Built on the conviction that improving the practices of the companies we invest in helps protect the value of our clients’ investments, we have implemented a formal engagement approach aimed at inﬂuencing companies to take more account of ESG issues. More generally, we are convinced that it is part of our fiduciary duty not only to select the best investments but also to encourage best practices and greater transparency by companies and, more generally, by markets.
We distinguish two types of engagement:
- Reactive engagement, following a controversy or a particular incident
- Proactive engagement, to encourage companies to develop greater transparency and better management of their ESG issues.
Engagement targets are identified in diﬀerent ways depending on whether the engagement is reactive or proactive.
We monitor daily the news ﬂow of the companies that we cover and analyse in detail the controversies that they face. This enables us to identify companies with which we would like to conduct reactive engagement. Therefore, we systematically ask for a meeting with companies facing controversies considered “serious”, meaning those identified as level 3 in our internal analysis tool.
Target companies for proactive engagement are identified based on several factors:
- The proportion of the company's equity that we own, which determines in part our power to inﬂuence
- The proportion of our total investments that the company represents for DNCA Finance, which determines the level of our risk exposure
- The presence of the company in our SRI funds, which justifies greater attention to ESG risks
- The company’s “Responsibility” rating, which can alert us to inadequate management of ESG risks
Each year, we select a list of at least 10 companies with which we would like to begin or continue engagement. In selecting the companies, priority is given to the following situations:
- We own more than 5% of the company’s equity
- Our investment in the company represents more than 1% of our total investments
- The company is included in our SRI funds and has a “Responsibility” rating of less than 5/10 and/or a rating in one of the four aspects of the “Responsibility” analysis (shareholder, environmental, social, societal) of less than 3/10 (if this aspect is considered material).