The annual conference of the Principles for Responsible Investment (PRI) took place in Berlin from 25-27 September. PRI in Person is a unique opportunity to take stock of the progress in responsible investment practice all over the globe as investors gather to share knowledge on the integration of environmental, social and governance (ESG) factors into investment decisions.
This year saw a focus on climate action and on the role of investors in championing the Sustainable Development Goals through investment decisions. Engagement was another topic of interest during the conference, as an audience poll showed that a majority of investors present believed that engaging with investee companies had the potential to improve corporate performance.
Attendees were given a primer on the results of two studies commissioned by PRI to learn from engagement processes between companies and investors.
The authors of the first study mainly found that investors who had lead successful engagements with companies were likely to increase their shareholding in the years following the engagement. This finding should provide further incentive for companies to respond to engagement to the best of their capacity.
Among other things, the second study explored the benefits of engagement for companies and investors. Investors engage to achieve better financial and ESG performance. Successful engagement on these issues means that investors can deliver value to their clients and demonstrate their commitment to stewardship.
More importantly, companies benefit from engagement in multiple manners. First of all, engagements are an opportunity to understand their investors’ expectations in relation to ESG issues. Companies’ representatives who were interviewed also stated that investors helped them identify new ESG trends and demonstrate their commitments and best practice – in which case investors were seen as a free consultancy service of sorts.
PRI will publish a full report on the findings of the study entitled ‘How can ESG engagement create value for investors and corporations’ at the end of the year.