Mirova's engagement strategy was born out of the conviction that each investor has the power of influence on companies through dialogue, thanks to its share capital held or its bond holdings.

By promoting better environmental, social and governance practices - either directly or indirectly - Mirova's engagement approach seeks value creation over the long run from financial, environmental and social perspectives. Mirova has therefore placed sustainability issues at the heart of its investment strategy, with the aim of achieving sustainable performance over the long run. In this context, engagement is a key component of Mirova's responsible investment policy, in addition to the incorporation of ESG issues into investment decisions.

Whether for individual or collaborative engagement, the constructive dialogue carried out with companies aims to encourage more transparency and the improvement of companies' ESG practices (collaborative dialogue is favoured for the most controversial practices in individual or several companies or an entire business sector).

Individual engagement is an integral part of Mirova's ESG analysis. Exercise of voting rights, and collaborative engagement enables the identification and the monitoring of significant risks. Such dialogue also supports investment decision-making. In particular, collaborative engagement aims at developing sectoral practices that are compatible with responsible investment in order to: a). be able to invest in companies that were previously excluded from the sustainable development investment universe of Mirova and / or its clients due to poor environmental and / or social practices; b). improve the practices and transparency of companies in the investment universe on a controversial subject so that they remain investable. It thus helps to mitigate the risks and to maximize the opportunities related to investments. In this way, Mirova meets its fiduciary duty by ensuring that its investment strategy, as well as its clients' interests are taken into account by companies. Beyond fiduciary duty, Mirova's engagement approach is a major tool to encourage companies to manage their environmental and social externalities, so as to collectively shape a more sustainable economic system.Mirova's engagement strategy was born out of the conviction that each investor has the power of influence on companies through dialogue, thanks to its share capital held or its bond holdings.By promoting better environmental, social and governance practices - either directly or indirectly - Mirova's engagement approach seeks value creation over the long run from financial, environmental and social perspectives. Mirova has therefore placed sustainability issues at the heart of its investment strategy, with the aim of achieving sustainable performance over the long run. In this context, engagement is a key component of Mirova's responsible investment policy, in addition to the incorporation of ESG issues into investment decisions. Whether for individual or collaborative engagement, the constructive dialogue carried out with companies aims to encourage more transparency and the improvement of companies' ESG practices (collaborative dialogue is favoured for the most controversial practices in individual or several companies or an entire business sector). Individual engagement is an integral part of Mirova's ESG analysis. Exercise of voting rights, and collaborative engagement enables the identification and the monitoring of significant risks. Such dialogue also supports investment decision-making. In particular, collaborative engagement aims at developing sectoral practices that are compatible with responsible investment in order to: a). be able to invest in companies that were previously excluded from the sustainable development investment universe of Mirova and / or its clients due to poor environmental and / or social practices; b). improve the practices and transparency of companies in the investment universe on a controversial subject so that they remain investable. It thus helps to mitigate the risks and to maximize the opportunities related to investments. In this way, Mirova meets its fiduciary duty by ensuring that its investment strategy, as well as its clients' interests are taken into account by companies.

Beyond fiduciary duty, Mirova's engagement approach is a major tool to encourage companies to manage their environmental and social externalities, so as to collectively shape a more sustainable economic system.

Individual engagement, aims at encouraging companies to improve their ESG practices, through a dialogue carried out by Mirova's in-house RI Research teams in multiple contexts: the ESG assessment of issuers, the exercise of voting rights, important events that bring to light significant short comings in practices, etc.).
 Mirova's individual engagement approach is:

-Continuous: the dialogue is undertaken all throughout the investment process. It takes the form of regular exchanges with companies, notably during annual ESG roadshows, ad hoc meetings or annual general meetings. -Intensive: companies primarily targeted are the most important held in Mirova and its clients' portfolios (i.e. key holdings). The geography/market of the companies and their weight in portfolio are therefore taken into account while defining the engagement universe. This enables an in-depth ESG analysis, a close monitoring and the achievement of objectives on a time horizon that varies depending on the complexity of the addressed issue. -Global: it addresses all the areas for improvement identified by the RI Research team while analysing AGMs resolutions or companies' overall ESG profile. While selecting the main engagement topic, the RI Research team takes into account and crosses several factors:
 - the sectorial key ESG issues, defined based on the degree of the business activities' ESG impact and the existing levers for improvement; - the identification of specific risks or opportunities; - negative impact(s) that have already impacted the issuer (a particular event, controversies); - the materiality of ESG factors.
 In order to identify these issues, and therefore prioritise engagement topics, Mirova's in-house RI Research teams perform a continuous review of companies' ESG practices, based on a broad array of information sources:
 -publicly available data: annual corporate/sustainable development reports, academic research, NGO reports, press, etc. -regular exchanges with different stakeholders: companies, trade unions, NGOs, scientific community (notably through the partnership with universities[SF1] [DM2] ), National Contact Points for the OECD Guidelines for Multinational Enterprises, etc.. -external research: sell-side analysts (such as Exane, BofAML, Goldman Sachs, etc.), ESG rating agencies (ISS ESG, Ethix, Carbone 4, ISS, Beyond Ratings, etc.).
 This monitoring guarantees an up to date view of companies' ESG practices and helps to identify relevant areas for improvement in ESG practices

