We engage with companies that have been identified either through screening or thematic research, as poorly managing their ESG risks. Occasionally we engage with companies who create opportunity out of an ESG issue to learn how others might do it better.
The screening process occurs monthly to identify controversies and half yearly to identify companies that score poorly on any one of thirty-seven key E, S or G key issues. Additional data feeds into this process including proxy voting outcomes and research scores from Regnan, our engagement partner.
Our thematic research, the themes of which are determined by a variety of sources, including increased member queries on a topic, increased media and community awareness of an issue, or topics that we vote on throughout the year, such as executive remuneration, allows us to dedicate substantial time to researching issues to determine how widely spread an issue is and importantly, how it will affect our holdings.
Severity, materiality, and value at risk (including reputational risk) of these ESG issues, as well as internal resourcing and likelihood of affecting change, dictate whether we pursue the engagement.