It has been five years since the Paris Agreement was signed, but we still have a long way to go to reduce global warming. This year's UN Climate Change Conference, known as Cop26, in Glasgow, may lead to some diplomatic wins, but the whole financial sector has a role to play and must do so more strongly than it has until now. Investor engagement is key.

Asset managers need to go beyond the sole mission of selecting the ‘good’ versus the ‘bad’. They must commit to allocating time and expertise to guide companies along the right track, whether through direct dialogue or collective engagement with other shareholders or non-governmental organisations.

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Divestment should remain the last-resort action, to be triggered only when a company is reluctant to commit to any sort of dialogue, or when issues cannot be remedied otherwise.

Engagement is not without challenges, of course. Differences between geographical markets mean that you cannot set out the same levels of ambition across different continents, or even measure companies’ progress and engagement outcomes in a uniform way. While critics will point out that measurements and reporting standards around environmental, social and governance (ESG) criteria are still not applied consistently worldwide, many companies and investors are working hard to improve this space. The recent focus on science-based targets and portfolio temperature measurement scores is encouraging.

This does not only mean asking ESG questions. Engagement should set targets and an agenda: it should be specific to the company, evolve over time, include quantifiable performance metrics and have an end date, regardless of whether it reached the desired results.

The exercise of voting rights is a central tool and should be fully integrated into any engagement campaign. If engagement fails, action must follow. This may mean voting management out, in the case of long-standing inaction, or excluding the company from the investment universe, in case of complete failure to engage and address a critical issue.

This is what engagement means. This is, in my view, what responsible investors should commit to.

Elodie Laugel is chief responsible investment officer at Amundi