Our engagement team has condensed all the material issues affecting the companies into nine topics. Together these topics encompass all the issues identified by traditional sustainability frameworks such as the UN Global Compact, the Global Reporting Initiative, the UN Guiding Principles and the Sustainable Development Goals. Unlike those frameworks, we have allowed the topics to overlap rather than making them mutually exclusive, so as to target the companies’ most material issues instead of generic categories. Human rights do not appear as a single topic. Instead, particularly in the light of the UN Guiding Principles on Human Rights, they are considered overarching, and are integrated into all nine topics. We believe that application of the UN Guiding Principles on Business and Human Rights, known as the “Ruggie Principles”, will represent the main challenge for large multinationals. Moreover, these principles rightfully regard climate change as a human-rights issue.
From these nine material topics, we select the most material topics for each company, depending on that company’s characteristics and industry sector. Our initial selection will be guided by the company’s materiality matrix or its own definition of its priorities. Next, our analysts will challenge the company’s view by going over the nature of any recent or recurring media controversies. In the third step, we consider the priorities set by specific sector frameworks such as the SASB Materiality Map™. This is an interactive tool that identifies and compares disclosure topics across different industries and sectors. The final decision as to the maximum three most material topics is made by the portfolio manager, considering the company’s business model and its development strategy.