EOS Stewardship Services
Responsibility & Stewardship
EOS Stewardship Services
Responsibility & Stewardship
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Five misconceptions of company engagement
"Add a short extract from this post, that is 10-15 words."
31/03/2019 - Will Pomroy
Hermes EOS expands global stewardship and engagement team
How markets are missing the biggest populist movement of all
09/01/2019 - 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 markets are missing the biggest populist movement of all
29/10/2018 - Saker Nusseibeh, CBE
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:
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 (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 - Dr Christine Chow
Sports Direct AGM
Ahead of the Sports Direct AGM tomorrow, Leon Kamhi, Head of Responsibility at Hermes Investment Management, assesses the company’s progress and highlights areas for improvement. “We welcome a number of positive changes that have taken place since the 2016 AGM. This includes the appointment of Mike Ashley as CEO, Jon Kempster as a permanent CFO, two independent directors and a Workers’ Representative who will attend board meetings.However, we are greatly concerned about the lack of one to one engagement the company has had with shareholders following the publication and implementation of the board’s Engagement Statement to investors, analysts and the media. It is our view that the absence of face to face engagement falls short of best practice and creates a multitude of missed opportunities to build positive and constructive relationships with interested third party minority investors.
05/09/2017 - Leon Kamhi
Hermes statement on WPP AGM
Hans-Christoph Hirt, Head of Hermes EOS at Hermes Investment Management, comments on today’s WPP AGM. 1. Succession planning We welcome the chair’s recognition of investor concerns regarding the company’s preparedness for succession. Sir Martin Sorrell, WPP’s CEO and founder, has created a great deal of value since taking over as Chief Executive of the company in 1986. He is rightly regarded as one of the most successful entrepreneurs and business leaders in the world. In light of this, the preparation for his eventual succession has been the focus of our engagement over the last years. Succession risks appear to have moved up the company’s agenda under this chair’s leadership and management of this seems increasingly reflected in WPP’s work and communications to shareholders. However, while we appreciate the steps that the company has taken so far, we urge the chair to continue to focus on the management of succession risks.
07/07/2017 - Dr. Hans-Christoph Hirt
China Mobile AGM speech
Good morning Chairman, Directors of the Board and the executive team, My name is Christine Chow. I am an Associate Director in the Engagement team of Hermes Investment Management. Our stewardship platform represent more than 40 institutional investors with over US$300 billion of assets, 28 of whom are shareholders in China Mobile. Firstly, we welcome the significant improvements made by the company in ESG disclosure, especially over the last year.
25/05/2017 - Dr Christine Chow
Governance issues to be highlighted at Rio Tinto AGM
• Hermes intends to vote against Chairman due to lack of diversity progress • Joins investor group in calling for further disclosure on climate risks Ahead of the Rio Tinto AGM tomorrow, Bruce Duguid, Stewardship Director within the Hermes EOS team at Hermes Investment Management, highlights two areas of focus in our engagement with the company. Environmental risk reporting The 2017 AGM season marks the first year of new climate change risk reporting requirements for mining companies Anglo American, Glencore and Rio Tinto. This follows the passing of resolutions last year, with the support of more than 95% of shareholders, requesting further disclosure of carbon-risk reporting and the company’s actions to manage them.
11/04/2017 - Bruce Duguid
Hermes' response to the UK Corporate Governance Reform Green Paper
Hermes Investment Management has responded to the UK government’s green paper on corporate governance reform. Our response is available to read here: BEIS Corporate Governance Green Paper - Hermes response
Navigating low carbon pathways
The current economic and financial models used by the investment industry need to be reconsidered if the targets outlined in the 2015 Paris Climate Change Agreement are to be reached, according to a new report entitled Navigating low-carbon pathways from Hermes Investment Management. Doing so is the only way to address the valuation threats climate change poses to investment strategies, which is part of investors’ fiduciary responsibility to their clients. The report points to the important role investors have to play in closing the emissions gap between current commitments and the levels required to deliver a world in which global warming is limited to 2°C or less. However, while significant progress has been made, many investors have yet to fully integrate climate change into their investment decision-making processes and stewardship of companies and other assets.
Hermes responds to the UK Government’s paper on corporate governance reform
Leon Kamhi, Head of Responsibility at Hermes Investment Management, comments on today’s publication, Corporate governance reform, by the UK Government: “The additional measures proposed today by the Government look set to strengthen investors’ hand on pay, and it is now incumbent on both companies and us as investors to respond to the challenge of excessive executive remuneration." “Whilst it is not a panacea and the appropriate ratio will differ from company to company, increased transparency provided by the publication of the CEO-to-median-employee pay ratio is to be welcomed as it puts pressure on boards to explain the rationale behind the level of executive remuneration and disparities in pay across the organisation." “We strongly believe that boards of both public and private companies need to be more diverse and recognise the critical contribution that employees make to the success of every company. Whilst we would have liked the Government to go further and propose elected employees on boards, we are encouraged to see recognition for the clear benefits that are gleaned from greater employee voice in a company’s governance."
29/11/2016 - Leon Kamhi
Hermes calls for overhaul of CEO and executive remuneration models
Hermes Investment Management (Hermes), the £28.6 billion manager focused on delivering superior, sustainable, risk adjusted returns to its clients – responsibly, is calling on large publicly listed companies to overhaul current executive remuneration models. In its paper ‘Remuneration Principles: clarifying expectations’, Hermes outlines why well-structured remuneration practices are key to aligning the activities of management with a company’s purpose, strategy and long-term performance. In the paper, Hermes also emphasises the need to address the question of fairness and give it a social licence to operate. Hermes particularly examines the rapid expansion of CEO compensation over recent years. Analysis by the High Pay Centre suggests the ratio of CEO pay to the average worker has doubled in a little over a decade – from 70x in 2002 to 140x in 2015[footnote]Just Do It, High Pay Centre, 2015.
Are low yields and volatility killing responsible capitalism?
Hermes Investment Management, the £26 billion manager focused on delivering superior, sustainable, risk adjusted returns to its clients – responsibly, has today published the first paper from its annual Responsible Capitalism survey, Many rivers to cross – Slow progress towards responsible capitalism. The survey reveals a number of emerging trends that have worrying consequences for responsible capitalism advocates. The survey of 102 leading UK & European institutional investors found that 7% fewer investors believe significant environmental,
19/09/2016 - Saker Nusseibeh, CBE
A bout of volatility is what the market needed
With many indices now labelled bear markets after a traumatic start to the year, Andrew Parry, Head of Equities notes it is important to recognise that long-term investment returns are gradually rising, not falling, and that an adjustment was needed, as global quantitative easing had led to elevated valuations in most asset markets. US rates more influential than China turbulence: Previously, we have said that elevated volatility was the only market prediction that we were certain about. We maintain this view largely because of the “denominator problem”: with official rates hovering near zero and longer term rates suppressed, small changes in interest rate expectations can lead to significant swings in asset prices.
Johnny Weir, Head of Corporate Communications
+44 (0)20 7702 6126
+44 (0)7990 565 211
Rachael Dowers, Manager - Corporate Communications
+ 44 (0)20 7680 4698
Hannah Bellfield, Assistant Manager - Corporate Communications
+44 (0)20 7680 8064
Harriet Hall, Associate - Corporate Communications
+44 (0)20 7680 2362