The fourth quarter of 2021 saw the start of one engagement theme, the closure of two others, and the continuance of trying to improve corporate governance standards in South Korea, among other ongoing projects by the Active Ownership team. Meanwhile, expectations are being laid out for the proxy voting season that starts with companies’ spring AGMs.
Leading the Q4 report is the launch of the ‘Acceleration to Paris’ engagement theme in which 200 of the largest emitters across Robeco’s investment universe were assessed according to their climate risk. The worst performers were selected to enter a climate-focused enhanced engagement program. In a Q&A, Nick Spooner explains how the engagement program aims to help companies decarbonize in order to meet the temperature goals of the Paris Agreement.
As one theme starts, another ends. Laura Bosch reflects on the results of engaging with fashion retailers and luxury brands on paying living wages over the last three years. She outlines how deeply rooted power inequalities, complex supply chains and lax regulation have largely stopped the apparel sector from closing the pay gap, though some brands have started to take on the issue.
Also closing is a four-year engagement theme on risk management and governance in the financial sector. Michiel van Esch shares the key challenges when it comes to monitoring risk management processes in the banking sector and reflects on the influence of managerial and executive culture on risk governance strategies.
Fostering systemic change
An ongoing theme is policy engagement in emerging markets, including a regular dialog with the Asian Corporate Governance Association, to whom feedback was given on South Korea’s revised ESG codes. Ronnie Lim explains how these policy dialogues with financial regulators and related stakeholders across various emerging economies aim to foster systematic change by strengthening corporate governance standards.
Proxy voting remains highly important to Robeco. Antonis Mantsokis and Lucas van Beek reflect on some of the trends and sustainability questions that will continue to define the agenda for the upcoming proxy voting season. Among them are the increasingly important topic of aligning executive compensation with relevant ESG metrics, and some new developments around corporate governance and stewardship, led by the UK.
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Protecting the climate
“Over the last quarter of 2021, we saw a strong collective effort to protect our climate and biodiversity, not only at Robeco but across the world,” says Carola van Lamoen, Head of Sustainable Investing. “Engagement lies at the core of our climate change strategy, reflecting the importance that we attribute to active ownership.”
“Despite recently expanded commitments, doubts remain whether companies are equipped to sufficiently limit global warming. In our new ‘Acceleration to Paris’ engagement theme, Robeco focuses on the climate laggards and largest emitters within our investment universe in order to help them ramp up their decarbonization efforts.”
Reflecting on past and present themes
“Besides the growing importance that we attach to climate change, we want to reflect on some of our ongoing and concluding engagements. On the social front, we have closed our engagement efforts tackling the payment of living wages across the garment supply chain, an industry in which poverty pay levels and strong power inequalities are common.”
“Meanwhile, on the governance side, we concluded our engagement with the financial sector around culture and risk governance. Financial institutions are exposed to numerous governance-related risks, some reaching as far as money laundering or other financial crimes.”
“As we move into the new year, we are encouraged by the global movement that is putting environmental and social issues at the forefront of their actions.”