SIF 2023: Jonathan Stapleton, Philip Vernardis, Caroline Escott and Catherine Howarth
More rigorous investor engagement can help boost positive outcomes for businesses and the wider world, a panel discussion has said.
The panel at Sustainable Investment Festival 2023 discussed how to identify opportunities to influence businesses, what effective engagement and voting looks like, and ways of demonstrating the impact of engagement.
Speaking on the panel, ShareAction chief executive Catherine Howarth said investors can best use their influence by being "more rigorous and structured in their shareholder rights and bondholder influence", adding there should be "tightly defined priorities" and good communication and interaction.
Northern Trust Asset Management head of EMEA investment stewardship Philip Vernardis said that from an index manager's perspective, voting and engagement is essential - adding that NTAM will amplify its efforts in this area over the next few years.
Railpen senior investment manager Caroline Escott believed investors should also do more work on a policy front to advance their interests. She said: "Systemwide issues need systemwide solutions" - adding that sometimes an efficient way to effect change is to encourage regulators to implement policy changes and bring together voting rights.
Engagement priorities
When determining which engagement issues to focus on, Vernardis said investors should focus on those that are financial material, use a rigorous methodology, and hold client-facing sessions, regularly collecting feedback.
Escott added that Railpen ranks around 70 ESG issues against weighted criteria and holds member surveys and roundtables for a "two-way dialogue".
Howarth said that investors "have the toolkit" to encourage acceleration of action - citing voting against directors and engaging with public policy as key ways to promote dialogue.
She added that asset owners can use their power and influence to push asset managers by making stewardship a high part of the criteria for asset allocation to drive change, adding that once you select a money manager, there needs to be an "ongoing and rigorous conversation" with that manager.
The session also included a question from the audience on protecting investor rights. Escott urged investors to respond to the Financial Conduct Authority's (FCA) consultation on proposed listing changes which closes on 28 June - noting the proposals as they stood risked weakening investor protection.
