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Shareholder engagement and its effects on target companies

Research spotlight

Fast reading

  • Award-winning study reveals that companies that are successfully engaged by Hermes EOS exhibit a lower risk profile
  • Two measures of risk: risk-weighted probability of a negative stock return and value-at-risk
  • Risk reduction effect is largest when the engagement is more successful (i.e. at milestone 3 or 4) and when environmental topics are addressed

The award-winning study ‘ESG shareholder engagement and downside risk’, which uses engagement data from Hermes EOS, reveals that companies that are successfully engaged by EOS exhibit a lower risk profile, particularly when environmental issues are tackled.

The study adds to the increasing literature on stewardship, and demonstrates that there are direct financial benefits for investors when engagement occurs at the right level and with the appropriate resources.

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EOS Client Service and Business Development

Amy D’Eugenio,
Head of Client Service and Business Development, Hermes EOS