We continue to note this indicator is not helpful in communicating how Perpetual undertakes corporate engagement.
This indicator may be valid for a small fund manager or asset owner with limited ESG engagement resources (i.e. who needs to prioritise), or for a signatory with a separate ESG engagement team (i.e. with priorities that may differ from investment decision-makers as per below).
However, Perpetual's engagement activities (including ESG) are an integrated part of our large equity team's investment process. Having our investment decision-makers carry out engagement (where it is material and relevant to their analysis and investment decision-making), rather than by a separate ESG team, we strongly believe is more valid and effective. That is because the 'change message' is being communicated to the company by the same individuals who control our buy/sell/hold decision (i.e. whether to provide or withdraw capital to the company). Clearly this will increase the motivation of company Boards/management to consider change. In summary, we engage on a 'bottom-up', company-by-company basis as needed, rather than running 'top-down' ESG 'campaigns' on the same issue across multiple companies at the same time.
Therefore, for us it is unnecessary and impractical to institute 'a formal process for identifying and prioritising engagement activities' as per this question. This would mean in practise our equity professionals debating the worth of their respective proposed company engagements against other equity professionals' proposed engagements. We doubt any equity team would manage money in this way. At Perpetual, equity professionals are given trust to achieve their performance objectives via different approaches, not micro-managed in this way.