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Sustainable Investing

Active ownership

Active ownership means using your rights as a shareholder to improve corporate behavior and make investments more sustainable. The two main ways to do this are by engaging with investee companies or through voting at shareholder meetings.


Engagement means discussing environmental, social or governance (ESG) concerns with the company in which they invest, usually to address a specific theme such as emissions (E), labor rights (S) or the independence of the board (G). It can also be used to combat serious breaches of international standards, where the company faces exclusion unless it remedies the problem.

Most engagement themes last three years. They have proved successful in raising sustainability to the point that it preserves long-term shareholder value and enhances long-term returns. When done under collaboration with other investors, engagement can be very effective in influencing companies’ behavior on major global themes such as achieving net zero carbon.

Returns that benefit the world we live in

Say on Climate, Say on Pay

Voting has gone beyond traditional ‘rubber-stamping’ of company resolutions at their annual general meetings to become an effective tool in raising concerns about ESG issues. Investors can also put forward resolutions on issues such as ‘Say on Climate’ and ‘Say on Pay’ to further sustainability in the contentious issues of emissions reduction and executive remuneration, respectively.

Other voting is more routine, such as in authorizing accounts or specific projects. Much more votes have been cast against companies in recent years in apparently routine matters, such as reappointing the chairman, in protest at a company’s preparedness for climate change.

See also:

Engagement
Social sustainability
Corporate governance


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