Describe how you select priority engagement topics to raise with companies and how you involve your clients in this process.
As a point of departure, Engagement International helps each client with formulating an engagement policy that corresponds to the client’s individual values as well as international guidelines such as the UN Global Compact, OECD Guidelines for Multinational Enterprises, OECD Responsible Business Conduct for Institutional Investors, UN Guiding Principles on Business and Human Rights, PRI etc..
Subsequently, the client portfolio due diligence screening undertaken by Engagement International reflects the defined engagement policy and leads to identifying companies with engagement potential. In terms of content, potential engagement cases and topics flagged to the clients may cover companies that are, for instance:
° violating those norms that are laid out in the defined engagement policy, and/or causing adverse impacts to other international guidelines, for instance conflicting with the United Nation’s Sustainable Development Goals, the Paris Agreement, or the Task Force on Climate-related Financial Disclosures,
° highly exposed to certain specific environmental, social and/or corporate governance (ESG) risks, and/or are attested a particularly low level of ESG risk & opportunity management.
When it comes to selecting the prioritisation of portfolio companies and topics for engagement, the client is given the ultimate choice. Here, the client may also decide whether she/he prefers to engage in collaboration together with other institutional investors among Engagement International’s clients. This way, Engagement International gets mandated to engage with the client’s prioritized portfolio companies on the client’s preferred topics.
Two prominent examples of Engagement International’s work on behalf of institutional investors during the latest PRI reporting period, are the engagements with those companies in the world which are contributing the most to climate change due to carbon emissions originating from fossil fuels, as well as the engagements with companies that are involved in controversial tax practices.
Beyond full-service engagements, Engagement International also offers bespoke engagement solutions to those clients, who need tailored support e.g. in their own engagement activities.
Describe how you define the objectives and milestones of the engagements and how you involve your clients in this process.
After the initial engagement policy formulation for the client in the beginning of the collaboration, following the client’s selection of flagged portfolio companies and topics for engagement (as described in the previous paragraph), Engagement International is defining clear engagement goals for each engagement case it is mandated with by the institutional investor.
Before each of the engagement dialogues, Engagement International thoroughly assesses the company’s ESG performance according to a structured underlying methodology. Engagement International developed various sets of sound KPIs and ratings for evaluating a company’s ESG risks & opportunities and ESG management efforts to reflect a company’s current status and to measure how much and in which direction it has progressed since day one of the engagement. The engagement progress is tracked along a set of 5 to 10 milestones, and after each bi-annual engagement dialogue Engagement International is adjusting the recommendations given to the company for improvement accordingly. The calculated investment signal, which accounts for a company’s ESG risks & opportunities, ESG management level and engagement progress, indicates each client the extent to which a company in her/his portfolio is aligned with the client’s commitment to responsible investment.
This way, Engagement International provides clients with clear and visible results of the engagements conducted on their behalf with portfolio companies around the world.