to short-term pressures in markets and corporate management. Market interests in ESG and sustainable investing has evolved in part in reaction to perceived excessive short-term pressures, a concern which we share and to which we believe our deep analysis, strict valuation discipline, and significant patience offer an alternative

We thoughtfully consider ESG factors in how we vote proxies on behalf of our clients. To support our proxy voting process, we subscribe to Institutional Shareholder Services’ (“ISS”) proxy monitoring and voting agent service, which includes informative ESG analysis inclusive of human rights matters. However, we retain ultimate authority for instructing ISS how to vote proxies and apply our own proxy voting guidelines which reflect the values of our integrated ESG approach. If a material conflict of interest arises – especially regarding ESG and human rights – we follow our procedural guidelines for addressing such conflicts, including deferral of the recommendation to ISS where appropriate.

Our People:

We take seriously our responsibility to respect the human rights of our employees and strictly comply with applicable employment regulations in the jurisdictions in which we operate.

We respect the rights of our employees to enjoy just and favorable work conditions, including health and safety protections, and are committed to providing adequate information and training on health, safety and wellbeing issues.

We also promote diversity and inclusion by prohibiting all forms of discrimination based on age, race, nationality, ethnic origin, gender, sexual orientation, religion, marital status, or disability between our potential, current, or past employees.

In addition, all employees are made aware of the important role that they play in upholding our high standards of conduct through our Employee Handbook.

Our Operations:

We are a purchaser of products and services for the purposes of our internal operations. Our supply chains include providers of financial services data and software, and providers of business services including travel, hospitality, catering, and office supplies and services. We are committed to ensuring that our supply chain is free of human trafficking and modern slavery. We have incorporated these matters into our vendor management and due diligence process and highlight any areas of concern, such as modern slavery risks, to our Vendor Committee, with escalation to senior management as appropriate. The Committee is comprised of managers from Legal, Finance, Operations, and Internal Audit. Topics such as cybersecurity, financial health, availability of independent audit reports, and disaster recovery, among others, including human trafficking and modern slavery, are reviewed in the Committee’s analyses. In the event our concerns with any supplier are not resolved to our satisfaction, we reserve all options, including termination of our relationship with the relevant supplier.

This statement has been approved by the Executive Committee of Pzena Investment Management, LLC.

  • Richard S. Pzena
  • Chief Executive Officer & Chief Investment Officer
  • Pzena Investment Management, LLC