Preamble
ISS ESG’s Quarterly Engagement Update series highlights key trends that emerge through activities conducted on behalf of participating investors under ISS ESG’s 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), the EU Sustainable Finance Disclosure Regulation (SFDR), the EU Shareholder Rights Directive II (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).
Through collaborative engagement, institutional investors can strengthen their focus on sustainability issues and effectively convey their concerns to investee company management. ISS ESG supports this process by facilitating engagement on behalf of participating clients, driving change through active ownership and constructive dialogue. Key areas of focus include enhancing disclosure, encouraging improved sustainability performance, and mitigating sustainability 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 and labour rights and breaches of environment- and corruption-related recognised international standards, including the OECD Guidelines for Multinational Enterprises, the 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 30-50 public companies per theme over a two-year or three-year engagement cycle. It focuses on companies identified as underperforming in the areas of Net Zero, Gender Equality, Water, and Biodiversity.
Collaborative Engagement Activity
In Q4 2024, ISS ESG facilitated engagement on behalf of signatory investors with a total of 184 companies across 219 topics. ISS ESG conducted engagements with 55 companies under Norm-Based Engagement, the Thematic Engagement solution facilitated engagement with 130 companies, and one company was engaged with both solutions.
Table 1: Collaborative Engagement Activity, Q4 2024
| COMPANIES ENGAGED WITH | TOPICS ENGAGED ON |
|---|---|
| 184 | 219 |
Source: ISS ESG
The companies engaged with are spread out globally, with domiciles in North America (39%); Europe, the Middle East, and Africa (EMEA) (32%); Asia-Pacific (APAC) (27%); and Latin America (3%).
Figure 1: Regional Distribution
Source: ISS ESG
Note: Darker shades of blue reflect higher numbers of engaged companies.
Source: ISS ESG
Across the 219 topics that ISS ESG facilitated engagement on during Q4 2024, Environment topics (53%) held the majority of the engagement for the quarter, followed by Social topics (47%), while 1% of the topics concerned the Governance pillar.
Figure 2: ESG Breakdown
Source: ISS ESG
A detailed analysis of the ESG breakdown reveals that, among the Environment-related engagements facilitated by ISS ESG in Q4 2024, the most frequently discussed topics were Net Zero, Water, and Biodiversity. Within the area of Environment Norms, the most common sub-topics focused on controversies related to biodiversity and environmental impacts.
Among Social topics, most of the engagements focused on Gender Equality, followed closely by Labour Rights Norms under Norm-Based Engagement. Within Labour Rights Norms, the most frequently discussed issues were workplace health and safety, as well as forced labour. In the area of Human Rights Norms, the most common sub-topics included controversies related to indigenous rights, living standards, and inadequate stakeholder consultation.
Figure 3: ESG Topics Breakdown
Source: ISS ESG
The topics that ISS ESG facilitated collaborative engagement on in Q4 2024 covered 13 of the UN Sustainable Development Goals (SDGs). Reflecting the launch of ISS ESG’s second Thematic Engagement cycles on Gender Equality, Water and Biodiversity in Q4 2024, the most frequently addressed SDGs were SDG 5: Gender Equality, followed by SDG 6: Clean Water and Sanitation, and SDG 15: Life on Land.
Figure 4: SDG Breakdown
Source: ISS ESG
Future Action
For over a decade, a mix of soft and hard law initiatives, coupled with growing investor demand, has driven the global expansion of active ownership practices—particularly engagement. These trends have fostered more standardized frameworks for investment stewardship, enabling investors to seek meaningful 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. In Q4 2024 ISS ESG launched the second cycle of the Biodiversity, Water and Gender Equality Thematic Engagement services.
ISS ESG has also 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, including an April 2024 webinar dedicated to Key Trends in ESG Engagement and the article “Terms of Engagement: Investor Challenges on the Road to Net Zero,” published in November 2023.
Explore ISS ESG solutions mentioned in this report:
- Develop engagement strategies, define achievable engagement objectives and manage your engagement process with ISS ESG’s Norm-Based Engagement Solution and Thematic Engagement Solution.
By:
Shweta Shah, Sustainability Engagement Coordinator, ISS ESG
Sujay Pan, Sustainability Engagement Coordinator, ISS ESG
Loïc Dessaint, Head of Sustainability Engagement, ISS ESG
