Sustainability Oversight

A Q&A with Sustainability & ESG Analyst, Senior Associate Miriam Benarey

Q: Why is dialogue with companies so important to our engagement efforts? 

Miriam Benarey: In many cases, we can only truly understand a business and its overall quality by complementing publicly disclosed information with the insights that we glean through engagement dialogues. It gives us a holistic, broad picture of both the financial and the non-financial sides of a business that can tell us where a company is heading and what its momentum is like, allowing us to catch future success stories early or to pick up on things that might not necessarily be going in the right direction. We often describe companies as having a character, a personality; we can get to that through long­-term open and honest dialogue.

Q. Looking back on the year 2020 in engagement, were there any interesting developments?

Miriam Benarey: In 2020 we saw more of the companies we engage with dedicate resources toward integrating sustainability in their organizations, into their corporate strategies. That is a change from the year before, where the companies we engaged maybe still thought of sustainability oversight as a more distant-future need. So, I think integrated sustainability management has become more of a push for companies. Specifically, we saw more companies make sustainability an area of board-level oversight. That is a huge catalyst in a company’s sustainability journey. When they get that buy in from senior leadership and have that solid structure of managing sustainability as part of the overall corporate structure, that is fantastic. The board is on board. Sustainability becomes a central aspect of corporate management.

“We saw more companies make sustainability an area of board-level oversight. That is a huge catalyst in a company’s sustainability journey.”

Q: Should achieving sustainability targets be linked to executives’ remuneration?

Miriam Benarey: That is the best practice, yes. Sustainable development can only work with the right foundation in place, so having executive-level accountability is just so important. A company can have the best sustainability management processes in place, but without management interests being aligned with those of stakeholders, it’s not going to go anywhere.

Q: With what types of companies do you engage?

Miriam Benarey: I focus on the companies in our thematic and sustainability lens equities. These are businesses that are providing products and services that we believe make them well-positioned in the transition to a more sustainable economy. But just because we appreciate the solutions they offer does not mean they have top-notch processes and leadership structures in place, and that is where engagement comes in. We try to help them hone how they do business so they can become even more resilient in this transition.

Q: Are companies generally receptive to these conversations?

Miriam Benarey: There has definitely been greater openness and readiness and willingness from companies. I think it has become part of their normal course of business.

Q: Do you think your work has helped to normalize these types of conversations?

Miriam Benarey: Yes. Sometimes we can really be forebearers of something that is to come. For example, we have been working on a thought-leadership project about water and water impact with our client AP7. As part of it, we had some engagements with companies in our strategies to really understand what the water reporting landscape is like and why disclosure is largely lacking with regards to water. This work led to us picking up on some issues very early. There is still little attention paid to these aspects, but eventually they will become mainstream and the broader investor community will take an interest. By then, our companies will be well-versed in all things water-related because we have been talking with them for a while.

Q: It sounds as if engagement helps you uncover emerging trends that you might not necessarily pick up in research and analysis.

Miriam Benarey: I think it can go both ways. You can have an inkling; you can pick something up in your research and sort of road test it a bit in your conversations with companies. And sometimes there are bits and pieces you pick up in engagements that can ultimately lead to a completely new investment opportunity or understanding of an area that a company is involved in that you did not even know about, and then you can connect the dots.