Transparency is a key component of active ownership and it forms part of many stewardship codes and principles (i.e. Principle 6, the ICGN Global Stewardship Principles, the OECD Responsible Business Conduct for Institutional Investor and several national stewardship codes).

Reporting Framework reference:

Strategy and governance (SG)

19 - communication

Transparency is a key component of active ownership and it forms part of many stewardship codes and principles (i.e. Principle 6, the ICGN Global Stewardship Principles, the OECD Responsible Business Conduct for Institutional Investor and several national stewardship codes). As much as investors are engaging with companies to access and encourage better ESG information and practices, they are responsible for reporting to their clients and beneficiaries on their engagement and voting activities and relevant outcomes. Such information should be easy to access and understand and provided on a regular basis (i.e. quarterly or annually). Disclosure to clients and beneficiaries may also be more detailed than public disclosure to other stakeholders. Reporting practices should also be reviewed periodically to continuously improve communication.

Investors might be reluctant to provide too much information as it can take a long time for the positive outcomes of active ownership activities to unfold. Additionally, attribution might be difficult to prove as companies change practices for multiple factors happening at the same time. Dialogue with companies is also often kept private to build trust and ensure openness by corporate management. Therefore, some investors might perceive reporting as a hindrance to forming relationships with companies.

Nevertheless, the benefits of disclosure clearly outweigh the possible downsides. More information facilitates the validation of active ownership and creates business opportunities in markets where asset owners are focusing more attention on stewardship responsibilities. Sharing details on the progress of dialogue also enables better consideration of engagement and voting data in investment decision making when active ownership activities and asset management functions are run by two separate entities. Greater disclosure by investors is also an opportunity to improve how they communicate their expectations to companies and reward positive dialogue and progress in ESG practices. Finally, reporting allows for more robust monitoring by and accountability to clients, beneficiaries, regulators, standard setters and other stakeholders.

Best practice disclosure on engagement activities includes:

  • a presentation of the overall engagement strategy, due diligence and monitoring approach;
  • detail on the selection of engagement cases and a definition of objectives;
  • number of engagements undertaken;
  • breakdown of engagements by type/topic;
  • breakdown of engagements by region;
  • an assessment of progress and outcomes achieved against defined objectives;
  • examples of engagement cases with specific companies (when the information is not considered sensitive and confidential);
  • detail on eventual escalation strategies taken after the initial dialogue has been unsuccessful (i.e. filing resolutions, issuing a statement, voting against, divestment etc.); and
  • whether the information provided has been assured externally.

Good quality reporting on voting activities covers:

