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Ethics Metrics LLC

Service Providers Framework 2019

You are in Active Ownership Services » Engagement

Engagement

AOS 04. Prioritizing engagement topics

04.1. Describe how you select priority engagement topics to raise with companies and how you involve your clients in this process.

          By evaluating the Ethics Metrics Credit Ratings for each of 100 large DIHCs on a quarterly basis since 2005, Ethics Metrics identifies those DIHCs with ratings indicating severe and undisclosed compliance violations of federal banking and securities laws as one set of priority candidates for engagements. The other set of priority candidates will be those DIHCs with ratings indicating sound governance and compliance with the Code of Ethics under Sarbanes Oxley and related banking and securities laws. Through Comprehensive Paid Engagements on the PRI's Collaboration Platform, asset owners and investment managers have the option to participate in one or more of 3 phases that include Education, Empowerment and Engagement, all for the goal of maximizing gains, minimizing losses at the portfolio level and igniting market discipline, market integrity and sound governance within related global financial markets.
        

04.2. Describe how you define the objectives and milestones of the engagements and how you involve your clients in this process.

          Initial objectives are to help asset owners and investment managers maximize gains and minimize losses through (A) paid subscriptions to the DIHC Rating Reports for 100 large DIHCs and (B) active engagement strategies to rescind contracts, for first movers, and recover damages, for late comers.
        

04.3. Additional information [OPTIONAL]

          
        

AOS 05. Channels of engagement

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

Engagement type

Frequency

Frequency

          Active engagement strategies to rescind contracts, for first movers, and recover damages, for late comers.
        

Frequency

05.2. Describe your typical execution method.

          Details are provided in the Comprehensive Paid Engagements on the PRI's Collaboration Platform.
        

05.3. Additional information [OPTIONAL]

          
        

AOS 06. Accessing the appropriate teams when engaging with companies

06.1. Indicate from the options below the employee at the companies you typically engage with.

Employee level

Frequency

Frequency

Frequency

Frequency

06.2. Describe how you ensure the client’s rationale and engagement objectives are being communicated clearly to the company at the beginning and during the dialogue phase.

          Details are provided in the Comprehensive Paid Engagements on the PRI's Collaboration Platform.
        

06.3. Describe the escalation strategies you take (or suggest that your clients take) when the engagement objectives are not achieved.

          Details are provided in the Comprehensive Paid Engagements on the PRI's Collaboration Platform.
        

06.4. Additional information [OPTIONAL]

          
        

AOS 07. Monitoring engagements

07.1. Indicate how you monitor the progress of engagements.

07.2. Describe how you typically decide what recommendations for next steps to give to clients.

Recommendations are calibrated to a client's investment strategy to maximize gains and minimize losses based on degrees of governance risk and systemic risks within the U.S. banking industry and related investments.

07.3. Additional information [OPTIONAL]

          
        

AOS 08. Defining and measuring success

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

          Evaluating whether clients maximized gains or minimized losses based on trends of publicly disclosed equity holdings and prices by each asset owner and investment manager in the 100 large DIHCs.
        

08.2. Describe how you measure success when evaluating/reviewing these engagements.

          Evaluating whether clients maximized gains or minimized losses based on trends of publicly disclosed equity holdings and prices by each asset owner and investment manager in the 100 large DIHCs.
        

08.3. Additional information [OPTIONAL]

          
        

AOS 09. Companies changing practices/behavior following engagement (Private)


AOS 10. Engaging with policy makers and industry bodies

10.1. Indicate whether your organisation engaged with public policy makers and industry bodies on ESG engagement topics or regulatory/policy issues that could advance ESG engagement in the reporting year.

10.2. Describe what ESG factors and/or regulatory/policy issues have informed your decisions to engage with policy makers and industry bodies. Provide examples.

          Through Comprehensive Paid Engagements led by Ethics Metrics on the PRI's Collaboration Platform, Ethics Metrics is addressing violations of the OECD Corporate Governance Principles, specifically the failure to disclose material information on material contracts for formal enforcement actions and infernal fraud as these are concealed as confidential supervisory information for large DIHCs. The OECD Corporate Governance Principles are the standards applied by the Financial Stability Board's 2017 Thematic Review of Corporate Governance. Ethics Metrics engages with the Securities and Exchange Commission and bank regulators and the readers of the Harvard Law School Forum on Corporate Governance and Financial Regulation. For examples, please see Articles on Systemic Risk and Governance in U.S. Banking at http://www.systemicriskandcorporategovernancecenter.com.
        

10.3. Additional information [OPTIONAL]

          
        

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