PRESS CENTRE

Institutional investors believe ESG factors are more important than financial metrics when evaluating a company’s long-term attractiveness ESG factors have grown in importance to institutional investors, according to a survey of 100 UK-based institutional investors by Federated Hermes, a global leader in active, responsible investing. 28/10/2021 - Saker Nusseibeh, CBE

Taking a localised approach to engagement Taking a tailored approach when engaging with companies across countries and industries 23/04/2019 - Hamish Galpin

Greater demand for stewardship sees Hermes EOS and ACSI share engagement insight Hermes EOS will work with the Australian Council of Superannuation Investors to provide engagement services 12/03/2019

Investing for the climate is good business The evidence on the importance of limiting temperature rises to well below 2°C continues to grow and investors will have a crucial role to play in bringing this about, says Hermes Investment Management in its 2018 Carbon Report. 06/12/2018 - Saker Nusseibeh, CBE

Supply chain and human rights risk management: blockchain and emerging technology 16/11/2018 - Leon Kamhi

Companies must make social license a focus When assessing a company, investors spend a great deal of time examining factors such as its balance sheet, past performance and potential for future growth. 14/11/2018 - Leon Kamhi

Hermes ESG Shows Social Rising Companies with good or improving social characteristics have tended to outperform their lower-ranked peers on average by 15bps per month, according to new research from the Global Equities team at Hermes Investment Management. 13/11/2018 - Geir Lode

How cyber-attacks will change the face of company boards 08/11/2018 - Leon Kamhi

How markets are missing the biggest populist movement of all 29/10/2018 - Saker Nusseibeh, CBE

Hermes EOS highlights governance concerns at alibaba 26/10/2018

Shared interests unite bondholders and shareholders The perceived divergence of priorities between bondholders and shareholders has led some to believe that these investors cannot engage with companies on the same issues. Some – remarkably - even question the legitimacy of bondholders (or other creditors) engaging with companies in the first place. However, given their financial stakes in a company, both types of investors not only have legitimate cause to engage, but also a professional duty to do so. So say, Mitch Reznick, Co-Head of Credit, and Dr. Hans Christoph-Hirt, Head of Hermes EOS, in We Can All Get Along, a new report dispelling myths surrounding joint company engagements between bondholders and long-term shareholders. Writing in the paper, the authors argue that the difference in the payoff profile of equities and bonds is sometimes cited as a reason that bondholders focus less on long-term factors, while shareholders want to see growth. However, there are strategic issues which the pair highlight as being relevant to a company’s current and likely future health and value creation, including the management of ESG (environmental, social and governance) factors. Arguing that although the cash flows from bonds held to maturity will not alter unless operating cash flows are substantially impaired, the authors highlight that unmitigated risks can weaken a company’s ability to fulfil its debt-service obligations. 12/09/2018 - Mitch Reznick

Hermes EOS appointed by Brunel Pension Partnership Hermes Investment Management has today announced that its stewardship and engagement team, Hermes EOS, has been appointed by Brunel Pension Partnership (Brunel) to provide voting and engagement services. Brunel brings together circa £30 billion investments of 10 likeminded Local Government Pensions Scheme funds. It is one of eight national pooled funds and will manage the investment of the pension assets for the funds of Avon, Buckinghamshire, Cornwall, Devon, Dorset, Environment Agency, Gloucestershire, Oxfordshire, Somerset, and Wiltshire. 04/09/2018

