The world is changing and we’re facing major shifts in areas such as decarbonisation, deglobalisation and demographics. The challenges associated with these changes have highlighted the importance of ESG analysis when making investment decisions. However, analysis alone is not enough. To collect the necessary information, investors must engage with companies to understand their business models and identify areas for improvement.
In the best-case scenario, this engagement can lead to improved company practices, which can increase investor conviction and potentially lead to investment. It can also work as a useful due diligence tool when keeping tabs on companies already in an investor’s portfolio. For instance, if an investee company shows no improvement despite several engagements, investors may decide to divest and, in the worst-case scenario, blacklist the company.
Engagement…
