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ngagement P
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ered by an ESG Engagement strategy. However, there is great variability in the use of combina- tions within these three countries. In the UK, it is common to combine ESG Engagement with ESG Integration. In Denmark, it is common to combine ESG Engagement with Exclusions and Norms-based screening. In the Netherlands, it is common to combine ESG Engagement with Exclusions and ESG Integration.
If one looks at the converse, or how much of the total assets of an individual responsible investment strategy is combined with ESG Engagement, the most frequent combination is also ESG Integra- tion. As seen in Figure 16, of the total ESG Integration assets in the nine countries, almost 90% is also combined with ESG Engagement. The second highest use of ESG Engagement in combina- tion with another responsible investment strategy is Sustainability Themed Investment, with 67% of all such assets combined with ESG Engagement.
Figure 16: SRI Strategies Combined with ESG Engagement (Source: Eurosif, 2013).
The data also show that it is common to combine ESG Engagement with not just one, but also two or three SRI strategies across assets. The extent of combinations of SRI strategies is significant because it shows that investors use different strategies for different purposes. For example, con- sidering the nature of ESG Engagement one can argue that it is more suitable for achieving incre- mental improvements in existing company practice and conduct than it is achieving a fundamental shift to more sustainable consumption and production. This is because most ESG Engagement is aimed at evolutionary changes rather than revolutionary. If an investor wants to finance innovative new technologies that have the potential to change the world it therefore makes sense to combine ESG Engagement with Sustainability Themed assets. This does not imply that one strategy is more important that the other; they simply serve different purposes in achieving the overall investment objective of the investor.
30.30% 45.64% 53.44% 67.31% 89.94%
Exclusions Best in Class Integration
100.00% 90.00% 80.00% 70.00% 60.00% 50.00% 40.00% 30.00% 20.00% 10.00% 0.00% Norms
49
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CTION 1
THE ST
ATE OF EUROPEAN ESG ENGA
GEMENT
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ENGA
GEMENT IN A BRO
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ONTEXT
Illustration 10: Etica SGRThis case study illustrates how a sustained relationship between investor and company can develop into a successful partnership.
Etica has been investing in Indesit, an Italian appliance manufacturer, since 2003, in part due to its good ESG profile and constant commitment to a responsible management. For exam- ple, for a number of years, Indesit has been publishing a Sustainability Report, which in 2011 was awarded the level A+ of the Guidelines of GRI.
Etica has been attending the Indesit AGM every year since 2005, developing a continuous dialogue with the company about ESG issues. Moreover, Etica has regular meetings with the company’s investor relations team through phone calls and meetings. Indesit is transparent about this dialogue in its Sustainability Report and reports on the presence of Etica among its shareholders as an ethical investor in order to underline the importance of the dialogue with Etica for Indesit’s CSR commitment.
At the first shareholder meeting it attended, Etica requested more transparency on the envi- ronmental certification for all company’s plants. As a result, Indesit included the information requested in its Sustainability Report of the following year.
In 2008, Etica stressed the importance of adopting a selection and monitoring policy for suppliers based on ESG criteria. At present, Indesit selects its suppliers according to ESG targets (comprising 10 environmental indicators and 11 on health and safety) and it monitors suppliers’ compliance through online surveys and auditing conducted by the Supply Chain Quality Unit.
In 2010, Indesit joined a project promoted by Etica in Italy and launched by the PRI about gender diversity at companies’ management levels. The goal of the project was to identify companies with leading policies and programs aimed to promote gender equity in corporate leadership and to encourage increased transparency with respect to gender empowerment. A few years ago, as a consequence of the crisis, Indesit decided to move part of its production to Poland, where working and production costs are lower than in Italy. Etica urged Indesit to pay particular attention to the issue of job stability, asking for information about the relocation of workers of the plants that have been closed and moved abroad. Indesit disclosed its reloca- tion policy to Etica, which demonstrated all the proceedings that have been implemented by the company and showed that no employees had been fired.
3.2. Collaborative Engagement
Collaborative engagement (also referred to as collective or pooled engagement) is where two or more investors collaborate on engaging on a topic or range of topics with a company. It is signif- icant because it reduces costs and increases the probability of a successful outcome. Investors, especially asset managers, have limited budgets and therefore capacity constraints. Being able to share costs and knowledge reduces both the time and resources each investor needs to dedicate to an engagement effort. Further, due to the power of voice, the larger the collective ownership