Topic

For more than a decade, various soft and hard law initiatives have combined with investor demand as active ownership approaches generally, and engagement specifically, have grown around the world.

November 16, 2022

ISS ESG Quarterly Engagement Update – Q3 2022: A Busy Quarter Across Investors’ Top-Priority ESG Topics

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ISS ESG’s Quarterly Engagement Update series highlights key trends that emerge through activities conducted on behalf of participating investors under its Collaborative Engagement Services. These services allow investors to participate in cost-effective joint outreach and dialogue with companies on material sustainability-related themes.

The services also support global investor compliance and reporting requirements with regard to voluntary and statutory stewardship frameworks, including the Principles for Responsible Investment (PRI), EU Sustainable Finance Disclosure Regulation (SFDR), the EU Shareholder Rights Directive (SRD II), and stewardship codes across the globe.

The Collaborative Engagement Services leverage ISS ESG’s expertise, research, and data to identify key performance indicators for corporate ESG improvement and momentum that are aligned with recognised standards such as the United Nations Sustainable Development Goals (SDGs).

By engaging collaboratively, institutional investors can increase their focus on environmental, social and governance (ESG) issues and effectively communicate their concerns to investee company management. ISS ESG facilitates engagement on behalf of the participating clients to promote positive change through active ownership and dialogue, with focus areas including enhanced disclosure, a push for improved sustainability performance, and mitigation of ESG risks.

ISS ESG’s Collaborative Engagement Services consist of two elements:

  • The ISS ESG Norm-Based Engagement Solution (formerly known as ‘Pooled Engagement’) is based on outreach to a select universe of upwards of 100 public companies annually. Companies are identified based on their involvement in alleged violations of human rights, labor rights, and breaches of recognized international environment- and corruption-related standards including the OECD Guidelines, UN Global Compact, and the UN Guiding Principles on Business and Human Rights.
  • The ISS ESG Thematic Engagement Solution, launched in 2022, prioritises outreach to a select universe of 30-40 public companies per theme over a two-year engagement cycle. It focuses on companies identified as underperforming in the areas of Net Zero, Gender Equality, Water, and Biodiversity.

Q3 Collaborative Engagement Activity

In Q3 2022, ISS ESG facilitated engagement on behalf of signatory investors with a total of 188 companies across 225 topics. With the launch of three additional themes under the Thematic Engagement solution during Q3, the number of companies engaged with under Thematic Engagement reached 122, 62 companies were engaged with under Norm-Based Engagement, and four companies were engaged with through both solutions.

Table 1: Collaborative Engagement activity, Q3 2022

table1 collaborative engagement activity

Source: ISS ESG

While the companies engaged with are spread out across all regions globally, Asia (46%), North America (36%), and Europe (15%), saw the most engagement activity during Q3.

Figure 1: Regional Distribution

figure1 regional distribution

Source: ISS ESG

Across the 225 topics that ISS ESG facilitated engagement on during Q3, there was a relatively even distribution between Environment topics (49%) and Social topics (47%), while 4% of the topics concerned the Governance pillar.

Figure 2: ESG Breakdown

figure2 esg breakdown

Source: ISS ESG

A closer look at the ESG breakdown shows that among Environment topics, most engagement facilitated by ISS ESG during Q3 related to Biodiversity and Water, followed by Net Zero, and Environment Norms. In Environment Norms, the most common sub-topic related to pollution.

Among Social topics, most of the engagement related to Labour Rights Norms, followed by Gender Equality and Human Rights Norms. Within Labour Rights, the most common sub-topics were forced labour, union rights, and workplace health and safety. Within Human Rights, the most common sub-topics were indigenous rights, the right to privacy, and living standards.

Figure 3: ESG Topics Breakdown

figure3 esg topics breakdown

Source: ISS ESG

When looking at engagement related to the UN Sustainable Development Goals (SDGs), the topics that ISS ESG facilitated collaborative engagement on in Q3 covered 12 SDGs in total. The most common SDGs included SDG 6 – Clean Water and Sanitation, SDG 5 – Gender Equality, SDG 15 – Life on Land, SDG 8 – Decent Work and Economic Growth, SDG 14 – Life below Water, and SDG 13 – Climate Action.

Figure 4: SDG Breakdown

figure4 sdg breakdown

Source: ISS ESG

Future Action

For more than a decade, various soft and hard law initiatives have combined with investor demand as active ownership approaches generally, and engagement specifically, have grown around the world. These trends have encouraged more common investment stewardship frameworks for investors seeking positive change in the companies they invest in.

ISS ESG’s Collaborative Engagement Services, including Norm-Based Engagement and the Thematic Engagement Solution, are available to support investors in this important area of their stewardship practice. ISS ESG has published a range of Thought Leadership material covering ESG engagement, including Stewardship Excellence: Engagement in 2021 and Sustainability Engagement in the Asia Pacific: A Look Back Over the Past Decade. ISS ESG Engagement Managers have also shared insights on corporate engagement in several webinars and articles on themes such as Net Zero, Water, Biodiversity, Gender Diversity, and Modern Slavery.

For more information on ISS ESG’s Collaborative Engagement Services, please visit us at: issgovernance.com/esg/engagement

Explore ISS ESG solutions mentioned in this report:


By: Vyankatesh Padmanabhi, ESG Engagement Co-ordinator, ISS ESG
Georg Präauer, ESG Engagement Manager, ISS ESG

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