by Paweł Pieniążek, Communications Manager at GES
GES asked Magnus Furugård, one of its founders and chairman of the board to look back at the past 25 years’ development of Responsible Investment.
What was the starting point for Engagement back in the days?
Engagement grew partly out of investor frustrations of having bi-annual exclusion lists. Exclusions didn’t work for them as it meant investors couldn’t keep to benchmarks but would have to continuously re-compose portfolios. GES’ response was to offer a longer-term dialogue with companies; our clients were extremely positive towards this and we have been growing our collaborative engagement pool ever since!
One of the earliest signs of success was in our engagement with Coca Cola. They invited us to come to New York and provide feedback to their new supply chain policy. That was when we understood that we were onto something new and ground-breaking in terms of investor dialogue.
What do you think is the secret of GES’ success during 25 years?
The dialogue with companies and the notion of being able to influence through dialogue has been part of GES’ work from the beginning. The concept of active ownership as well as the understanding of the business case has changed immensely during these years. And of course I also have to mention our people! Our success is also due to the team staying true to the goal of a sustainable future. We have such a committed team of dedicated staff and I am proud to have been part of this development.
What would you recommend to newcomers in the area?
We meet many investors who are just starting out on the road to responsible investment. We always start off by trying to understand what their motivation is. For some it will be concerned scheme members or clients, or having to deliver on an ethical mandate, or perhaps to manage reputational risks. Once you get to the core objective, you can develop the right policy which addresses those concerns and needs. There is an array of different ESG integration tools and a clear policy will help steer you in the right direction, whether it be portfolio screening, exclusions, active ownership, engagement, or proxy voting.
What about the next coming years?
We believe that all investors of any reasonable size will work with active dialogue and voting, whether it be by outsourcing it to someone like GES or conducting it in-house. Working on ESG issues will remain important – climate, water and ecosystem services just to name a few issues. What GES has done all the time in regards to E and S is actually G = governance. We encourage companies to adopt a different form of governance – based on long-term sustainable practices.