As off-season shareholder engagement continues to rise, buy-side corporate access teams are stepping in to assist with the meetings – either formally or informally.
For most issuers, there has been a sharp increase in investor meetings this year as the ease of virtual conferencing has played a part. This engagement has carried through to the off-season, when governance professionals and board directors tend to meet with the stewardship and responsible investment teams at asset managers.
According to an informal poll at the recent ESG Integration Forum – US, hosted by IR Magazine and Corporate Secretary earlier this month, 64 percent of attendees have participated in more ESG-oriented shareholder engagement this year, while 29 percent have participated in the same number of meetings as last year.
This is consistent with the findings of IR Magazine’s recent Off-Season Governance research report, in which 63 percent of respondents say they planned to participate in off-season engagements this year. The results are higher at large caps, where 78 percent of respondents planned to participate.
While the demand for ESG engagements during the off-season continues to rise, so does the influence of buy-side corporate access teams, which have traditionally focused on supporting portfolio managers and analysts. A number of corporate access professionals have told IR Magazine they are now playing either a formal or informal role in their firm’s off-season engagement.
This occurrence was initially confirmed by Jessica McDougall, vice president at BlackRock Investment Stewardship and Corporate Governance. Speaking to IR Magazine earlier this year, she said: ‘We put requests through a centralized team to really make the best use of a company’s time and identify where there’s opportunities for BlackRock to bring investment professionals together more efficiently. We now have several examples across the firm where I have an ESG view of a company and a fundamental analyst may have a different view on the company and we work together to build a more fulsome view of the company.’
Elizabeth Librizzi, senior vice president and head of corporate access and advisory services at AllianceBernstein, says she expects this integration of fundamental investors and ESG-oriented team members to increase. ‘Over the last year, with Michelle Dunstan being appointed the global head of responsible investing, [AllianceBernstein] has definitely put a more formulaic approach around all of our stewardship [and] ESG-centric engagements,’ Librizzi tells IR Magazine.
‘My team wasn’t put in place to disintermediate, but to help to co-ordinate and collaborate, and we’ve definitely been heavily involved in arranging and planning our ESG engagements, and co-ordinating the participation internally once we’ve locked in the access.’
Librizzi adds that there are some teams that still prefer to reach out to issuers on their own, but she thinks ‘corporates will find, going forward, most ESG-centric engagements will include fundamental investors, as well as representation from our [responsible investing] team.’
Representatives from the corporate access teams at Fidelity Management & Research and Columbia Threadneedle tell IR Magazine that this outreach has historically been done by the stewardship or responsible investing teams, because they own the relationships with their portfolio companies on the governance side, but that they expect this to change as corporate access becomes more involved in the future.
At Capital Group, the corporate access team has played more of a role in off-season engagement this year while informally stepping in to assist with scheduling meetings. Jocelyn Cheng, global head of corporate access, says she and her colleagues in the corporate access team help to establish which ESG-focused meetings investment professionals should attend.
One of the emerging ESG questions from investors in US-listed companies, in light of the continued dialogue about racial justice and equality, is whether issuers can publicly disclose the EEO-1 workforce data that is filed each year with the Equal Employment Opportunity Commission.
Earlier this year the New York City Comptroller Scott Stringer initiated a campaign to pressure S&P 100 companies to disclose EEO-1 data. According to an update in late September, 34 additional S&P 100 companies have committed to disclosing this information in the future. State Street Global Advisors has taken similar steps.
Speaking at the ESG Integration Forum, Alexandra Higgins, managing director at Okapi Partners, said this is a topic that has been discussed in many off-season engagements.
According to a survey of the audience, 42 percent of attendees do not currently disclose EEO-1 data but are thinking about it, 14 percent already disclose this data and the remaining 44 percent do not currently disclose this data and aren’t thinking about it.