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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.

Related Insights

NetEase case study
NetEase published its inaugural ESG report in June 2020, covering material ESG topics including data privacy and protection, and GDPR compliance. EOS is pleased with its commitment to improve shareholder communication and continues to engage with the company on the wider ESG agenda.
HEINEKEN case study
HEINEKEN has improved the standard and transparency of its business conduct policies, increasing investor confidence. EOS continues to engage with the company on its accountability to its key values of integrity and fairness and on other ESG issues.
Takeda Pharmaceutical case study
Takeda Pharmaceutical has significantly improved the transparency and accountability of its executive remuneration, aligning itself more closely to global peers. EOS has engaged it on this topic for the past 16 months to increase investor confidence in the company for the long term.
Burberry case study
Burberry has reaffirmed its commitment to find alternatives to incinerating surplus stock in the midst of the coronavirus pandemic and set a science-based carbon reduction target.
The coronavirus and the race for a vaccine
With the coronavirus pandemic set to continue without an effective and widely-available vaccine, all eyes are on the pharmaceutical sector.
Mizuho Financial Group case study
Mizuho has made a commitment to ending financing of new coal-fired power plants and reducing exposure to coal-fired power plants to zero by 2050, the only Japanese bank to makes such a commitment.

EOS Client Service and Business Development

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