Engagement: A constructive dialogue as an active shareholder
Engagement refers to the continuous and constructive dialogue between investors and their participations. The aim is twofold: financial return and sustainable improvement for people, the environment and society. Engagement therefore goes a step further than exclusion: it wants to have a positive influence on the policy of companies.
The how and why of engagement
Excluding or selling companies because of their unsustainable activity is drastic, and unfortunately sometimes necessary. But then you miss the opportunity as a financial partner to steer the company in the right direction. An active ownership offer opportunities for growth, for both financial and non-financial results, even if takes time and effort. Our fund manager Cadelam motivates companies to make future-oriented choices through continuous dialogue – formally and informally.
Engagement is about exerting a positive influence on the policy of companies.
Hermes EOS, our partner in engagement
Cadelam partnered with the internationally renowned Hermes EOS for the engagement part; a first in Belgium. They have an independent team of experienced experts in the field of ESG (environment, society and good governance). Together with Cadelam, they define priority sustainability themes. They then start a dialogue with the companies in question. The tone is strict but fair: positive and constructive at the outset, critical and determined when improvements are taking too long to appear. The right to vote at general meetings can also encourage – or even prevent – certain strategic choices.
Concrete cooperation in the field of environment, society and good governance
A clear strategy and open communication about these three areas will create a momentum in which everyone wins: the companies (sustainable growth), the investors (profitable investments) and the wider landscape (people, the environment and society).
- Environment: Align business models with the Paris climate agreements, in which the members of the UN are committed to limiting global warming to a maximum of 2°C and drastically tackling air, land and water pollution.
- Society: Engage in dialogue with companies with global supply chains. The customer may be king, but for long-term success, a company must take into account all its stakeholders, especially its workforce.
- Corporate governance: To establish the organizational checks & balances of a company. A well-functioning board of directors, for example, and the right balance between remuneration and sustainable value creation provide the right impulses for targeted decision-making.
Creating such an impact is what responsible asset management is all about.