Mirova's collaborative engagement consists in:

 -identifying controversial practices applied by several companies or by a whole business sector; -engaging in dialogue with the latter to require more transparency and, whenever possible, changes in the identified controversial practices. Given the importance of these issues, several investors join their efforts to collectively have more power of influence.
 In 2014, Mirova went a step further by launching its own collaborative engagement platform, which was specifically designed to bring together its own RI specialists and institutional investors with a common view of responsible investment. Thanks to this initiative, Mirova and its client involved in the platform are now able to lead collaborative engagement on major issues that require further attention from investors,
 Mirova has a formal process for identifying and prioritising collaborative dialogue. Its engagement activities carried out through its platform are structured around three distinct phases: planning, dialogue and reporting. During the planning phase, the RI research team notably identifies the potential engagement themes based on:

-The analysis performed by the RI Research team on sustainability issues and themes, directly related to ESG sectoral issues; - – engagement themes such as those systemically imbedded in an industry (e.g. tax optimisation practices, etc.) that would be better addressed as a consortium of investors rather than individually.
 The engagement themes are defined on the basis of the significance of the issue in terms of both sustainability (important negative externalities despite existing levers for improvement) and potential impacts on investments (materiality).
 Collaborative engagement thus focuses on the following topics:
 - topics which constitute barriers to potential investments: the purpose is to help excluded companies to progressively become eligible for investment by Mirova and/or its clients;
 - topics which constitute potential barriers to investment: for companies which are part of the investment universe but where there is an aspect that poses a level of concern with regard to their environmental and/or social impact, the objective is to improve the companies' practices and transparency on the issue in question so that they remain investable.
 Depending on the issues addressed, Mirova can therefore collaboratively engage in dialogue with companies with to aim to obtain:
 -more transparency from targeted companies' to gain a better understanding of the environmental and/or social impacts of their controversial production processes and/or products; -more transparency and improved practices when negative impacts of production processes and/or products are identified and confirmed; -improved environmental and/or social impacts of the products and/or services offered by the targeted companies.
 On this basis, a short list of themes is established, and the final engagement topics are ultimately selected on a case-by-case basis if the engagement can provide attainable changes (i.e. no complete change in business model), if the issue is gaining momentum from stakeholders and if no other collaborative engagement exists.
 A potential scope of engagement (i.e. the list of targeted issuers) is then established by combining the significance of the topic of engagement for each company* with its weight within the portfolio constituted by Mirova's main positions and those of its clients. The issuers could be targeted either in reaction if an important event already occurred, or in anticipation if they are identified as exposed to significant risks.
 The platform is currently addressing the risk management in the supply chain in the textile sector, where price competition can lead to abuses.
 Mirova's collaborative engagement is mainly undertaken through this proprietary platform, but also by joining other collaborative initiatives led by RI professional bodies or by other investors, whenever relevant (i.e. if the theme is compatible with Mirova's vision, objectives and priorities in terms of sustainability). For example, Mirova took part in several collaborative engagement initiatives led by other investors, on various themes, e.g. corporate tax practices, science-based targets, disclosure on social issues in the workforce, etc. Mirova also supports many investor statements (please refer to LEA.13 for further details).
 Taking part in such collaborative initiatives is a way to share our vision of sustainability, to provide insights from our in-house RI Research team made up of 11 ESG analysts, and also to learn from other investors involved in working groups in which Mirova is not represented. Thanks to this collaborative and constructive spirit, we better understand ESG issues that companies have to address, we encourage them to improve their practices and we collectively build higher sectoral standards together with peers.
 * based on the ESG analysis

 We analyse and engage based on our voting policy that might lead, in some cases, to voting against the board of directors; for example where the remuneration of the CEO is deemed excessive compared with the remuneration of other stakeholders, particularly employees, and the company, during the engagement process, was not able to provide acceptable explanations.
 Finally, in case of a controversy and if the result of engagement is not conclusive, the rating of the issuer could be changed to "risk" and therefore, leading to divestment from our portfolios.

