Investors rely on engagement with Asean corporates to drive ESG change
Janice Lim
ASSET managers are relying on behind-the-scenes engagement with corporates in South-east Asia to drive change in their sustainability strategies, instead of voting on climate-related shareholder resolutions during their annual general meetings (AGMs).
Such resolutions are few and far between among corporates in this region to begin with, unlike companies in Japan, North America and Europe, which are seeing an increasing number of climate-related shareholder resolutions during the most recent AGM season.
Jerry Goh, investment manager at asset manager Abrdn, said that one reason for the lack of climate-related shareholder resolutions among corporates in this region is due to an absence of a litigation culture, as opposed to a society like the United States.
While proxy voting during a company’s AGM is one tool that investors can use, Chiang Yi-Chen, senior sustainable investing analyst at Manulife Investment Management, said that engagement with companies is one avenue investors constantly turn to.
“So, we want to bring these topics up with the company first and discuss it before we actually file a resolution... We want to have face-to-face discussions with the management, ‘This is obviously where you’re lacking compared to your peers, what you can improve’,” said Chiang.
She added that Manulife Investment Management will try to understand a company’s risks and opportunities based on their disclosures, and identify a gap before agreeing to reach a particular outcome.
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Though investor activism is on the rise – at least among listed companies in Singapore – it is still rare to see climate-related resolutions, especially ones tabled by shareholders themselves. Most company resolutions are typically passed at high percentages.
Goh said: “That’s why in this region, having people on the ground is so important. Because we rely on that engagement piece, we rely on the relationship-building piece with the company, trying to drive change from that perspective”.
Both Chiang and Goh spoke on Tuesday (Jun 20) at a conference organised by Asia Research and Engagement as well as the Global Strategic Communications Council.
Based on the recent AGM season in Japan, Goh observed that there have been resolutions targeting issues around companies’ net-zero commitments, capital expenditure on their climate commitments and whether they are aligned with the Paris Agreement. Banks and utility companies are also the main targets of such resolutions.
Chiang noticed that in North America, issues surrounding the financed emissions of banks, transition plans of utility companies as well as linking remuneration to sustainability targets received quite a number of proposals.
While asset managers have their own voting policies, Goh pointed out that asset managers may choose to abstain or even vote against a climate-related shareholder resolution if they had engaged with the company’s management prior to the voting, and it was able to show that it had improved its disclosures or that it has signed up to an international framework aligned with the Paris Agreement.
Other considerations are whether these proposed resolutions are overly prescriptive, or may not have taken a country’s national climate strategy into account, he added.
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