As a result twenty-one companies (in which Liontrust are invested) have increased the proportion of women on the board to over 30 per cent, such that Liontrust no longer needs to withhold support. After voting, these companies now have an average of 38 percent female boards, compared to just 22 per cent previous to Liontrust casting its vote.
Mr Michaelis adds: "A further fifteen companies have increased the number of women on their boards, and we remain positive that continued efforts should result in further progress. These companies now have an average of 26 per cent female boards, compared to 17 per cent before we voted on this issue.
"There are thirteen companies where we have seen less progress on increasing gender diversity so we will continue to engage to effect real change."
Central to Liontrust's approach is that all the elements of sustainable investment are integrated within a single team.
Every member is responsible for all aspects of financial, ESG and engagement relating to an investment decision. This means, as Mr Michaelis explains, that engagement is an ongoing part of the process rather than a separate arm. Every time there is a meeting with a company, engagement on a range of issues will form part of the overall stock analysis.
Matt Crossman, stewardship director at Rathbones says: "Engagement, done collaboratively or an individual basis, is crucial to harnessing a better understanding of a company and the key risks facing it. Through regular company meetings with senior management, larger investors are able to draw out key observations that data providers and smaller investors could miss. Investors are able to put senior management on the spot to see whether ESG themes form part of management’s thinking. Conversely, investors can spot and alert senior management to ESG risks which may have escaped management’s notice. Insight from engagement (and voting) should feed back into the investment process and supplement ongoing research."
Data delivery
>In 2016, the team began withholding support for companies that were not sufficiently gender diverse.--Peter Michaelis
Catherine de Coninck-Lopez, global head of ESG at Invesco, says at her firm the ongoing engagement with companies is part of the corporate governance function of ESG, while the AGM is used to highlight the most serious ESG issues.
From a fund selection point of view, Mona Shah, an ESG specialist investor at Stonehage Fleming, says that as part of her ongoing engagement with ESG fund managers she highlights that technology is available to allow managers to measure the carbon footprint of their fund, and also to move manager’s focus onto additional ESG criteria, such as the UN sustainable development goals.
