How many people make up the Federated Hermes engagement and responsible investing team?
We have more than 60 global team members deployed across engagement, stewardship and our responsibility office.
How long have you worked for Federated Hermes, and in which roles?
I joined Federated Hermes in 2008 and was an equity portfolio manager and vice president prior to my current role as director of the responsible investing office.
What is the function of your responsible investing office?
Our responsible investing office oversees the company-wide integration of proprietary ESG analytics as well as active engagement across all asset classes and 30 global investment teams. We are a multi-disciplinary ESG hub responsible for ESG integration, thought-leadership and corporate responsibility.
How is engagement with corporates carried out at Federated Hermes?
[Our stewardship group] EOS is a pioneer in active engagement with $1.1 tn in assets under stewardship, a 15-year database and one of the largest engagement teams in the industry. Our dedicated engagers are ESG experts who maintain a high-touch and long-term collaborative dialogue with the senior leadership of thousands of corporate issuers around the world.
Can you define your active engagement program and how it’s evolving?
I like to characterize our platform as 360-degree engagement, which includes ESG, fundamental and proxy engagement. To be effective, each of the components requires different skill-sets, which is why we have assembled a fleet of global engagers with deep thematic ESG and sector expertise.
We are directly engaging with multiple corporations every single day on material ESG issues. It’s not just periodic letter writing or something conducted only during proxy season. Engagement and stewardship are key ingredients in our company-wide ESG integration strategy, which includes both engagers and investment teams across all asset classes.
So how do the engagement teams and investment teams intersect?
We cross-pollinate the unique ESG insights from the active engagers with the fundamental views of our portfolio managers and analysts. Think of it as combining the best of both worlds.
Portfolio managers and analysts typically interact with investor relations and the chief financial officer while our ESG engagers regularly meet with board directors, C-suite and sustainability officers. By combining multiple vantage points of deep primary research, we get a more comprehensive understanding of any issuer’s ESG risks to help uncover mispriced opportunities.
How often do EOS engagers interact with a company in your engagement program?
We have varying degrees of intensity that are determined on a case-by-case basis. Consistent interaction with a variety of directors and senior leadership is key to understanding an organization’s ESG trajectory. One engagement per year to help inform proxy voting is not enough to formulate any meaningful insight or effectively advocate for positive change. It’s very common for a lead EOS engager to interact with a single company more than four times in a given year, having forged a long-term relationship with more than a decade’s worth of meetings. That’s a true collaborative dialogue that can result in positive ESG outcomes. It also serves as the cornerstone of our engagement database.
This is an extract of an article from the Corporate Secretary Yearbook, produced by IR Magazine‘s sister publication Corporate Secretary. Click here to read the full article
