Across all service providers, engagements are largely proactive (planned) to focus on priority companies and priority ESG issues and aim to achieve specified behaviour change objectives. All service providers measure progress towards and achievement of these behaviour change objectives. There are also instances where engagement may be reactive to address ESG issues that have arisen during the reporting period.
In relation to planned engagements, HESTA contributes annually to the development and/or review of the Hermes EOS, ACSI and Regnan Engagement Plans. We also regularly review each service provider's engagement activities and the success of these activities.
To assist with our review, HESTA has developed detailed Engagement Objectives and Measures, which outline our expectations in relation to the planning, delivery and outcome of engagement services, and the way in which we will assess and measure whether these expectations have been met. Our Objectives and Measures include:
Company Engagement Planning
1. To identify companies that most need to improve their performance and/or disclosure in relation to key ESG issues.
2. To identify priority ESG issues.
* Develop a robust process to identify and prioritise ESG issues and/or companies with which to engage.
* Develop or maintain an Engagement Plan which (1.) Identifies priority companies with which to engage, (2.) Identifies the key ESG issues relevant to each company, and (3.) outlines behaviour change objectives and measurable targets for each company to be achieved over a specified timeframe.
* Consult HESTA on the Engagement Plan annually.
* Develop and implement a process to determine which ESG issues or company behaviours that arise during the period warrant engagement (i.e. reactive engagements).
Company Engagement Activities & Outcomes
1. To improve ESG performance and/or disclosure of priority companies.
* Engage with a minimum number of priority companies in the specified time period (determined for each service provider).
* Demonstrate progress on a reasonable number of the measurable targets for each behaviour change objectives for each priority companies engaged with during the specified time period (determined for each service provider).
All engagement with companies occurs via face-to-face meetings, teleconferences and written correspondence, most often at the company Chairman or Director level.
From time to time, HESTA internal staff participate in engagements arranged by our engagement service providers or by our external investment managers with companies on specific ESG issues. From time to time, we also participate in collaborative engagements though industry organisations of which we are a member including IGCC.