October 04, 2013
The State of Shareowner Engagement in Europe
by Robert Kropp
Eurosif reports on investor engagement with corporations in Europe and finds that engagement on
environmental, social, and corporate governance issues is steadily increasing.
In a 2009 paper outlining the differences in approaches to shareowner engagement in the UK and US,
James Gifford, Executive Director of the United Nations' Principles for Responsible Investment (PRI), wrote, "There is a
cultural difference between the US and the UK on the issue of filing shareholder resolutions, with
this tool being much more common in the US due to weaker shareholder rights leaving shareholders
with fewer options, as well as a more confrontational corporate culture."
It may well be that conditions have
changed somewhat since Gifford wrote those words—for the past two years at least, members of the Interfaith Center on Corporate Responsibility
(ICCR) have prioritized corporate dialogues while continuing to file shareowner
resolutions—but, as a recently published report from Eurosif reveals, the filing of resolutions remains a
relatively low priority for sustainable institutional investors in Europe.
Stewardship: European ESG Engagement Practice 2013, states,
“While these proposals are a
common vehicle for change in the United States, accounting for several thousand proposals each
year, there are typically less than 10 of these each year in Europe.”
“The differences are
mainly cultural and historical,” the report continues. “European investors vote shares, but the
main vehicle for change is private engagement rather than proposing a shareholder resolution on an
ESG issue. In the US, the mere filing of a shareholder resolution can actually be a vehicle for
successful engagement, as many proposals are withdrawn before the vote because companies respond to
The report defines environmental, social, and corporate governance
(ESG) engagement as “a responsible investment strategy that is often used for the purpose of
achieving incremental advances in sustainability reporting or ESG performance of companies.”
According to Eurosif, the most frequently utilized engagement strategies in Europe (besides the
voting of shares, which slightly over half of industry participants practice), are private
dialogues and collaborative engagement. Collaborative engagement “involves working with other
investors on an informal basis, or on collaborative platforms,” the report states. “By being
supported by a higher proportion of company share capital, the likelihood of success of engagement
Additional highlights from the report include:
Assets subject to an ESG
engagement policy have been steadily growing for the past ten years, reaching almost $2.7 trillion
in 2011; and
slightly more than one-third of industry participants surveyed report having
investment policies that include ESG integration, while over two-thirds of those who engage with
corporations on ESG issues have such a policy in place.
The report also calls for improved
integration of ESG issues into corporate and investment decision making through mandating strong
ESG disclosure from companies and requiring the disclosure of engagement and voting policies and
practices from investors.
“Active engagement has the potential to deliver value by
generating profits, reducing risks and negative ESG externalities, encouraging better business
practices, changing ethical behavior and improving reputations,” the report concludes.
“The report highlights the benefits of being an engaged investor, in particular around
environmental, social and governance issues,” Francois Passant, Executive Director of Eurosif,
said. “It clearly demonstrates the potential of engagement to create value in the long term and be
an agent of positive change.”
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