According to Morrow Sodali's always eagerly awaited annual Institutional Investor Survey, which this year focused on ESG risks and opportunities, many institutional investors remain keenly focused on engagement to influence and effect change, with a view toward tapping other means or resources only after reasonable engagement efforts have failed.
Key takeaways include:
- Means to influence board policy - Investors overwhelmingly (over 91% of respondents) believe that engagement with the board is the most effective way to influence board policies and decisions; however, a strong 59% of respondents believe engagement with management is most effective. Voting against directors is deemed the most effective method by just 18% of respondents.
- Why engage with the board? - Most investors (64%) request engagement with the board to build a constructive two-way relationship with the company; 41% said they request board engagement to better understand the company and its culture.
- Corporate purpose & culture - Investors rely heavily on proactive and regular engagement with management (95%) and the board (86%) to evaluate corporate purpose and culture. Only 9% said that disclosure of quantitative human capital indicators best informs their corporate purposes and culture evaluation.
- Top sustainability engagement topics - The top two sustainability-related engagement priorities for 2020 are climate change (91% of respondents) and HCM (64%). Other topics including corporate purpose and culture ranked much lower.
See additional key takeaways in Morrow Sodali's release and this Pensions & Investments article. The annual survey captured responses from a diverse mix of 41 global institutional investors (27% US) representing $26 trillion in AUM (60% active/40% passive). This post first appeared in the weekly Society Alert!