Methodology & Proxy Voting Requirements - ESG Investors
Thursday, July 8, 2021
For institutional investors with an ESG focus, it is increasingly obvious that (i) a cogent approach to ESG is needed (with a documented methodology and supporting materials) along with (ii) proxy voting supporting that approach (See “SEC Announces Enforcement Task Force Focused on Climate and ESG Issues”). On July 7th the SEC’s Asset Management Advisory Committee recommended:
“The SEC should suggest best practices for investment products to describe each product’s planned approach to share ownership activities in the Statement of Additional Information, and any notable recent ownership activities outside proxy voting, which is reported in Form N-PX, in shareholder reporting” (https://www.sec.gov/files/amac-recommendations-esg-subcommittee-070721.pdf, page 9)
Egan-Jones is helping firms fulfill their commitments to both ESG factors and coordinated Proxy Voting requirements. Egan-Jones, through its proxy advisory services has been involved in ESG matters for the past fifteen years and is well-equipped to address Institutional investors’ needs. Using Egan-Jones’ Climate Change/ ESG Scores, investors have an easy-to-understand yet thoughtful approach for assessing an issuers current position relative to peers and the trend in its position. Egan-Jones’ ESG scoring methodology groups companies by industries and evaluates companies’ ESG potential on a universal basis as well as on an industry/sector basis. On the universal basis, all companies covered by EJR are pooled together and assigned a score from universal comparison. On the industry/sector basis, companies from different industries are evaluated separately and each company is assigned a relevant ESG score within its group. Scores are assigned based on companies’ current position and their improvement (or decline) over the prior year.
Regarding proxy voting, Egan-Jones Proxy (EJP) reflects an investor's approach in its voting policy. With this proxy voting methodology investors can ensure that their proxy voting record reflects their ESG focus.
How we can help
Prospective clients have often asked how we can help them and what areas we consider are particularly
strong. In response, below are the areas worth reviewing:
Private Placement Ratings – assisting investors access private markets via ratings on private placements.
Subscription Ratings – we have had a strong track record in providing early, accurate independent credit
Climate Change / ESG Scores – an assessment of entities’ current and prospective scores.
Independent Proxy Research and Recommendation/Voting – assisting fiduciaries in fulfilling their voting and record-keeping obligations.