Resources

Corporate Engagement in Brief

Date 3 May, 2020

Author

Category Corporate Engagement

Corporate engagement is an effective strategy to improve the company ESG/sustainability performance and increase the relative value of assets. Investors and asset managers, along with management boards, are increasingly involved in this process. As PRI research shows, “ESG engagement creates value for both companies and investors, amid growing evidence that engagement by investors with companies on environmental, social and governance (ESG) issues can create shareholder value.”*

Corporate engagement falls within a broader category of active ownership. While active ownership means an exercise of shareholder rights to advocate for improved corporate governance, corporate engagement involves a direct dialogue of asset owners or managers with a company. More precisely, through corporate engagement, asset owners or asset managers bring to the attention of management important issues related to ESG/sustainability performance and request improvements. Engagement can take the form of:

– filing or co-filing advisory resolutions,

– joining shareholder coalitions in order to encourage companies to improve,

– voting on ESG issues at annual meetings.

Investors can also participate in public policy initiatives or collaborate with government agencies. By doing so, often times they get publicity and media attention.

To illustrate the scope of corporate engagement practice, in the US between 2016 and 2018 more than 200 institutional investors and asset managers, with a total of $1.76 trillion in assets, filed over 700 resolutions on ESG issues.** Majority of proposals aimed at facilitating shareholders’ ability to nominate board directors. Among other issues raised by investors were: lobbying and disclosure of political spending, climate change, human rights including fair labor and pay standards, and integrated reporting.

 

source: unpri.org, ussif.org

* unpri.org ** ussif.org