Engagement for PME is done by our fiduciary manager MN.
1. PME believes in the co-existence of financial and social return on investments. On one hand it is our aim by conducting engagement on holdings to limit the potential negative impact of business on the environment, people and society and corporate governance (ESG). On the other hand, we also aim to leverage the potential positive impact of business within these same three themes (ESG). The key-objectives for engagement are that companies acquire the ability:
- To fully participate in the low-carbon economy energy transition (E);
- To protect the human and labour rights of workers in the global supply chain (S);
- To reward company executives according to an adequate and balanced remuneration scheme in line with the interests of (minority) shareholders (G).
2. MN operates on the basis of a clearly defined engagement policy. The engagement focus lies on
- Significant Dutch holdings;
- Significant holdings with a Global Compact violator status (downside risk);
- Significant holdings that present material ESG-risks within a few key sustainability themes as prioritised by our PME (thematic engagement); and
- Significant holdings that present general high material ESG-risks (adhoc/incidents)
3. Our engagements may take place with both invested and non-invested holdings. We generally engage with companies that are currently held in our portfolios. However, we also aim to conduct engagement with a few companies that we no longer hold. This concerns a “light” style of engagement with companies that we divested after a number of years of failed engagement. In order to keep our re-investment options open, we want to keep our tabs on them and be aware of any progress if there. It should be mentioned that this type of engagement proves to have some limitations for the reason that some companies will refrain to engage on sustainability issues when investors are no longer shareholders in the company.
4. Our engagements are both on a pro- and reactive basis. On one hand we want to address the issues that have already occurred in order to be convinced that companies are taking the right measures to assure that such an event will never happen again. On the other hand we also proactively engage companies that operate in very challenging industries where we want to be assured that they do everything in their power to rightly mitigate the potential risks and impacts of their operations.
5. Engagement within MN is carried out by specialists from our in-house responsible investment and governance team, investment analysts and senior fund managers and if necessary legal for litigation. Last year there even have been a few examples of executive board level engagement with companies conducted by our MN CEO (René van de Kieft) and CIO (Gerald Cartigny).
6. It generally depends on the theme of engagement and what we want to achieve what level we prefer to engage on within a company. Over the last year, we have seen that when we are looking for a certain commitment of companies on climate change and/or remuneration arrangements it is often most worthwhile to speak to board level executives. When discussing the implementation of specialist topics, it often proves more useful to speak to the in-house experts who have been working on these issues for years. It is not only our duty to assure that companies adopt best practice standards, investors also need to make an effort to better understand companies’ local challenges when implementing these best practices.
7. We engage companies generally on the biggest material ESG-risks, which means in practice that we will conduct engagement with the poorest ESG-performers (global compact violators) on any relevant topic. Any companies above this threshold will be selected based on size of holding and biggest ESG-risks selected within a certain ESG-theme as prioritised by our pension fund. As such we have defined focus areas in the Environmental, Social and Governance space and those themes equally define our engagement efforts.