Solving the plastic problem: investing in a circular economy Society’s addiction to plastics is pushing the environment to the limit. Despite the recent media focus on plastic as an environmental issue, its popularity as a raw material continues to rise – experts estimate production will increase by a further 40% over the next decade. However, in a recent engagement insight, Full cycle: investing for a circular economy, Dr. Christine Chow, Director, and Emma Berntman, Engagement, Hermes EOS, explain that behind the demonisation of plastic itself lies the need for a paradigm shift in the way we produce and consume goods – one in which we can participate as investors as well as consumers. Plastic planet There are reasons for the ongoing ubiquity of plastic: it is cheap, lightweight and waterproof. Plastic has become emblematic of the problems inherent in the traditional consumption-led economic model. Its durability and visibility mean we are now literally seeing it everywhere: of the 8.3bn metric tonnes of plastic ever produced, an estimated 4.9bn tonnes have been discarded rather than incinerated or recycled. While it is possible to reduce the environmental impact of plastics, such as the Polyethylene terephthalate (PET) widely used in drinks bottles, through more effective and comprehensive recycling, the way plastic is used in other products makes recycling almost impossible. This is because they were never designed to be recycled: they remain part of an economic model in which products are produced, used and thrown away. 23/07/2018

Hermes is turning up the heat on climate change with the launch of a carbon tool Hermes Investment Management, the £33.6 billion manager, has been investing in the development of a number of Environment, Social and Governance (ESG) tools for its fund managers and engagers to use to make enhanced investment decisions and to better inform engagement activities with companies on ESG matters. Hermes will be launching a carbon tool that allows fund managers to assess their fund’s carbon performance, carbon risk, and corresponding engagements with investee companies in a comprehensive manner. The tool will also be the source for enhanced client reporting to demonstrate how ESG and engagement is being credibly integrated into the firm’s fund and stewardship offerings. The carbon tool will assess and integrate the following four key elements, making it a cutting-edge approach in evaluating the impact that investment funds have on the environment: 20/06/2018

Hermes EOS to raise shareholder concerns at Hon Hai AGM Ahead of the Hon Hai Precision Industry (“Foxconn Technology”) AGM on Friday 22 June, Dr. Christine Chow, Director of Hermes EOS, highlights the issues that she will be raising with the Founder and Chair, Mr Terry Gou, and his senior team. Hermes EOS has been engaging with Hon Hai since 2010 and we have been encouraged to see the company make progress on the areas of human capital management, transparency and communications and improved sustainability reporting. All of which are instrumental in creating value for long-term shareholders. However, Hon Hai is now at a critical stage of transformation as it evolves from a traditional hardware manufacturing firm to a company that provides smart platforms and solutions. We are now asking the company to build on the progress and fully address the concerns of the shareholders that we represent. Strategy With this evolution of the business it is clear that Hon Hai needs a well-defined, long term strategy with clear targets which is articulated to shareholders in a transparent and in-depth way. We believe that the company can make improvements in this area, bringing it in line with the reporting provided by its peers. There are three key areas in which it can achieve this: 20/06/2018

Hermes expands EOS team in North America Hermes Investment Management, the £30.8 billion manager, has appointed Tim Youmans as Engagement Director in its stewardship and engagement team, Hermes EOS. Based in New York, Tim will focus on enhancing the activities of Hermes EOS in the North American market and will report to Bruce Duguid, Head of Stewardship, Hermes EOS. In this role, Tim will be responsible for researching, planning and carrying out corporate, public policy and best practice engagement work in North America. This includes planning and executing voting activities and providing controversial company risk screening services. 10/06/2018

Hermes EOS to call for more effective leadership and management stability at Deutsche Bank AGM Ahead of the Deutsche Bank AG AGM on Thursday 24 May, Dr. Hans-Christoph Hirt, Head of Hermes EOS at Hermes Investment Management, highlights the questions the Chair needs to answer and explains why the Chair is ultimately responsible for the company’s limited progress in the implementation of a value-creating strategy. He also raises concerns about the high turnover of management and supervisory board members and urges a review and improvement of the selection and nomination processes for management board members and non-executives. The Chair needs to answer serious questions regarding CEO turnover and other management board changes Given the catalogue of challenges Deutsche Bank currently faces, more effective leadership and continuity is needed in its management board. Unfortunately, there continues to be high churn: •The appointment of Christian Sewing as the new CEO in April, which was preceded by rumours and leaks, means that Deutsche Bank has now had four CEOs/co-CEOs during the six-year tenure of the Chair, Paul Achleitner. He hand-picked John Cryan, who was initially appointed as co-CEO in mid-2015 (when he was a member of the company’s supervisory board), after overseeing the previous co-CEOs for three years following his own election in 2012 22/05/2018

