Proportion varies manager to manager and in part may be dependent on the number of companies in the portfolio. 25% is a fair median of the range.
We therefore encourage all our equity fund managers to:
· engage regularly with the top management of companies, either directly or through a specialist provider
· assess each company's ESG practices
· ensure these practices are in line with our own assessment of ESG risk.
The fund manager must also identify issues for engagement. Our managers and external service providers typically undertake about 500 ESG related engagements a year on our behalf. Engagement activity relating to wider business and investment issues are also undertaken by our managers as part of their investment decision making process and these engagements are in addition to the 500. In addition we select engagement targets from our own research and portfolio analysis and ask our managers to engage on these topics and report back. Typically these engagement targets come from ;
· Portfolio companies identified with high environmental or carbon impact relative to their peers identified through the annual footprinting exercise.
· Portfolio companies identified via our review into stranded carbon assets.
· Portfolio companies where the disclosures on ESG issues is poor potentially leading to an overestimate of the company's impact and on our portfolio environmental and carbon footprints
· Portfolio companies identified through as target companies e.g. CDP, WDP
· Portfolio companies where we have high exposure, operating in high risk areas, undertaking controversial activities, following a prosecution for ESG activity, etc.
· Portfolio companies targeted by the media or campaign groups
· Portfolio companies subject to environmental shareholder resolutions where we believe the company's response and action should be improved.
· Specific member or stakeholder request.