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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

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Public Engagement Report Q3 2021
In this issue we take a more in-depth look at the climate crisis ahead of COP26.
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Japan Tobacco case study
Japan Tobacco has demonstrated its commitment to eliminating child labour from its supply chain through various programmes and significantly improving its reporting on the issue, including a standalone human rights report.

EOS Client Service and Business Development

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