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Service Provider Reporting Framework 2017

You are in Stewardship Services » Engagement


SS 02. Your definition of engagement activities

02.1. Provide a brief description of what your organisation defines and/or interprets as engagement activities.

          Vigeo Eiris considers engagement to be the process by which investors communicate with companies in an effort to improve ESG performance across a range of themes.
Vigeo Eiris supports clients in the engagement process through the delivery of data and information on corporate ESG performance or allegations of involvement in controversial activities. This is done in line with the investor’s responsible investment policy, and enables the client to open a dialogue with invested companies on weak CSR performance or on allegations relating to controversial activities.

SS 03. Acquiring ESG data and information

03.1. Describe how and where you acquire your ESG data and information.

          ESG research is undertaken in-house and is based upon the Vigeo Eiris research methodology. Our methodology builds upon the combination of ex-Vigeo and ex-Eiris databases: our combined database includes all the ESG data collected by the analysts during companies assessment process as well as the ex-Eiris methodology. The data available to support our engagements covers the full range of ESG issues as well as high profile/impact controversies.

03.2. Describe how this information influences your product offerings and/or how you implement your services.

          All engagement services are based upon the Vigeo Eiris methodology. This methodology is used to identify the levels of risk that companies are exposed to across the full range of ESG themes and assesses their performance in managing these risks.
Companies that are exposed to a high level of risk and that have demonstrated little to no evidence of managing this risk are identified as ‘laggards’ and recommended as a potential engagement cases.

SS 04. Prioritizing engagement topics

04.1. Describe how you select priority engagement topics to raise with companies.

          The selection or priority engagement topics are mostly driven by our clients’ needs.

Based on our ESG database, we identify those ESG areas that clients have indicated are most valuable to them and which our own research suggests have the biggest impact on company performance. 

A dedicated engagement service is for instance conducted on the following themes: bribery and corruption, climate change, ESG risk management, human rights, supply chain labour standards and water scarcity. 

A separate engagement service is also framed in order to engage with companies involved in allegations analysed as “critical”, in any of our 38 ESG topics under analysis. 

Other themes are offered on a bespoke basis with consideration to add new themes to the standard list based upon client and marketplace feedback.

04.2. Describe how you define the objective of the engagements and reach agreement on this with the client.

          The ESG themes are selected on the basis of a client’s investment policy. They are defined in a meeting with the client, who indicates which themes they would like to adopt and engage upon.

A baseline assessment is created for each company prior to engagement beginning. This allows our analysts to assign each company an overall ‘grade’ as prescribed by the Vigeo Eiris methodology and indicate to the client how the company performs prior to the engagement process beginning. Objectives are then set by the clients to challenge the company to increase its overall grade.

Final objectives are set in discussion with the client. A decision is made as to the grade that the client would like to see the company achieve in each ESG theme engaged upon.

Generally speaking companies identified for engagement are exposed to a high risk in a particular ESG theme and have demonstrated only ‘limited’ or ‘no evidence’ of addressing this risk. The final objective is ultimately set in consultation with the client.

SS 05. Engagement model and clients’ needs

05.1. Describe the processes that are in place to ensure that your engagement model takes into account the diversified needs of your clients.

          Before any engagement programme is launched we discuss all aspects of the process with clients and work with them to ensure all of their needs are met. This will include tailoring the service to meet specific requirements and outcomes and will take into account:
•	the ESG themes to engage upon 
•	the number of ‘live’ engagements at any one time
•	setting final engagement objectives
•	engagement timescales
•	deciding upon preferred methods and frequency of engagements
•	developing the initial engagement letters/email wording
•	agreeing upon the frequency and format of progress reporting. 

At all stages we consult with the client to ensure that the programme is progressing in a manner with which they are happy. Frequent meetings allow for feedback that can shape the future set-up of the service and help to decide new engagement themes to develop.

