April 4, 2012
Window-dressing, financial value, disclosure and a number of disconnections were debated yesterday when GES hosted a high-profile engagement seminar in London to celebrate its 20th anniversary.
Under the title “What works in ESG Engagement?” GES had invited five prominent players within Responsible Investment to discuss the past, the present and the future. Approximately 150 people attended either at the London Stock Exchange or by webcast at anniversary events at GES’ four offices in Sweden, Denmark, Poland and Switzerland or by webcast at other locations. All were able to interact with the panel, and several did, thereby contributing to a rare and much-needed debate, according to moderator Mike Tyrrell, SRI Connect, UK:
“Engagement will continue to become a more and more constructive and positive part of the communication between companies and investors if we keep this debate live, if we are prepared to accept where there are gaps in communication, where there are inconsistencies, where we need greater authenticity.”
Carl Rosén, Executive Director at ICGN, UK, pointed out one major disconnection in today’s practices:
“What works for me – and I think this is different from the normal ESG crowd – is that ESG always starts with G. If you do not have G in place, it is much more complicated to engage in environmental and social issues. And there is a very strong correlation between good governance and good E and S practices. Very often people like us, in this room and in the webcast, do a big mistake: they focus on the people that actually know about what is going on in the company instead of the people that actually govern the company…boards and top management.”
Helen Parris, Director of Investor Relations at G4S, UK, preferred to get the ESG questions directly to her department and encouraged more investors to put them:
“We never get these questions in mainstream investor meetings. It would be very helpful for us as part of the feedback to management and board. /…/ I personally would like to get a few more questions from an ESG basis so that I can show our people putting together the CSR report and all the information that goes into it, that someone is reading it, someone is thinking about it.”
Craig MacKenzie, Head of Sustainability at SWIP, UK, advocated targeted benchmarking as an engagement tool and one change to be made:
“We need to place more emphasis on additionality. In other words: what is it specifically that investors can bring that will take things forward? I think there are an awful lot of meetings that people are having with companies that do not really add anything for anyone. And that is a waste of everybody’s time.”
Heidi Finskas, Advisor Responsible Investments at KLP, Norway, found their annual disclosure of engagement efforts very important both internally and externally:
“It is a powerful tool which gives a small investor more influence than one otherwise might have. Secondly, it is about transparency towards our clients and stakeholders, so that they know what we have invested their money in and what not. Third, it is very disciplining for us. We have to be conscious and make good decisions based on facts. It is really a way to make sure that the quality in your work is good. The disclosure has at least helped KLP from not doing window-dressing but actually doing things.”
Tytti Kaasinen, Senior Engagement Manager, GES, responded to the seminar’s main question:
“What I think works in engagement is when engager and engagee manage to form a relationship which is more than a one-off email question-answer exchange, rather a more longer-term constructive two-way dialogue where both are open to and happy to listen to and learn from each other – and learn stuff on each other, as well. Obviously, that involves appreciating what is relevant for the other party, material, if you like. It does not mean you have to agree, but this long term is an ongoing dialogue; not giving up after one question and deciding the company is good or bad.”
A video recording from GES 20th Anniversary Responsible Investment Seminar can be viewed on GES’ website at www.ges-invest.com.
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