Next steps for investor engagement. Helena Mahoney 11 November 2009

Transcription

1 Next steps for investor engagement Helena Mahoney 11 November 2009

2 Overview Hermes EOS meets pension fund needs as responsible investors and owners Introduction to Hermes How to prepare to engage Measuring engagement success s project and engagement in practice Carbon engagement Hermes Equity Ownership Services I Overview I November

3 Introduction to Hermes Aligned with goals and objectives of pension funds and other longterm investors Hermes is wholly owned by BTPS, the largest UK pension scheme Independent investment manager of circa Euro 40bn* for over 200 clients Responsible ownership activities since the early 1990s Hermes Equity Ownership Services (EOS) set up in 2004 Heritage and ownership align Hermes with long-term orientated investors Founder signatory of the United Nations Principles for Responsible Investment (UN PRI) As at 31 September 2009 Source: Hermes Hermes Equity Ownership Services I Overview I November

4 Multi-skilled, multi-national and global resource Central team Colin Melvin (CEO) Senior advisors Board (Ind. Directors) Tadashi Kurachi Sir Mark Moody Stuart, fund manager Corporate management Corporate management Leon Kamhi (Commercial) Bill Mackenzie Christian Strenger Activism, strategy, industry Pension fund management Corporate management Paul Lee (Operations) David Pitt-Watson Stephen Davis, legal Strategy, Activism, Politics Helena Mahoney Hege Sjo Financial marketing, Client service Finance, Corporate governance Martin Weiss (Voting administration) Marketing, line management Europe Hans Hirt Mais Hayek Accounting, legal Jennifer Walmsley Daniel Ingram Journalism Tim Goodman Natacha Dimitrijevic Industry Hannes Stelten Public policy Industry, Co. Secretary Freddie Woolfe Forestry Gianfranco Gianfrate Corporate Finance Americas Asia Bess Joffe Karin Ri Legal Investment Banking Darren Brady Naheeda Rashid Investment Products James Davidson June Choi Finance, strategy Michiko Saito Government, Inv Banking Regnan Team Engagement, research Hermes Equity Ownership Services I Overview I November

5 Preparing to engage: identifying issues and candidates Screens and sources Screens Environmental Analysis Social & Ethical Analysis Financial Analysis Analysis Strategic Analysis News developments Local media across markets Specialist news services NGO sources Client input Company specific Thematic engagements Investor Networks ACCA, Assogestioni, CII, DSW, Eumedion, EuroSIF, GIGN, ICGN, IIGCC, UKSIF, UNEP FI, UNPRI EOS Team actions Preparation Assess likelihood of success Prioritisation of resource Detailed proposal for in-depth, heavily time and resource intensive engagements Low-key proposal for most engagements Engagement Iterative process of meetings at Board level Reinforced in writing Discussion with other shareholders Oversight Weekly EOS peer review and monthly progress assessment Quarterly oversight by Engagement Committee EOS Board reviews Engagement Committee activities Bi-annual oversight by Client Advisory Council Client reporting Hermes Equity Ownership Services I Overview I November

6 Definitions Definitions (general by environmental theme) Theme Environment Bio-diversity Climate change / carbon intensity Forestry Oil sands Waste Water stress Company identified through screening Raised substance of concerns with company at appropriate level Assessment (or measurement) & disclosure Severely impacted by an issue and either are not mitigating the risk effectively, or the issue they face is of such a scale that mitigation is not going to successfully address it Develop credible strategy / set stretching targets Moderate risk or have managed to mitigate a significant concern so effectively that we are comfortable that the effective exposure is only moderate definitions for carbon engagements Strategy implemented Limited risk or have managed to mitigate a moderate concern so effectively that we are comfortable the effective exposure is limited Theme Environment Climate change / carbon intensity Screen for exposure to carbon risk (direct, indirect and through supply chain) Meet with appropriate operational and sustainability executives. Review challenges and opportunities Escalate to board level for senior level oversight. Ensure carbon risk management strategies are in place through disclosure in annual reports and appropriate KPIs Develop credible carbon mitigation strategy and set stretching carbon reduction targets Carbon mitigation strategy implemented over the longer term. Continue to monitor company s progress through reporting and disclosure Hermes Equity Ownership Services I Overview I November