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Capital Group

PRI reporting framework 2020

You are in Direct - Listed Equity Active Ownership » Engagement

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

02.4. Additional information. [Optional]

We engaged with fund rating agencies to gain an understanding when their methodology is exclusively based on company disclosure on ESG factors. We also engaged with ESG research providers to encourage fact finding dialogue with issuers before filtering out companies based on past controversies.

We do not rely on external providers for engagement, though we are founding members of the Investor Forum. Our extensive team of in-house equity and fixed income analysts along with the Governance and Proxy team and ESG team has the deepest knowledge and understanding of the companies. Our intensive research approach naturally leads to our analysts developing long-term relationships with companies, providing us with access and credibility in direct engagement.


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

Collaborative engagements

Collaborative engagements

03.3. Additional information. [Optional]

Meeting our client objectives is the driver of our decision making process. We plan engagements throughout the year to maintain relationships with management and keep open dialogue.  We consider ESG issues that could affect the value of our clients’ assets, both directly and indirectly in the short and long-term.

Besides PRI, we are also a member of International Corporate Governance Network (ICGN), Council of Institutional Investors (CII), and Asian Corporate Governance Association (ACGA). We are active participants in these organisations and contribute by speaking at and attending events, working on collaborative engagement initiatives and participating in working groups such as the ICGN’s Cross Border Voting Working Group or the IASB and Financial Services Agency to improve accounting transparency.

In addition, we are involved in the following organisations:

  • UK Investment Association
  • Forum of European Asset Managers (FEAM)
  • European Fund and Asset Management Association (EFAMA)
  • UK Investor Forum
  • Institute of International Finance (IIF)
  • Assogestioni

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

04.2. Additional information. [Optional]

The Governance and Proxy team and ESG team maintain a database outlining our company engagement which is used to track our engagement activity. Information such as the purpose of the meeting, who initiated it, attendees and outcomes are recorded. The teams use the detailed records to focus future engagements and monitor company progress.

We believe that continuous engagement during the year raises the standards of reporting and governance practices of the companies in which we have invested our clients' money, it is important to Capital Group to protect and enhance the long-term value of our investment.


LEA 05. Process for identifying and prioritising collaborative engagement

Indicate whether you monitor and/or review engagement outcomes.
Individual / Internal staff engagements
Collaborative 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

05.3. Additional information. [Optional]

Collaborative engagement can be a powerful tool and can lead to rapid change when properly harnessed. We participate in formal networks to engage on topics of mutual interests between investors where we feel that our input is beneficial and can lead to positive outcomes for all stakeholders.


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]

If direct dialogue with management has failed to achieve the desired outcome and we wish to retain the investment in the company concerned, we consider carefully whether taking further action could improve shareholder value. This action can take many forms, including holding additional meetings with management specifically to discuss concerns, or raising the matter with non-executive directors (including its senior independent director or chairman), or the company’s advisers. Occasionally, we may also work with other investors where we believe this is the appropriate course and will benefit our clients, and consistent with applicable legal constraints.

Alternatively, if we believe it is in the best financial interests of our clients, we may divest rather than continue the discussions.


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

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

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

07.4. Additional information. [Optional]

The Governance and Proxy team and ESG team work alongside Capital's investment analysts to engage with issuers together in the majority of cases. If the Governance or ESG team meet the company alone, the meeting write up is shared with the investment analyst and is available for internal staff to access should they wish.


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

08.2. Additional information. [Optional]

We systematically capture all company engagements in which investment professionals and the governance and ESG teams are involved, including direct and collaborative engagements. 


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