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ACTIAM

PRI reporting framework 2020

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Engagement

LEA 02. Reasoning for interaction on ESG issues

Indicate the method of engagement, giving reasons for the interaction.

Type of engagement

Reason for interaction

Individual / Internal staff engagements
Collaborative engagements
Service provider engagements

02.2. Indicate whether your organisation plays a role in the engagement process that your service provider conducts.

02.3. Indicate the role(s) you play in engagements that your service provider conducts on your behalf.

02.4. Additional information. [Optional]

ACTIAM engages individually, with other investors, and through a service provider. We strive to engage collaboratively whenever possible, as we believe it is both more efficient and increases our influence over investees. All engagements are tracked in the same database. With respect to service provider engagements, there are roughly three levels of interaction:

- Joint (collaborative) engagements: we have been and are involved in joint engagements, where we are present at all meetings and give input for the scope, process, and objectives of the engagement.

- Bespoke engagements conducted by the service provider: these are typically responsive engagements where ACTIAM sets the objectives and timelines, and sometimes participates in calls. 

- Other (proactive) engagements conducted by the service provider: ACTIAM is not involved in the execution of these engagements, but evaluates whether we want to endorse the engagement and monitors the progress.


LEA 03. Process for identifying and prioritising engagement activities

New selection options have been added to this indicator. Please review your prefilled responses carefully.

03.1. Indicate whether your organisation has a formal process for identifying and prioritising engagements.

Indicate the criteria used to identify and prioritise engagements for each type of engagement.
Type of engagement
Criteria used to identify/prioritise engagements
Individual / Internal staff engagements

Individual / Internal staff engagements

specify

          Opportunities the company can seize upon improvement on the topic; the expected openness of company for investor feedback; position of the company against peers.
        
Collaborative engagements

Collaborative engagements

specify

          Whether engagement contributes to our targets; Opportunity to increase our impact in markets/regions that ACTIAM is less familiar with.
        
Service-provider engagements

Service-provider engagements

specify

          Violation of ACTIAM's policies (in such cases, exposure is not considered material).
        

03.3. Additional information. [Optional]

Responsive engagements are triggered by violation of ACTIAM's policies. ACTIAM will first determine viability of engagement, considering:

·         the governance and ownership structure. For example, if a company is majority owned by a single family or person, the chances of success of engagement are likely to be smaller;

·         any history of engagement with the company and how responsive the company was in those dialogues;

·         the regulatory and geographic framework. For example, if a company is located in a country with a strong governmental influence and that influence is not headed in the direction of ACTIAM's vision, chances of success are probably smaller;

·         any public responses the company has made if the breach is a result of public controversy, indicating whether it is open to change;

·         whether the company has a reasonable opportunity to change its conduct, products or services. For example, if the responsive engagement process is triggered because of a company's exposure to thermal coal mining, but nearly all of its revenue comes from this activity, chances of a successful change are limited.

Proactive engagements address (systemic) risks and take into account planetary boundaries, social justice, and the materiality of an issue for a sector. When selecting target companies, ACTIAM considers:

·         the governance and ownership structure. For example, if a company is majority owned by a single family or person, the chances of success of engagement are likely to be smaller;

·         any history of engagement with the company and how responsive the company was in those dialogues;

·         the regulatory and geographic framework. For example, if a company is located in a country with a strong governmental influence and that influence is not headed in the direction of ACTIAM's vision, chances of success are probably smaller;

·         any public positions or statements the company has made, in light of (for instance) any public controversy, indicating whether it is open to change;

·         whether the company has a reasonable opportunity to change its conduct, products or services.

Additionally for collaborative engagements:

·         When evaluating the opportunity to passively join a collaborative engagement, ACTIAM's key considerations are whether the topic addressed matches our goals, whether the organizations involved are considered knowledgeable and trustworthy to use ACTIAM's name, and to make sure there is no overlap between existing engagements.

-         When evaluating the opportunity to actively contribute to a collaborative engagement, the key considerations are whether the topic addressed matches ACTIAM's goals, the commitment and resources needed; whether there is sufficient coordination to make the collaboration a success, and whether there is true additional value in contributing to the engagement next to existing engagements


LEA 04. Objectives for engagement activities

New selection options have been added to this indicator. Please review your prefilled responses carefully.
Indicate whether you define specific objectives for your organisation’s engagement activities.
Individual / Internal staff engagements
Collaborative engagements
Service-provider engagements

04.2. Additional information. [Optional]

ACTIAM's active ownership policy, updated in 2019, has formalised 3 milestones that an engaged entity can achieve:

0. Engagement not yet commenced, or company has not confirmed to have received our correspondence.

1. Company has confirmed receipt of our correspondence.

2. Objectives of engagement discussed in more detail with the entity.

3. Engagement in progress.

Upon the 3rd milestone, ACTIAM monitors the progress of engagement towards the objectives settled (in milestone 2), updating such progress on a quarterly basis. This information is brought into the quarterly meeting of the ACTIAM ESG Committee and reported to clients as well as externally on ACTIAM's website (aggregated in case of the latter). If circumstances require so, objectives can be revised, however a company not willing to achieve the objectives is not a valid reason for revision. In such cases, in combination with the entity continuing to violate ACTIAM's policies, ACTIAM can consider exclusion of the entity.
Depending on the progress towards the objectives, engagements can be judged as successfully or unsuccessfully closed.

