Many socially-minded investors express their ESG preferences by divesting in firms whose practises they do not agree with. But engaging with listed companies as shareholders has enormous, and under-appreciated, potential to change the way companies do business. Our panellists will describe the power that investors can have when they collaborate on key issues, in both active and passive portfolios.
This webinar was hosted by our Lead Expert Jamie Broderick who spoke to Sacha Sadan, Director of Investment Stewardship at Legal & General Investment Management and Edward Mason, Director of Engagement and Impact Reporting at Generation Investment Management, and former Head of Responsible Investment for the Church Commissioners, the financial arm of the Church of England and Catherine Howarth, Chief Executive of ShareAction.
Key messages from the discussion
- Engagement creates real impact, which is backed up by academic studies. Organisations such as Climate Action were set-up based on that evidence. All over the world, shareholders are having highly relevant discussions with companies around climate change, their workforce, human rights, and diversity. And those conversations have measurable impact.
- There is no one size fits all approach to shareholder engagement. You do not have to decide between engagement or divestment. Instead, shareholders should take a flexible approach that can include an individual or collaborative dialogue with company directors, monitoring a company’s practices and asserting pressure where necessary, or public campaigning.
- Greenwashing, social washing and impact attribution are complex issues, but they can be addressed. It is important to look beyond annual reports and other external communications efforts by companies. Shareholders, especially large asset owners and managers, can seek external support to examine the actual positive and negative impact companies have on people and the planet.
- Measuring the success of engagement is not always straightforward. While asset owners and managers should take credit when they have direct impact, shareholders should stay focused on the bigger picture when pursuing collaborative efforts.