Thematic Engagement
Environmental, social and corporate governance (ESG) issues are constantly evolving, reflecting society’s changing view and expectations to corporate sustainability management. Institutional investors can be exposed to the risks and opportunities associated with an emerging E, S or G theme through their investments. Further, particular themes may be especially relevant to an investor’s own philosophy, mandate and strategy. Thematic Engagement allows you to focus and engage on a chosen theme in depth.
Engagement themes
Climate change
The Paris Agreement signed in 2015 demonstrates clear global consensus and commitment to limit temperature increase to 1.5 degree Celsius to avoid irreversible damage by climate change.
To transition into this low-carbon future, systemic changes to our way of energy production and consumption are required. Investors can drive the companies they invest in to contribute to this end through the following engagement lenses:
Climate Top 100:
Engagement is focused on those 100 listed companies that contribute the highest impact to climate change in terms of potential emissions from fossil fuel reserves and current scope 1 and 2 emissions.
The engagement goal is to encourage the companies to reduce carbon emissions in line with the Paris goal. We have experience with this engagement since 2016.
Read our series of blogs on climate change engagement on our progress thus far.
Climate Gap 100:
Engagement is focused on those 10 companies in the 10 most climate-exposed industries that show the largest gap between its climate change-related risk exposure and management.
The engagement goal is to drive these companies, which are typically laggards in view of the recommendations by the TCFD, to reduce or close the gap in their climate risk management efforts.
Responsible tax
Aggressive tax planning can pose earnings risks, governance problems, reputational risks and damage to brand value to listed companies. Further, it can also lead to macroeconomic and societal distortions in some cases. The business case for institutional investors to engage with companies on aggressive tax planning is well documented in UN PRI’s engagement guidance.
Focusing on companies involved in controversial corporate tax practices, the engagement goal is to encourage them to adopt responsible tax strategies, which are in line with international guidelines and industry best practices, and to ensure that effective governance and management structures are in place.
UN Sustainable Development Goals (UN SDGs)
Adopted at the UN Sustainable Development Summit in 2015, the UN SDGs set the agenda for global sustainable development through 2030. The 17 SDGs, together with their respective targets and indicators, provide guidance on the key issues governments, investors and companies alike can contribute to.
We work with institutional investors who would like to focus on a particular SDG such as clean water and sanitation, life on land, responsible consumption and production etc. The engagement goal is to motivate companies to address their adverse impacts and make contributions to the selected SDG.
Corporate Governance
Sound corporate governance is the very foundation of any thriving business, enabling effective oversight of risk management, development of corporate strategy and ensuring integrity in business conduct.
We work with institutional investors who would like to focus on a particular corporate governance theme such as CEO renumeration, board independence, board diversity etc. The engagement goal is to improve companies’ approach and performance on the selected theme.