As a front line player in the RI industry, Mirova makes available to portfolio managers (PMs) a broad array of ESG-related information, among which those related to active ownership practices. The investment teams systematically take all relevant ESG inputs into consideration in their investment decisions, including those arising from the exercise of voting rights and from the engagement actions carried out by the RI research team. This sharing of information is made through several ways:

-A report of each engagement action is logged in "OCTAVE"*, a proprietary centralized database available to all Mirova's teams, including PMs. OCTAVE notably tracks the history of the engagement's goals for each company, the outcomes achieved, and the resulting impact on ESG analysis or voting decisions.
-An online platform which discloses all Mirova votes on resolutions presented at the general meetings of companies held in its voting funds (not including dedicated funds).
-Portfolio managers and ESG analysts interact constantly:

.They share the same offices. Informal cross-teams exchanges are therefore fostered, including about active ownership matters.
 .They take part in several common internal meetings (Conviction meetings, Thematic clusters, etc.) during which strategic voting decisions and results of key engagement actions are disclosed.
 .PMs can attend meetings with companies dedicated to the topics of voting and/or engagement; and conversely RI analysts have the opportunity to take part in meetings with companies' management, during which questions about engagements and vote can be addressed.

In addition, clients are informed of the results of our engagement since these inform our sustainability rating of the companies within our funds and thus determine eligibility. We additionally discuss engagement activities with clients whom we have in place investment committees every semester. Furthermore, we share insights from both individual and collaborative engagement with companies on request and through our annual Engagement Report which is updated yearly and available on our website.

*Online Collaborative Tool for Analysis, Voting and Engagement

Mirova is committed to transparency and its engagement approach seeks tangible positive impacts.

To ensure traceability, efficiency and reliability of their engagement actions, the in-house RI research teams fill out and keep updated “OCTAVE”*, an in-house tracking database.
Its purpose is twofold:

-To track any changes in companies’ practices that would result from the dialogue process, and therefore appropriately update the Sustainability  Opinion depending on the outcomes.

-To provide data:

.for the engagement report performed on a yearly basis on Mirova’s investment scope,
.for custom reports provided to clients upon request (please refer to LEA.16 for further details).

The database is comprised of the following data: the name of the issuer, the goals of the engagement, details on meetings held and other interactions with the company, the achieved improvements, and the final result of the engagement.

As regards individual engagement, Mirova's RI Research team targeted 189 issuers in 2019. This dialogue was carried out as part of the ESG analysis, or while analysing AGMS resolutions. 389 meetings (or others kinds of direct contacts e.g. calls, site visits, emails)) were held to this end.

In our detailed engagement report, available online and updated yearly, Mirova discloses several kinds of information:

-The breakdown of companies targeted by sector
-For each above-mentioned sector, the report also discloses an explanation of the ESG sectoral issues, the number of companies targeted, a summary of the main achievements in the reporting year, a case study and the breakdown of engagement carried out by topics.
 -A focus on cross-investment engagement themes, for example on the G-pillar. Mirova sent an email to all companies in its portfolios outlining its expectations with regards integration of sustainability in their governance practices.

With regard to collaborative engagement, Mirova participated in engagements that targeted a total of more than 1,000 issuers in 2019. 2019 was an extraordinary year for Mirova as it launched a collaborative engagement with regards to women empowerment in companies particularly to encourage companies to sign and adhere to the UN’s Women Empowerment Principles. This engagement targeted all companies found in the MSCI World index which consists of more than 1,000.

In 2019, Mirova also joined other collaborative initiatives led by RI professional bodies or by other investors, for example:

- Access to Nutrition Index
 - Arctic drilling in Wildlife Sanctuary
  - European sustainable plan ESG disclosure
 - Climate 100 (+50)
 - European transport
 - EXXON Mobile letter
 - Science Based Targets Initiative
 - Global investor engagement on meat sourcing
 - Investor statement on the Amazon fires
 - Tobacco Free Finance Pledge
 - Thirty Percent Coalition
 - WDI - Workforce Disclosure Initiative - phase II
 - Access to Medicine Index
 - Global investor Statement to governments on climate change
 - Antibiotics Overuse in livestock
 - Sustainable Protein
 - Investor Decarbonisation Initiative
 
 

Mirova equally participated in some collaborative engagements launched by PRI's platform (e.g. tax practices and sustainable forests).

Mirova has also defined and implemented an advanced public policy engagement approach that notably includes investor statements targeting public policy makers. This approach is addressed in the PRI module "Strategy and Governance" (please refer to questions SG.09 to SG.11).

Further information about the ESG topics covered by individual and collaborative engagement are disclosed in Mirova's annual engagement report, publicly available on its website:

http://www.mirova.com/en-INT/voting-and-engagement

 *Online Collaborative Tool for Analysis, Voting and Engagement