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Australian Council of Superannuation Investors (ACSI)

Service Providers Framework 2020

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.

          ACSI’s engagement program seeks to influence companies through constructive engagement with ASX300 boards about material ESG issues. For 2019, ACSI had six priority engagement themes; gender diversity, corporate governance, Banking and Aged Care Royal Commissions, conduct, climate change and workforce (LHR, safety, human capital management). This consisted of 150 companies in the ASX300 index. The issues are drawn from a range of sources, based on a significant amount of internal and external research, proxy voting outcomes and current issues. ACSI then further prioritises companies by taking into account the holdings of our members, focusing on the largest aggregate member holdings. For engagement, ACSI creates a list of priority engagement companies which is reviewed annually, with progress monitored and evaluated semi-annually.
        

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

          ACSI annually creates a list of engagement priority companies with specifically defined concerns and objectives for each company. ACSI’s objectives are to achieve meaningful changes in company behaviour. ACSI also sets objectives for the proportion of all priority companies where objective are met: we aim for over 75% of all priority companies’ objectives to be met or partially resolved.  

This process is overseen by a Member Council, in consultation with Management. ACSI members actively contribute and set the goals and direction that ACSI takes.
        

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

Frequency

05.2. Describe your typical execution method.

          The way in which ACSI engages with listed companies relies on identification of specific issues, the desired outcome we are seeking from the company, and the actions the company undertakes to address the issues identified. ACSI monitor, follow up and track the company's progress against our defined objectives.

Some examples of what we take into account when prepping for an company engagement include; priority company issues and thematic risks,internal and external research, proxy voting research and outcomes, media & controversies and any company reporting that is publicly available.
        

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

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.

          ACSI notifies our members of the upcoming engagements and asks for feedback and participation in both the meetings and on the agenda setting for the meeting.
        

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

          ACSI aims to see all our engagement priority companies achieve meaningful change and set ourselves the objective for over 75% of priority companies objectives to be met or partially resolved in a calendar year.
Depending upon the nature and materiality of an issue and responsiveness of a company to engagement, if required ACSI will recommend next steps to our members and undertake a series of escalation steps.
This includes:
•	Further engagement with board members and/or chair
•	Expressing concerns to alternative company representatives (i.e. management, other non-executive directors)
•	Working collectively with asset managers/other asset owners and holding discussions with other equity or bondholders
•	Recommending a vote against management on relevant proposals at general meetings (eg: ACSI's women on boards policy: https://acsi.org.au/our-issues/gender-diversity/)
•	Speaking to regulators, industry bodies and advocating for policy change
•	Legal avenues
•	Encourage our membership and other industry participants to take up more pro-active stance

This process is reviewed each year, and for areas where we feel there is a lack of progress, we engage with our members on what additional steps they can expect us to take.
        

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.

This is described under indicator AOS 06.3 

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.

          Success is when a company modifies it behaviors or practices in a way which meet, all or in part, ACSI’s pre-determined objectives for the engagement.
        

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

          “Success” is measured differently as each priority company has a specific objective set. In areas such as gender diversity at board level, appointment of a woman director – or a firm commitment from the company that one will be appointed – is easily measurable. 
Where more qualitative changes are sought, such as the setting of policies and greater public disclosure on labour and human rights issue, or how a company is responding to (and reporting on) the challenges of climate change effects on its business, achievement of objectives will often require several meetings and several staged steps towards “best practice”. 
Similarly, changes in remuneration practices often require a longer time horizon because of the wider-ranging effect of altering structures. 

Depending on the issue, timelines for companies vary. For example, for some board and governance issues ACSI would expect to see a level of change or a plan for change within the year in which we are engaging with the company, but for other issues like climate risk and the adoption of 'best practice' frameworks, we would expect this transition to happen over a number of years.
        

08.3. Additional information [OPTIONAL]

          
        

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


AOS 10. Engaging with policy makers and industry bodies (Private)


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