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SDG Engagement Equity: 2019 Annual Report

Launched in January 2018, the Hermes SDG Engagement Equity Fund has the dual purpose of delivering attractive returns and measurable real-world impact.

In our 2019 Annual Report, we reflect how we target both traditional financial performance goals and positive and environmental change by engaging with companies to help deliver the Sustainable Development Goals (SDGs).

What progress did we achieve over 2019? In this report, we consider how: 

  • Leveraging networks can be the key to catalysing action. Our roundtable seminar on SDG 3.7 – universal access to sexual and reproductive health – showed how different parties can collaborate to achieve goals.
  • Decent work is inextricably linked to other SDGs. Companies have a considerable impact on individual lives and can affect economic, physical and mental wellbeing. Almost 50% of our engagements were connected to SDG 8 – decent work and economic growth – in 2019.
  • An intelligent voting strategy can generate long-term shareholder value. In 2019 we voted against management on at least one resolution at 20 meetings. Executive compensation continues to be the main reason we exercise our voting rights.

We also provide a snapshot of the portfolio’s emissions intensity and the level of employee wellbeing in the underlying companies. To find out more, read the full report or have a look at figure 1 to see the intensity of our focus on each SDG. In this graphic, we look remove any duplication caused by covering multiple goals in a single engagement interaction. 

Figure 1. Our SDG engagement intensity in 2019 

Source: Federated Hermes, as at December 2019. 

SDG Engagement Equity Annual Report
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Hamish Galpin
Director, Head of Small and Mid Cap, Lead Manager of Global Small Cap

Hamish is the Head of the Small & Mid Cap team, which he has led since its creation in 2007. He has been at the international business of Federated Hermes since 1995, when he joined as co-manager of the UK smaller companies strategies; he served as lead manager from January 1997 to April 2010. Since the founding of the team, Hamish has gradually assumed a more global perspective, with oversight of the holdings across all of the team's strategies, and he is now lead manager of the Global Small Cap strategy. He has a background in credit, having started his career in the energy and natural resources division of NatWest Bank, and later moving to Bankers Trust as a credit analyst covering European corporates. He has a BEng (Hons) in Civil Engineering from Nottingham University and is a former director of the Hermes Group (DB) pension scheme. Hamish also sits on the Hermes Governance Group, which monitors the Hermes (DC) pension scheme.

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Will Pomroy
Lead Engager SDG Engagement and Small & Mid Cap Equities

Will joined the international business of Federated Hermes in 2015 and, in addition to overseeing and leading the engagement programme for the SDG Engagement Equity strategy, provides ESG analysis for and engagement with stocks in the firm’s small- and mid-cap strategies. Will has a decade of experience in the responsible investment space having, among his previous roles, led the stewardship and corporate governance activity of the UK’s National Association of Pension Funds (now known as the Pensions and Lifetime Savings Association). Prior to entering the world of responsible investment, Will worked as a senior parliamentary researcher in the UK Parliament. He chairs the Corporate Governance Expert Group of the Quoted Companies Alliance and is a member of the Corporate Governance Committee of the Institute of Chartered Accountants in England and Wales. Will holds an MSc in Public Policy and Management from Birkbeck College at the University of London and a BSc (Hons) in Forensic Science from the University of West of England. He also holds the Investment Management Certificate and the Certificate in ESG Investing, both from the CFA UK.

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