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Active ownership
Introduction
ESG integration
Climate change
Partnership with Prudential
Community and people
A final word
Central engagement
the letter is sent, we will rate the company as Milestone 1 and continue engagement with each company until it has satisfactorily resolved the relevant outstanding sustainability issue. This is likely to be a multi-year process. In 2021, Prudential had set a target to engage with the companies responsible for 65% of the absolute carbon emissions in their investment portfolio, which includes both listed equities and corporate bonds. The Eastspring Central Engagement team undertook these engagements under its Climate Change and Decarbonisation thematic, thereby allowing our client to meet their requirement of the Net Zero Asset Owners’ Alliance (“NZAOA”). Furthering our Central Engagement Program in 2022, we expanded our thematic focus to include the unsustainable use of Palm Oil and United Nations Global Compact (“UNGC”) violators. Additional thematic engagements, which will be discussed later in the chapter, have also been adopted by the team.
As active owners, we use our Central Engagement Programme as a platform to express our expectations on material ESG themes to targeted investee companies. Thematic engagement on specific issues complements the investment team’s more company-centric ESG engagements. The programme objectives are based on our judgment of materiality to investment portfolios managed on behalf of clients. For each identified material ESG theme, the Central Engagement team follows a six‑step process to carry out the engagement programme.
Milestone 1 Raised awareness of issue with company
Milestone 2 Dialogue in process
Milestone 3 Company has agreed to address the issue
Milestone 4 Company has developed or are planning to implement a plan to address the issue
To determine the deployment of engagement and to keep track of
engagement progress, we have designed a six-step process for assigning engagement milestones to companies. After assessing the disclosures, targets, and strategy of the company management, we assign a milestone to each company. We utilise letter writing via emails as the initial mode of engagement to request that companies address the issue. Once
Milestone 5 Company has satisfactorily resolved the issue
Central engagement cycle
1 Identify topic for engagement
2 Identify companies that are in scope for the engagement topic
3 Cross-check company
4 Assess quality of management, targets, and strategy to shortlist target companies
5 Compose engagement
6 Monitor progress
disclosures against selected standards, initiatives, targets, and strategy
letter and email to target companies
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