ESG engagement: How they do it at Old Mutual
With investors’ appetite for ESG information showing no signs of slowing down, and regulation and government initiatives further driving the agenda, ESG engagement can be a challenge. We speak to Helen Wilson, head of responsible business at Old Mutual, who gives us an insight into her engagement practice.
At Old Mutual, do you integrate ESG engagements into your regular meetings, and how does this work?
Our approach is really a hybrid of proactive engagement around material issues – such as HIV mortality – or infrastructure investment that are raised by investors in our regular corporate affairs, IR or corporate governance meetings. We also have a substantial number of ad hoc conversations and inquiries on niche issues, or those seen as less material to our bottom line, such as the Modern Slavery Act, tax policy or our response to the recommendations of the Task Force on Climate-related Financial Disclosures.
The issues are presented and discussed as part of the business response to its operating environment, or legislative and regulatory changes. We have chosen not to split out responsible business or sustainability issues, instead preferring to embed the issues in the business context. We present our plan or framework for delivering on ESG issues as a stand-alone item when the investor has shown interest in this area specifically.
Do you ever host specific ESG days or events? If so, how have these been received?
We have offered to join ESG roadshows on a few occasions, but the lack of take-up of meetings has meant it has not been worth the team travelling. In these cases, we have followed up with interested parties on a one-on-one basis to ensure we have engaged with any interested investor. We cover ESG issues as part of our business operational reviews and market updates.
Are you noticing more interest in ESG topics?
We sit in an interesting space, both as an asset owner or issuer of information and, on the other side, an asset manager. This means we are asking other businesses the questions our fund managers think will allow them to make stock decisions to build strong portfolios delivering on customer mandates, and we are asked the same questions by external fund managers.
This position offers us insight into what both communities are facing, but sets a challenge of how we communicate our stance from a corporate perspective while still engaging with investee companies around issues on which we have a clear in-house perspective. Diversity, remuneration and – of course – climate change are all examples of this.
Do you see the future of your ESG engagement evolving and, if so, how?
Yes, change in this space is natural and to be expected. All the existing ratings and engagement processes will be updated to cover the additional and evolving issues that are now being seen and talked about at board level. Over the next few years, the engagement environment will require businesses to engage on a holistic and broad level with their mainstream investors and then be able to engage on specific material issues in a deep and data-enriched conversation with specific focus groups of investors.
The need for assured data to give investors confidence will continue to grow, and the pressure on companies to produce a reporting suite that really tells investors both a historic and a future business narrative (rather than just ticking boxes) will keep the corporate reporting landscape evolving.
Are there any other changes to be expected?
As a corporate, we are going through radical change ourselves – we call it ‘managed separation’. We are transferring the responsibility for engagement with investors to the individual businesses. Going forward, we expect this will lead to greater local insight being provided to interested stakeholders.