  • all voting decisions, including on ESG resolutions;
  • number of votes cast and corresponding AGMs covered across markets and percentage of total available votes;
  • an overview of topics covered during the voting season;
  • percentage of votes cast for, against or abstained;
  • explanation of rationale for voting against management or abstentions; and
  • whether the information provided has been assured externally.
Examples of public active ownership reporting
BNP Paribas Asset Management, Investment Manager, France Annual Voting Report
  • Provides an overview of its voting policy.
  • Outlines recent changes to its policy.
  • Aggregates number of votes by region.
  • Shows percentage of votes in favour of and against management.
  • Explains main reasons for voting against by regions.
  • Includes a table with specific numbers of votes against management by typology of reason.
  • Includes engagement data with number of companies engaged compared to the previous year.
  • Shows the number of successful cases of engagement and examples of the success (i.e. a new long-term remuneration strategy).
  • Lists collaborative engagements BNP Paribas has taken part in.
  • Lists ESG initiatives and workshops BNP Paribas has joined.
BMO Global Asset Management, Investment Manager, Canada Responsible Investment Annual Report
  • Includes an overview of engagement on key themes.
  • Presents number of votes cast in favour/against/abstained/withheld domestically and internationally, and votes against management broken down by region.
  • Features an overview of voting in various markets.
  • Breaks down engagements by E, S, and G factors and instances of success.
  • Shows number of engagements undertaken on specific issues and in different regions, as well as milestones achieved by issue and geography.
  • Breaks down company engagements by background, action and verdict (including next steps).
  • Includes a map of engagements against relevant SDGs, including a graph with aggregated engagements and their link to the SDGs.
Council on Ethics of AP-funds, Asset Owner, Sweden Engagement Annual Report
  • Provides an overview of the council’s engagement approach and types of engagement (reactive versus proactive).
  • Aggregates dialogues by progress/regions/sectors and issues through pie charts.
  • Presents the process of engagement from research, prioritisation, setting of objectives, dialogue and scale of achievements (or lack thereof).
  • Gives examples of thematic/sectorial engagements and a summary of achievements (i.e. palm oil, child labour in cocoa industry or the mining industry).
  • Provides examples of company dialogue, citing issues and names. Cases range from successful dialogues to situations that are still being monitored or where the investor has strong recommendations for the company going forward.
  • Presents cases where divestment has been recommended.
  • Includes detailed overviews of collaborations with other investors or multistakeholder initiatives with broader presentation of the issues or concerns.
  • Reports on company visits in specific countries (i.e. Mexico and South Korea).
  • Includes a photo and overview of the team responsible for engagement activities.
Heritage- Standard Life Investments, Investment Manager, UK Engagement Quarterly Report
  • Outlines its general approach to engagement.
  • Presents who is responsible for engagement.
  • Refers to the UK Stewardship Code.
  • Aggregates number of engagements and type of interactions (letters, one-toone meetings, consultations on remuneration, engagement related to voting, collective engagements etc.).
  • Includes a list of companies they interacted with and broad issues covered (i.e. remuneration, ownership, strategy and audit).
NEI Investments, Investment Manager, Canada Engagement Quarterly Report
  • Includes updates on the progress of engagement with all companies where dialogue has taken place.
  • Includes a table with the name of target companies, a description of them, the ESG issues at stake, progress/achievements/dialogue and holdings/ corresponding funds.
  • Specifies whether engagement is executed individually or in collaboration.
  • Features a list of collaborations joined.
  • Contains information on relevant public policy engagement on ESG topics.
PGGM, Investment Manager, Netherlands Responsible Investment Annual Report
  • Provides an overview of the engagement and voting approach/data used and service providers used.
  • Includes areas/themes covered.
  • Aggregates number of companies engaged and results achieved.
  • Shows number of votes cast and number of AGMs covered.
  • Provides a world map with a list of results achieved in engagement with specific companies named.
  • For each area of focus, it outlines PGGM fs position and what it would ask of companies, and then goes into specific details and case studies.
  • The information provided is externally assured.
State Street Global Advisors, Investment Manager, US Engagement Annual Report
  • Provides an overview of annual engagement priorities with detail on sectors and issues.
  • Presents its voting policy on activist investors.
  • Summarises number of AGMs voted on, companies covered, shareholder proposals, votes cast for and against management, and breakdown of voting per region.
  • References total number of engagements completed; describes some of the key engagement priorities, objectives and number of companies involved; outlines views of SSGA and details of successes (if relevant); and a table of engagements by region and year.
  • Lists names of all companies engaged by topic and region.
  • Outlines key takeaways from the season in specific regions (i.e. Australia and emerging markets).
  • Gives examples of voting and engagement success stories and highlights across regions (i.e. on governance, compensation, environmental and social matters).
  • Includes a table on leveraging the insights of regional investment professionals to enhance the effectiveness of voting and engagement activities.
Trillium Asset Management, Investment Manager, US Annual Impact Report
  • Shows percentage of votes cast against management, support for ESG proposals and votes against executive pay (including a comparison between these percentages for a core group of large-cap companies and firm-wide).
  • Includes a table of resolutions, topics, results and comments on commitments from companies, co-filers and lead filers.
  • Presents portfolio carbon footprinting compared to S&P 500 companies for scope 1, total emissions and carbon emissions intensity.
  • Lists percentage of portfolio companies with over 20% of females on the board, more than 80% of board independence, an independent CEO/chair, CDP participants, and average annual CEO total compensation in $ millions compared to the same indicators in S&P 500 companies.
UAW Retiree Medical Benefits Trust, Asset Owner, US Website and media outlets
  • Provides detail of engagement priorities and goals.
  • Gives an overview of UAW fs engagement history.
  • Assesses the current status of the engagements.
  • Details the outcomes that have been achieved through the engagements.
  • Summarises votes cast by calendar year annually, including why the trust may choose not to vote certain ballot items or attend meetings.
  • Rationale is disclosed in the following cases: votes in selected markets; votes on certain issues (all markets); votes for significant shareholdings (all markets); and votes for companies engaged.