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Engage Autumn 2022
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Engagement Report
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Dezember 12, 2022
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Dezember 12, 2022
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Engage Autumn 2022 |
We have engaged directly with companies on issues material to the sustainability of returns on operating capital for over 20 years. As active managers running concentrated portfolios and with a long-term investment horizon, we believe we are well positioned to engage with management on financial and material ESG topics and encourage companies towards better practices.
We seek to deliver better outcomes for our clients through producing attractive returns over the long term. To do this, we must invest with a conscious eye on whether companies can deliver not just today, but five, 10, and even 20 years from now. We back companies that have the characteristics needed to lead in the long run, like recurring revenue, pricing power and strong management, and importantly also invest to manage and improve their ESG performance. Direct, portfolio manager-led engagement is, in our view, vital to understanding whether companies and management can deliver across financial and material non-financial areas.
By its nature, quality is less exposed to potential adverse events compared to an average stock in the index. We cannot change or even predict the macroeconomic or political or regulatory environment, but we can aim to ensure that those we hold are the most robust we can find—and that the companies we select have management teams that are more likely to anticipate, mitigate and manage resiliently through adversity. Active portfolio managers that own stocks for the long term rather than just rent them are used to filtering out short-term noise and data for relevant and material drivers of long-term returns.
Meeting with company management matters. That means thorough preparation and a pragmatic use of the chance to meet CEOs, CFOs and Chairs of some of the world’s leading companies, and using these interactions as opportunities to test our hypotheses, gauge integrity and understand management’s strategy, capital allocation and commitment to returns on operating capital, and how they get paid. Beyond the solely financial topics, in the first half of 2022, we continued to engage with company management on a range of ESG subjects, including diversity, equity and inclusion, decarbonisation, biodiversity, executive pay, and supply chain management, amongst others.
Our holistic approach means we typically engage with companies on more than one topic in any given meeting. Environmental topics featured in 65% of our ESG engagements1, while social and governance topics presented in 38% and 40% of engagements respectively. Download our report to read some notable engagement case studies that took place during the first half of 2022.