Describe how you identify emerging ESG issues.
Regnan maintains a team of experienced research analysts who conduct continuous research on companies, existing issues, and emerging issues. Our engagement program enables a discussion of first-hand company experience to further test and validate our conviction with respect to these themes ahead of the establishment of formal change objectives and/or advocacy activities.
Describe some of the emerging ESG issues you have identified in this process.
Regnan has been early to identify a number of emerging ESG issues material to company performance. These have included:
• Our understanding of ESG risks in the unconventional oil and gas sector on which we began engaging in 2013.
Thanks to Regnan’s in house expertise on energy and mining sector issues, combined with a proactive gathering of further intelligence through the engagement program, we were able to identify heightened risks relating to unresolved technical, regulatory, environmental and stakeholder issues that have been amplified by the sector’s rapid growth. Building on prior research and engagement, Regnan invested in the development of a position paper on the topic, to frame a more constructive discussion with affected companies and to outline ESG risk management approaches.
• Identifying risks associated with companies supporting industry associations that lobby for positions counter to the strategic direction of the company. Not only does this create reputational risks for companies but may result in policy settings that impede execution of strategy. We identified this risk on a range of issues, including but not limited to climate lobbying and have engaged with companies on related matters for more than a decade. This risk became apparent following the ongoing newsflow scanning that is part of our ideation process, and we tested it extensively in engagement with individual companies as we developed this area of focus.
• During the recent Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry in Australia we identified that a number of the key themes from the commission’s findings had applications outside of financial services. We view these as emerging issues for a number of sectors should they not heed the lessons to be learned from the finance sector.