annual review indst 2024 public - Flipbook - Side 12
12
EOS
A guide to
engagement
terminology
Our engagement approach is systematic and transparent. Our proprietary
milestone system allows us to track the progress of our engagements relative
to the objectives set for each company.
Objectives
We set clear and specific objectives within our company
engagements to ensure we achieve positive outcomes. An
objective is a specific, measurable change defined at the
company – an outcome we are seeking to achieve. Each
objective is tracked using milestones. Objectives are regularly
reviewed until they are completed – when the company has
demonstrably implemented the change requested – or
discontinued. Objectives may be discontinued if the objective
is no longer relevant, or because the engagement is no
longer feasible or material.
We may engage with a company on multiple objectives at any
one time, covering a variety of material ESG issues. An
example of an objective could be: “Development of a
strategy consistent with the goals of the Paris Agreement,
including setting science-based emissions reduction targets
for operating emissions (Scopes 1 and 2 emissions).” Each
objective relates to a single theme and sub-theme.
To measure our progress and the
achievement of engagement objectives,
we use a four-stage milestone strategy.
precise objective. Issues are frequently used for companies
outside our continuous engagement programme, for example
those where we typically engage only around the annual
shareholder meeting and our voting recommendation.
Milestones
To measure our progress and the achievement of engagement
objectives, we use a four-stage milestone strategy. When we
set an objective at the start of an engagement, we will also
identify recognisable milestones that need to be achieved.
Progress against these objectives is assessed regularly and
evaluated against the original engagement proposal.
1
Our concern is
raised with the
company at the
appropriate
level
2
The company
acknowledges
the issue as a
serious investor
concern, worthy
of a response
3
The company
develops a
credible
strategy to
achieve the
objective, or
stretching
targets are set
to address the
concern
4
The company
implements a
strategy or
measures to
address the
concern
Milestone Progress
Issues
How does an objective differ from an issue, another term we
use within our engagement? An issue is a topic we have
raised with a company in engagement, but where we do not
precisely define the outcome that we are seeking to achieve.
This can be more appropriate if the issue is of lower
materiality and so we do not anticipate engaging with the
frequency required to pursue an objective. Or perhaps we are
still in the process of identifying what type of change we may
want to see at a company and so are not yet able to set a
Actions
These are the interactions that take place between our
engagement professionals and the companies or public policy
bodies with whom they are engaging. Every call, meeting or
correspondence is recorded as an action. Actions can be
linked to objectives or issues. We only consider companies to
be engaged when we have an individual interaction with the
company that relates to an objective or issue.
