Being a Responsible Business

Within our operations, we consider Responsible Business principles through two key pillars: first, the impact we have on our people and the communities in which we live and work. This is often referred to as Corporate Social Responsibility (CSR). Second, we consider the key risks and opportunities we face as an asset manager, we refer to this as Business Resilience.

Corporate Social Responsibility

Our role as an asset manager uniquely positions us to positively impact the well-being of our clients, our employees, our shareholders, and our communities in many ways.

People and Culture

We aspire to be the firm of choice for talented professionals and aim to provide an environment where employees can prosper. Our workplace is focused on creating opportunity and is built upon a foundation of trust, respect, and honesty. We are proud of our culture of ownership.

At the end of 2023, 86% of our employees collectively held 15% of the total equity interest in our company. This aligns the interests of our employees with those of our clients and shareholders.

Victory Capital is pleased to offer our employees a comprehensive benefits package that provides quality plans & programs for them and their families to optimize health, wellness & financial security.

Victory Capital is committed to advancing diversity and inclusion in our workplace. Our goal is to cultivate environments in which diverse perspectives and experiences are welcomed. We recognize that employees do their best work when they feel that they are valued and that they belong. 

Victory Capital's Diversity, Equity, Inclusion, and Belonging (DEIB) Committee coordinates diversity and inclusion initiatives across the firm in line with our Corporate Values and our CSR and DEIB strategic pillars, with a particular focus on ERG engagement and cultivating a culture of belonging within the firm. The Committee is chaired by our Director of Responsible Business and includes representatives from various business functions and the chairs of our ERGs discussed below.

We have four active ERGs which represent Black, Hispanic, Women, and Military-affiliated employees. 

Our ERGs, which are initiated and led by employees, provide a platform for individuals with similar backgrounds to come together, celebrate their heritage, share their perspectives, advocate for their interests and needs, and engage with our communities to have an impact.

In addition, we have Employee Networks (ENs), which are very similar to ERGs but focus on a shared affiliation or interest, such as education or hobbies.

Having both ERGs and ENs enables us to both celebrate and educate on diversity themes and cultural differences while creating an environment that fosters a sense of community and belonging among employees with shared interests.

Community engagement

Giving back to the communities in which we live and work is core to our culture. We encourage employee involvement through our corporate initiatives, such as our annual matching gift program and paid time off for qualifying volunteer work. 

Business Resilience

We understand the critical importance of maintaining business resilience in the face of evolving risks and opportunities. We are continually assessing and addressing potential vulnerabilities to ensure our long-term sustainability and success.

Governance

We have robust procedures in place to monitor our Business Resilience and Sustainability. The Nominating, Governance, and Sustainability Committee of the Victory Capital Holdings, Inc. Board of Directors is responsible for oversight of Business Sustainability initiatives. This includes CSR initiatives and potential business risks posed by ESG matters that may be material in nature, including, but not limited to, matters involving employee development and welfare, diversity and inclusion, community investment, information privacy and security, and environmental stewardship.

Sustainability Accounting Standards Board standards

We utilize the Sustainability Accounting Standards Board (SASB) standards to monitor and report on the material factors that may impact our business.

The material disclosure topics that SASB has identified for Asset Managers are mapped out below:

We report on our policies, procedures and oversight for these topics in our Annual Responsible Business Report.

Environmental, Social, and Governance (ESG) Ratings

ESG rating providers are companies that assess and evaluate the sustainability and ethical practices of businesses and financial instruments. They analyze and rate companies based on their environmental impact, social responsibility, and corporate governance practices. We actively engage with the following ESG Rating agencies:

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We are a fiduciary with respect to our investment advisory clients. The decisions we make on behalf of clients are made in their best interests, including any consideration of ESG factors in our investment processes.

We are committed to transparency and honesty in our positioning. We invest within client-led guidelines, where applicable, and each Investment Franchise is afforded the flexibility to meet each client’s unique 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 to companies that create sustainable impact, or by targeting certain environmental goals within their portfolios. As a result, we aim to offer a diverse range of solutions with the intention of satisfying an array of investor objectives.

Our shared service model and centralized operations allow us to easily integrate and accommodate client-driven ESG preferences.

Victory Capital categorizes Responsible Investing intentions into three distinct classifications:

• ESG Integration
• Exclusions, and
• Sustainable and/or Impact

As of December 31, 2023, $54.9bn (32.9%) of our Total Client Assets were managed with some form of Responsible Investment consideration. The remaining assets were not managed with any form of Responsible Investment considerations.

We report on our Responsible Investment classifications and approaches in more detail in our annual Responsible Business Report. 

Proxy voting

Victory Capital actively exercises 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 govern the voting process. The PVC is composed of Victory Capital employees who represent vital areas within the company and can provide a range of diverse knowledge that enhances the Committee’s decision-making capabilities.

To assist the PVC with implementing its proxy voting strategy, Victory Capital retains the services of an independent proxy voting service, 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, and providing research and voting recommendations based on the Policy. It also identifies resolutions that require specific shareholder judgment, 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.

UN Principles for Responsible Investment

The UN-supported Principles for Responsible Investment (UN PRI) is the world’s leading initiative for 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 UN PRI in 2020.

Victory Capital reported to the UN PRI for the first time in 2023. Victory Capital’s public Transparency report is available on the UN PRI data portal.

Responsible Investment Governance

Our Responsible Investment Committee is charged with the oversight of governance, systems, and controls of each Investment Franchise’s approach to ESG investing. It aims to support Victory Capital in robustly and transparently managing regulatory risks associated with Responsible Investment approaches.

The Director of Responsible Business chairs the Committee, which is made up of senior professionals from various departments involved in Responsible Investment oversight.