Engagement - How can investors encourage companies to be more sustainable?

In order to demonstrate the possibilities of collaborative engagement, a webinar was held on 24 April 2023 as part of the series "Green Money for Green Investments", which was organised by ÖGUT on behalf of the Ministry of Climate Protection and in cooperation with the Austrian Ecolabel team at VKI.

Engagement" is the active and long-term exchange between investors and companies with the aim of convincing the company management to take sustainability issues into account (known as the voice strategy). This also includes the exercise of voting rights at general meetings and shareholder proposals (the so-called vote strategy). Originating in the USA, engagement as an investment strategy is also increasingly used in Europe and Austria. However, there is still room for improvement, not least because this approach is considered to have a high positive impact in terms of sustainability.

Katharina Muner-Sammer (ÖGUT) guided through the event. After the welcome by Josef Behofsics (BMK), Raphael Fink from VKI gave an insight into the Austrian Ecolabel Guideline UZ 49 for sustainable financial products. In doing so, he addressed the current significance of "commitment" in the UZ49 and gave an outlook on the possible further development of the topic in the course of this year's revision of the guideline.

Rainer Ladentrog from fair-finance Vorsorgekasse AG presented "Shareholders for Change", a European network of institutional investors. Founded in 2017, the network jointly attends annual general meetings and coordinates the voting and/or submission of questions to boards and management on topics such as labour and human rights, tax practices and tax justice or CO2 emissions and climate change.

The PRI Collaboration Platform was then presented by Dustin Neuneyer (PRI - Germany & Austria). This platform enables PRI signatories[1] to create and conduct collaborations on ESG issues such as engagements, group discussions, investor statements and investor letters. Publicly accessible is the "Resolution Database". In this database, global resolutions and votes in the area of "ESG" or sustainability can be viewed.

Marco Mansfeld and Georg Präauer from ISS ESG gave an overview of the services offered by ISS in the field of engagement and proxy voting. Here, the collaborative engagement offerings include standards-based engagement or issue-specific engagement. Standards-based engagement ("pooled engagement") involves influencing companies that do not comply with international standards in the areas of labour and human rights, the environment and corruption. Issue-specific engagement involves contacting companies that are not making progress in the areas of reducing greenhouse gas emissions, biodiversity, gender equality, etc. It is important to identify the issue in advance. It is important to set engagement targets in advance and to work out corresponding indicators so that the actual success of the engagement can also be measured.

After the presentations, the speakers answered questions from the webinar participants and the moderator. Josef Behofsics and Katharina Muner-Sammer thanked the speakers for the insight into collaborative engagement opportunities and the lively interest shown by the approximately 170 participants at the event.

The individual presentations and the recording of the webinar will soon be available for download on the ÖGUT website: The Austrian Ecolabel for Sustainable Financial Products in the Context of Current Developments | ÖGUT (oegut.at)

Katharina Muner-Sammer and Susanne Hasenhüttl, ÖGUT

[1] The UN Principles for Responsible Investment (UN PRI) is an investor initiative founded in 2006 in partnership with the Finance Initiative of the UN Environment Programme (UNEP) and the UN Global Compact.