05.2. Describe how you align your engagement strategy with your client's investment principles and policies.

          As an ESG research provider our service is developed to take account of a full range of investment principles and policies. We have developed the product in line with PRI principles and it remains flexible so as to be incorporated into any investment policy. 

At the beginning of the consultation process with a new/potential client we will discuss their investment principles and policies and propose the best ESG themes and objectives that will ensure these principles are respected. Any issues that are truly bespoke and fall outside of the Vigeo Eiris standard criteria are being considered on a case by case basis.

In practical terms we are careful to recognise the intricacies behind established client investment policies and procedures. We will work with clients to design the most appropriate method for progressing with engagement and are happy to conduct engagement on behalf of a client if they prefer this to our standard approach. Likewise, we are careful to ensure that, where necessary, procedures are in place to allow timely communications between ourselves and client-based managers to ensure that at all times both parties are aware of the ongoing work conducted for the client.

SS 06. Channels of engagement

06.1. Indicate what channels you use to engage. Tick all that apply and indicate the frequency with which you typically use the channels.

Engagement type






          Suggest clients to participate to collective initiative of engagement (PRI)


          Suggest clients to participate to collective domestic initiative of engagement (local pool of investors)


06.2. Describe your typical execution method.

          Following the portfolio analysis and after the selection made by clients on the companies to engage with, Vigeo Eiris drafts letters requesting information and these are signed by the client. Vigeo Eiris evaluates companies’ responses and reports to the client.

It is important to point out that it is the client who directly engages with the companies, with the support of Vigeo Eiris.

SS 07. Accessing the appropriate teams when engaging with companies

07.1. Describe how you ensure that you have access to the appropriate teams and team members at the company you engage with.

          Vigeo Eiris has an established system for contacting companies that has developed as part of its standard ESG research cycle. A database of contacts is in place and can be used as a starting point for all engagement programmes. Each contact is checked before engagement is launched to ensure it is still current.

If the initial contact fails to respond to engagement requests Vigeo Eiris has a process of ‘escalation’ that it uses in order to identify who should be contacted next.

07.2. Indicate from the options below the employee at the company you typically engage with.

Employee level






07.3. Describe how you ensure the client’s rationale and engagement objectives are being communicated clearly to the company.

          We have developed a series of template letters that are used to begin all engagements. These letters draw heavily from our established, in house criteria and look to address the following:
•	an introduction to the client
•	an introduction to us as the research provider 
•	the motivation behind the engagement
•	a short introduction to the ESG theme
•	an outline of the company’s current performance
•	details of the objectives required.

As each engagement progresses we rely less on templates and prefer to let the discussion develop organically. However, with experienced analysts running each engagement we are able to communicate the often complex issues clearly and succinctly. 

Furthermore, as each engagement objective is directly linked to the Vigeo Eiris methodology we are able to refer to our detailed documentation and experience to ensure that we are communicating issues clearly and in a relevant, contemporary manner.

07.4. Describe how you adapt your engagement style to ensure you maintain a constructive relationship with the company that you are engaging with.

          The engagement client holds a direct relationship with corporates, whilst Vigeo Eiris provides data and information on ESG topics in the client portfolio.

Letters request information with a polite tone, recognising the value of the measures already undertaken by the company. The letters open a dialogue that in most cases is constructive.

As indicated in response to SS 07.3 whilst each engagement begins with a ‘template’ letter all further communications are undertaken in line with our in-house methodology but with a certain amount of analyst discretion. 

Feedback received from companies indicates that this is a method they appreciate; engagement can be a resource intensive process for both the engager and company being contacted and this process allows us to demonstrate to the company that their comments have been recognised and acted upon, whilst simultaneously allowing us to develop engagement strategies as necessary.  

Maintaining this flexibility is a key feature of our service. It allows us to accurately recommend when an engagement might benefit from a more ‘hard line’ approach and when it might be more productive to give the company some additional time to meet its objectives. The balance between maintaining flexibility whilst simultaneously managing a large number of engagements for multiple clients is one of our greatest strengths.

