SIF 2023: Collaborative versus individual engagement can lead to greater impact

investmentweek.co.uk:

Alex Bibani (pictured) speaks to delegates at the Investment Week Sustainable Investment Festival.

Speaking at the Sustainable Investment Festival last month, Bibani said that the next frontier for shareholder engagement should be more like-minded investors coming together as a group to engage in dialogue with companies on ESG issues.

According to the Principles for Responsible Investment, investors can more efficiently communicate their concerns to corporate management by speaking with a unified voice. It can also result in a more informed and constructive dialogue. 

Organisations such as The Investor Forum, Climate Action 100+, the 30% Club and Institutional Investors Group for Climate Change are some examples of investor alliances created to collectively engage with companies on key issues. 

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While collaborative engagement can increase the weight of investors' demands on ESG issues in the eyes of corporate management, different levels of knowledge and pragmatism among members can sometimes prove to be difficult, Bibani noted. 

«There are NGO-focused investors who want to engage, regardless of what the economic consequences might be. I sit more on the pragmatic side; I am not going to ask a company to shut down all of its operations tomorrow because that does not open the door to a collegial conversation with the company,» he said. 

«There are varying degrees of knowledge and desire to make a company change. That can be a little bit difficult, because I might be in the middle, there might be someone on the left, there might be someone on the right.»

In some cases, investors have to reach a compromise when deciding what can be realistically achieved and