The expectations of asset holders and regulators regarding ESG criteria have shifted considerably in recent years. This change stems from increased pressure for investors to adopt more transparent and responsible practices.
However, many ESG analysts are increasingly frustrated by the complexity, the time required, and the perceived partial inefficiency of the shareholder engagement process. On a daily basis, they are overwhelmed by time-consuming administrative tasks, diverting them from their primary objective: analyzing and improving ESG practices.
This raises two essential questions: what are the obstacles to effective shareholder engagement? How can digitalization and modern solutions transform this process?
ESG regulations are pushing asset management companies toward greater transparency and accountability, similar to the overhaul of the SRI label in France or the UK stewardship code, which defines stricter reporting rules. Savers demand concrete proof of ESG management, while regulators tighten their requirements. In response to these pressures, asset managers must implement robust reporting processes and demonstrate their ability to monitor and influence corporate practices. These obligations aim to ensure better risk management and long-term sustainable performance, meeting the growing expectations of clients.
Shareholder engagement has become an essential strategic lever for encouraging companies to adopt better practices, particularly in terms of sustainability and governance. Rather than excluding companies that fail to meet ESG criteria from their portfolios, asset managers prefer to engage in active dialogue to support these companies in their transition and improvements. This dialogue makes it possible to exert a direct influence on companies' ESG performance, by encouraging them to improve their environmental impact, enhance their social practices or strengthen their governance and transition plan.
This proactive approach offers several benefits: it helps maintain strong relationships with companies, maximizes long-term returns, while positively contributing to global challenges. Nearly 64% of savers say they want their personal ethical opinions to be considered when investing (Axa Study, 2023). In this context, where savers increasingly demand transparency and accountability, the ability to structure, track, and measure the impact of engagement actions has become a crucial evaluation criterion for asset managers. Those who can demonstrate tangible and measurable results stand out in an increasingly competitive market, where the effectiveness of engagement strategies will play a key role in savers' decision-making.
It is no longer enough to initiate dialogue to start a shareholder engagement strategy without assessing the results. Investors now want to measure its real impact.
Thus, impact measurement has become a major component of shareholder engagement strategy. Asset holders expect exemplary transparency from asset managers, requiring rigorous tracking and detailed reports.
They must not only report the number of initiatives undertaken but also demonstrate the concrete results achieved.
In a cost-rationalization context, operational efficiency becomes crucial to maximizing return on engagement. The more time-consuming a process, the higher the costs, whether it’s the time spent managing engagement actions manually or fragmented data tracking. By optimizing the engagement process, asset management companies can not only gain efficiency but also improve the return on investment by focusing their resources on higher-value initiatives. This also allows them to demonstrate better returns on engagement by allocating more time to strategic analysis and decision-making based on clear and up-to-date data.
One of the main barriers to effective shareholder engagement lies in the complexity and length of current processes. Around 30% of ESG analysts' time is spent on low-value tasks, such as gathering information and managing data. Analysts often have to manually collect ESG data from diverse, non-centralized sources.
Moreover, the documentation and tracking of engagement actions are tedious without dedicated tools to centralize and organize this data. This dispersion of tasks is often managed with tools ill-suited to the task, such as Excel and Word, where qualitative and quantitative parts are not integrated, complicating information traceability and internal exchanges. During an audit, teams struggle to provide accurate and comprehensive reporting due to the lack of a centralized platform allowing efficient and transparent tracking.
The lack of automation in tracking engagement actions is another major obstacle. Without automated alerts, analysts find it difficult to react quickly to changes in ESG indicators. Moreover, the lack of tools to prioritize tasks leads to an overload of low-value tasks at the expense of strategic analysis and the impact of ESG initiatives.
In some cases, management teams must manually retrieve this information, which is not only time-consuming but also prone to errors or omissions. Without automated alerts or centralized systems, analysts are forced to handle a multitude of low-value tasks, such as manually searching for data or checking indicators.
This situation undermines their ability to focus on the strategic value of their role: conducting strategic analyses and maximizing the impact of ESG initiatives. Thus, a lack of automated tracking reduces the responsiveness of asset managers, thereby decreasing the overall effectiveness of engagement actions.
Another barrier to effective shareholder engagement is the lack of collaboration between internal teams. In many asset management companies, ESG teams, financial analysts, and portfolio managers work in silos, preventing optimal coordination. This can lead to redundancies, misaligned objectives, and wasted time.
The lack of centralized communication platforms worsens this problem. An ESG analyst may have email or phone exchanges with a company, but if this information is not shared in real-time with the rest of the team, it becomes difficult to track engagements or ensure that actions align with the fund’s overall goals.
The obstacles related to the lack of automation and structured tracking of engagement actions reduce ESG analysts' ability to focus on strategic analysis and improving company practices. Instead of dedicating their time to high-value tasks such as dialogue with companies or preparing for general meetings, they are often held back by manual and administrative processes.
Moreover, the inefficiency of automating engagement actions can lead to additional financial costs for asset management companies in terms of managing, organizing, and tracking engagements, while also compromising their ability to demonstrate the added value of their engagement actions. To address these challenges, some asset management companies are investing in dedicated digital tools or increasing their direct interactions with companies to ensure more regular monitoring and improve the transparency of their initiatives.
In response to these challenges, Weefin offers a solution with its shareholder engagement module, designed to provide a comprehensive offer for a robust shareholder engagement policy.
3 key words:
Weefin's engagement module provides a comprehensive range of features that optimize the tracking and management of engagement actions. The automation of alerts and notifications keeps users informed in real-time about ESG indicator changes and specific actions to be taken.
The Weefin engagement module positions itself as an essential tool for asset management companies seeking to optimize their shareholder engagement process. Through its features focused on simplicity, synergies, and impact, it allows ESG analysts to concentrate on improving the ESG performance of companies. Additionally, it helps reduce operational costs, meeting the strategic needs of asset management companies.
Finally, the module offers advanced granularity by enabling actions to be tracked and organized by theme, sub-theme or commitment list, providing a precise view of current and future commitments, while facilitating prioritization and strategic planning.
Weefin's engagement module is an indispensable tool for asset managers seeking to optimize their shareholder engagement process. Thanks to its simplicity, synergy and impact-oriented functionalities, it enables ESG analysts to focus on improving companies' ESG performance. It also contributes to reducing operational costs, thereby meeting the strategic needs of asset management companies.
Try ESG Connect today! Simplify your engagement process and maximize the impact of your ESG actions. Request a personalized demo to discover how our module can meet your organization's specific needs.
