FaithInvest recently attended the US-based Interfaith Center on Corporate Responsibility (ICCR) Fall 2024 conference. As is FaithInvest, your organisation may be a member of this New York City-headquartered group, which is one of the largest multi-faith coalitions of 'faith-and values-based' investors, with a focus on shareholder advocacy.
The conference theme, Navigating Troubled Waters, set the tone – and reflected dynamics present in Europe, but concentrated in the US: 'A politically charged landscape...' where corporations '...face significant challenges navigating their support for democratic values without appearing partisan or becoming entangled in controversy'.
Overall, there was a significant focus on rising technologies and their potential impacts on workers, human rights and democracy, along with sessions on supply chain monitoring, industry consolidation, political lobbying and various energy topics – with looks into non-traditional shareholder engagement activities such as private equity and venture capital. The latter is a notable trend given the growth of private market assets with institutional investors.
Outside of the politics we covered in a recent post and industry specific sessions, there was a wonderful session on one of our favorite topics – measurement – titled Moving the Needle: Measuring Engagement Impact to Drive Success. This covered practical activities to get and demonstrate desired outcomes from shareholder company engagement. The panel had a few notable pointers for us as practitioners:
The Importance of narrative: Numbers are part of the story – how many engagements, number of management meetings, percent of Yes or No proxy votes, etc – and documenting the WHY of the engagements is equally important: What is your overall qualitative goal or vision from these engagements?
Establish a repeatable internal process: This process can be built around the proxy 'season' in your countries of activity, and include annual activity reporting and quarterly progress reporting. For the US, your organisation’s schedule could be built along the following lines:
Accommodate multi-year engagements: 'Typically [company] engagements that lead to a desired change often occur over multiple years.' One participant characterised their experience: 'The first year they ignore you, the second year they meet with you, the third year they do something.' Build your internal process and your reporting around this multi-year attribute – and 'connect the dots' by associating engagement actions on an issue with a company over time and record the company’s reaction. This approach can also provide diagnostics '…to identify persuasive arguments, measures, actions and tactics…' that can be refined and applied elsewhere.
Many of you may rely fully on your asset managers and / or your proxy voting provider (eg ISS) for company engagement and proxy voting. In this context, the pointers above can be applied to your internal review process of your manager / provider activity and the reporting they provide you.
Of course the FaithInvest team is here to help, and can connect you with peers or materials. The PRI recently published a paper on working with proxy advisors, and has an excellent case study, albeit for a very large organisation, on how one asset owner monitors the proxy voting activities of their investment managers.