Hermes EOS to provide qualified support for the Chair of Deutsche Börse Ahead of the Deutsche Börse AGM on Wednesday 16 May, Dr Michael Viehs, Associate Director of Responsibility, comments on Hermes EOS’s voting recommendations and the qualified support for the re-election of Joachim Faber, the Chair of the supervisory board. Specifically, Hermes EOS recommends its clients and other investors to: • Vote against the discharge of the company’s former CEO Carsten Kengeter and the Chair of the supervisory board, Joachim Faber • Provide qualified support for the re-election of Joachim Faber, the Chair of the supervisory board, and call for clarity around his succession by the time of the AGM in 2019 • Vote for the supervisory board nominees 15/05/2018 - Michael Viehs

Hermes EOS to raise investors’ concerns at the Volkswagen AGM Ahead of the Volkswagen AGM on Thursday 3 May, Dr Michael Viehs, Associate Director of Responsibility, comments on Hermes EOS’ voting recommendations and highlights the issues the company urgently needs to address: Recommendation to vote against the candidates proposed for election to the supervisory board • A call for an external supervisory board and corporate culture review • A commitment from the company to enter into a dialogue about the effects of climate change on its business model Supervisory board elections “Volkswagen has nominated Marianne Heiß and Wolfgang Porsche for election to its supervisory board. We recommend our clients vote against both of these nominations. The election of the candidates will result in a board with almost zero independent representation, which clearly goes against good corporate governance practice. 02/05/2018 - Michael Viehs

Hermes EOS Q4 Public Engagement Report: Antibiotics, listing rules, pollution and stewardship in China Hermes EOS, the stewardship and engagement team at Hermes Investment Management, has published its latest quarterly Public Engagement Report. The Report reviews the key activities and significant themes that Hermes EOS has engaged with companies on behalf of its clients in Q4 2017. It also contains four articles that give insights into stewardship activities: Tackling toxins: Cleaning up on pollution and waste management A ticking time bomb: The overuse of antibiotics in animal farming Regulators and listing rules Why the principle of one-share one-vote remains crucial The rise of sustainability: China’s journey to stewardship 12/02/2018

Raising the bar – Mind the gaps in the Equator Principles The $3.8 billion Dakota Access Pipeline (DAPL) has proved to be a highly controversial project, with its impacts exceeding the wildest expectations of investors. It was accompanied by protests, court cases, accusations of political interference and even a presidential memorandum. The banks financing the project claim to have adhered to the Equator Principles[1] (EP or the Principles), a credit risk management framework for determining, assessing and managing environmental and social risks in projects. They have been adopted by 92 financial institutions in 37 countries, covering over 70% of project finance debt in emerging markets. An Equator Principles Financial Institution (EPFI) will require its clients – the borrowers – to conduct environmental and social impact assessments for each project. 08/02/2018

When companies and indigenous peoples collide Some companies often fail to engage meaningfully with indigenous peoples, or worse still, make insufficient effort to establish a mutually beneficial agreement through Free, Prior and Informed Consent (FPIC). This failure can be detrimental to their cultures and livelihoods. Tim Goodman, Director of Engagement at Hermes Investment Management, explores where companies can fall short and the steps that should be taken to ensure a respectful engagement between all parties using a number of case studies. 05/02/2018

Hermes comments ahead of Siemens AGM Ahead of the Siemens AGM tomorrow, Dr Michael Viehs, Hermes EOS, discusses why they will support the election of all of the company’s nominees to the supervisory board.  Furthermore, Hermes EOS will support all management proposals and ask for a commitment from the company to enter into a dialogue about the effects of climate change on its business model. 30/01/2018 - Michael Viehs