Having a large and experienced analyst base with multiple offices around the world allows us to draw upon significant international experience to adapt our approach by market place and account for cultural/language differences. We have had particular success in engaging with Japanese companies and have native Japanese speakers based both in London and Tokyo who are able to either draft or check existing letters both in terms of language and tone. Likewise, our team of analysts specifically working on engagement includes a native Mandarin speaker who is able to draft letters to companies based in China. All languages which we are likely to engage in are covered by our global analyst base. Typically, engagements are launched in English. However, where we have local teams we provide engagement services in the client requested language for given companies (e.g. Italian in Italy).

SS 08. Monitoring engagements

08.1. Indicate your method for monitoring engagements over time.

          Monitoring responses/response rates and measuring timescales for completions
          Highlighting cases with client involvement or that might be classified as comprehensive
          Reporting on reason for completed engagements (direct response, research update etc.) and distinguishing between types of response received (letter, email, meeting, phone call etc.)

08.2. Indicate whether you provide clients with recommendations for next steps.

08.3. Describe the format that you typically use to provide your recommendations to the clients.

          In addition, formal written reports are provided to the client after each engagement response.

SS 09. Identifying emerging ESG issues

09.1. Indicate whether you identify emerging ESG issues.

09.2. Describe how you identify emerging ESG issues.

          This is undertaken via two separate methods: 
1) by monitoring and taking advantage of new methodology additions to the standard Vigeo Eiris research methodology.
(2) by responding to client feedback and bespoke requests.

09.3. Describe some of the main ESG issues you have identified in this process.

          New additions to our standard engagement service include ESG Risk Management and Water Scarcity. We have also refined our Bribery and Corruption, Human Rights and Supply Chain Labour standards engagement strategy following client feedback.

SS 10. Defining and measuring success

10.1. Describe how you define success when evaluating/reviewing engagements on ESG factors.

          A successful engagement is considered to have met the following:
•	met all engagement objectives within a set time frame (set in discussion with the client)
•	have responded to the client on at least one occasion.
We do also record all other completions but if, for example, a company does meet all of its objectives and has not responded to the client this will not be included in the official completion rates.

10.2. Describe how you measure success when evaluating/reviewing engagements on ESG factors.

          Engagement objectives are set against standard Vigeo Eiris research criteria, with companies encouraged to improve their grade to a certain level across specific ESG indicators.
Across all ESG themes we are looking for evidence of improvements in the company’s policies, management systems and public reporting. With regards to policies and management systems we will accept documents provided by the company directly to us or the client. However, all engagements relating to public reporting require that the company makes information available in the public domain.

10.3. Describe the actions you take (or recommend your client to take) if the engagement on ESG factors has not met the success criteria.

          There are a number of strategies that we offer to clients to overcome a ‘stalled’ engagement. A brief outline of the potential options are provided below:
•	Escalating the issue to a more senior member of the Company. Generally speaking we reach out to CSR/sustainability experts in the first instance. If this fails to illicit a response we will then ‘escalate’ to the Board and/or CEO.
•	Exploring language and cultural changes if appropriate
•	Providing additional contextual information to the company
•	Providing additional information to the company as to how it is seen to perform in comparison with its peers
•	Request face-to-face meetings or tele-conference
•	Scaling the engagement, with a collective initiative with other investors, in order to be more effective to get some material outcomes.

SS 11. Companies changing practices/behavior following engagement

11.1. Indicate whether you track the number of cases during the reporting year in which a company changed its practices, or made a formal commitment to do so, following your organisation’s engagement activities.

11.2. Indicate the number of companies that changed or made a formal commitment to change in the reporting year following your organisation’s and/or your service provider's engagement activities.


11.3. Additional information. [OPTIONAL]

SS 12. Publishing engagement outcomes

12.1. Indicate whether you publish your engagement outcomes.

12.2. Indicate whether you enable your clients to publish your engagement outcomes.

SS 13. Engaging with policy makers and industry bodies (Not Completed)