Boston Trust Walden maintains a database of companies included in our engagement activity, which is updated on a regular basis. At the end of each calendar quarter and year, progress is assessed for all engagement activity. Results are captured in formal quarterly and annual reports provided to clients and posted on our website.
To evaluate progress, we periodically assess company engagement as follows:
- Progress was observed.
- Engagement contributed to new or amended policies (e.g., amending a Nominating Governance Committee Charter, adopting an inclusive non-discrimination policy).
- Engagement contributed to more sustainable business practices (e.g., commitment to more robust vendor standards monitoring, implementation of science-based greenhouse gas reduction goals).
- Engagement led to greater transparency and accountability (e.g., enhanced comprehensive ESG reporting, better transparency on a specific issue such as lobbying).
- No significant progress; engagement is ongoing.
- No additional follow up planned. This generally applies to engagement undertaken solely to build awareness around an ESG issue or in situations where portfolio holdings have been sold.
Each year, we publish an annual impact report documenting portfolio company progress. Data underlying the metrics presented in the report have been verified by a member of the Office of the Executive Committee.
We record collaborative engagements involving portfolio companies in the same database used for tracking in-house engagements. If Boston Trust Walden assumes a leadership or active role, we monitor progress in the same way as described above. However, if the goal of a collaborative engagement is awareness building (i.e. requiring little to no company follow up), or if we have a more passive role in the collaboration, we do not independently attempt to monitor the progress of companies. Nonetheless, we will record information provided by the leaders of the investor collaborations when such progress is monitored and shared.
We believe our company engagement on behalf of clients has resulted in substantial positive outcomes over our four decades-long history. However, progress is often made possible through collaboration with other investors, as well as the actions of other stakeholders seeking to influence corporate behavior. Hence, while we monitor and report on all engagement activity, we are careful to note that observed outcomes sometimes reflect the hard work of many individuals and groups.
In public disclosures, we describe five primary challenges to assessing the impact of engagement. We believe this context is important to better understand and interpret our reported impact metrics. In summary form, these challenges include:
- Continuum of progress. Corporate progress is often incremental and can span multiple years. Boston Trust Walden counts milestones achieved in reporting periods as evidence of progress.
- Attribution. Observed progress may be primarily driven by our engagement, but also often represents the combined efforts of numerous investors and other stakeholders, as well as internal company advocates.
- Quality vs. Quantity. Improvements in policies, practices, and transparency are not all equal in terms of the time and resources required to implement them or in the magnitude of the impact; yet they are counted equally.
- Transparency. Progress may be counted in our reporting based on private conversations and commitments before we publicly report the details.
- Real World Progress vs. Corporate Change. Our current definition of ESG impact is often at least one step removed from real world impacts, such as the amount of emissions avoided, a decrease in workplace discrimination incidents, or a diminution of corporate money in politics. We believe this is an appropriate, realistic framework for measuring impact.
The progress noted in subsequent questions should be viewed in this context.