For more information, please see our policy document on active ownership: https://www.actiam.com/48df26/siteassets/4_verantwoord/documenten/en/actiam_sustainable-investment-instruments.pdf


LEA 05. Process for identifying and prioritising collaborative engagement

Indicate whether you monitor and/or review engagement outcomes.
Individual / Internal staff engagements
Collaborative engagements
Service-provider engagements
Indicate whether you do any of the following to monitor and/or review the progress of engagement activities.
Individual / Internal staff engagements
Collaborative engagements
Service-provider engagements

05.3. Additional information. [Optional]

For collaborative engagements, ACTIAM decides whether it will partake actively or passively. Active collaborative engagements can entail both a lead investor role or a supporting investor role with an active contribution, such as the drafting of documents, planning, organisational contributions, etc.

Please also see response under LEA 03.


LEA 06. Role in engagement process

06.1. Indicate whether your organisation has an escalation strategy when engagements are unsuccessful.

06.2. Indicate the escalation strategies used at your organisation following unsuccessful engagements.

06.3. Additional information. [Optional]

ACTIAM will evaluate how companies are progressing on the issues identified for engagement. Besides the actions taken at the end of an engagement, there are several escalation strategies that ACTIAM can use to increase pressure during an engagement:

·         Seek allies: ACTIAM can collaborate with other investors to increase leverage.

·         Decrease the ESG score of the company.

·         Make a public statement: ACTIAM can draft a public letter or investor statement, preferably with other investors, calling out the company on its performance and the need for improvement.

·         Vote against management proposals at a shareholders meeting. For example, ACTIAM can vote 'no' on remuneration packages or appointments. In these instances, ACTIAM will share their concerns and intention of voting against the resolution with the company first.

·         Speaking at a shareholder meeting: ACTIAM can choose to visit the shareholder meeting and explain its position, asking the company to improve its performance.

·         (Co)filing a shareholder resolution: this option can be very effective but it is also a complicated, time-consuming and sometimes costly process and the ease of the process differs greatly across jurisdictions. If there is an opportunity to co-file an existing resolution, this option is preferred.

·         Reducing exposure: in case of an active investment proposition, ACTIAM can also consider reducing the size of its investment.
·         Exclusion: an ultimate escalation strategy;  ACTIAM can decide to exclude companies from investment if the (responsive) engagement did not have the expected results, i.e. the company did not improve its performance


LEA 07. Share insights from engagements with internal/external managers

07.1. Indicate whether insights gained from your organisation`s engagements are shared with investment decision-makers.

Type of engagement

Insights shared

Individual / Internal staff engagements

Collaborative engagements

Service-provider engagements

07.2. Indicate the practices used to ensure that information and insights gained through engagements are shared with investment decision-makers.

          Responsively engaged companies' ESG scores are decreased. Portfolio managers have targets for the ESGscores of their portfolio, so there is an incentive to decrease exposure.
        

07.3. Indicate whether insights gained from your organisation’s engagements are shared with your clients/beneficiaries.

Type of engagement

Insights shared

Individual/Internal staff engagements

Collaborative engagements

Service-provider engagements

07.4. Additional information. [Optional]

Information about engagement progress (both as milestone progress and qualitatively, towards the objects settled) is shared on a quarterly basis with the ACTIAM ESG Committee, comprising the CEO (in the role of Chair), CIO, Head of Fund Management and Head of ESG Research and an external expert who is a Professor of Ethics.

Furthermore, there is an ongoing dialogue about engagements with the investment managers. Both engagement and proxy voting information is shared with investment decision-makers through an internal dashboard, as well as raw data files. The dashboard is updated every quarter with the latest engagement developments and every half year to reflect outcomes of voting.

Engagements can also be conducted together with external investment managers in case that is relevant, for example because of location or language matters.

Clients receive a detailed engagement overview on a quarterly basis; a summary of this overview is also published online. 

For some of our funds (sustainable portfolios), companies which are responsively engaged are not investable.


LEA 08. Tracking number of engagements

08.1. Indicate whether you track the number of your engagement activities.

Type of engagement
Tracking engagements
Individual/Internal staff engagements​

Collaborative engagements

Service-provider engagements

08.2. Additional information. [Optional]

ACTIAM tracks the number of engagements on an ongoing basis and formally submits them on a quarterly basis to the ACTIAM ESG Committee. The number of engagements, as well as milestone and objectives progress, are also reported to clients and to the public through our website. In the last two years, an annual, additional ACTIAM ESG Committee meeting is held to specific discussed the status and progress of certain engagements. Furthermore, the ACTIAM ESG Committee can be called on an ad-hoc basis when a decision needs to be made immediately, via the FIP Fast track procedure. 


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