Morgan Stanley: Engage Winter 2023
The latest edition of Engage, the International Equity Team’s semi-annual update on their ESG engagement activity.05.02.2024 | 08:02 Uhr
In this edition:
Testing the water
As a follow up to an engagement on water use with a brewery we hold,
our Head of ESG took the opportunity to conduct a further fact-finding
engagement, visiting the company’s “best in class” brewery in the
water-stressed region of North Mexico. Having identified water use as a
financially material risk for the company, our engagement enabled us to
gain on-the-ground insights into the measures used by the company and
brewery to manage the risks associated with water scarcity.
Investing in people
Diversity, equity & inclusion (DEI) is both a financially
material risk and opportunity for a European multinational software
company we hold. We met with their Chief Diversity & Inclusion
Officer to discuss how they are identifying internal candidates and
supporting development to ensure female employees are in a better
position to be promoted, enquire about data disclosure around DEI, and
discuss the setting of effective targets around racial diversity.
Overall, we believe that their new Chief Diversity & Inclusion
Officer appears to be an effective and focused leader, driving the right
DEI strategy and culture in the business.
Climate change – can insurers stand the heat?
Record temperatures and recent wildfires have brought further
evidence that the climate is changing. With weather patterns more
extreme, unpredictable and therefore costly, how will the insurance
industry adapt? And what about re-insurers? While the protection gap may
present a financially material opportunity for insurance companies,
increasing insurance coverage increases the liabilities of those doing
the insuring. The insurance companies control an essential aspect
however – price, which we believe is one way they can manage this
financial risk.
The devil is in the detail: carbon targets 101
A look at the key differences between carbon neutral and Net Zero,
the basic building blocks involved in setting carbon reduction targets
and why we believe targets approved by the Science Based Targets
initiative (SBTi) are credible and consistent.
Executive pay: “Show me the incentive and I will show you the outcome”
As long-term investors, we want the companies we invest in to have
pay plans in place that encourage longer-term thinking over short-term
opportunism. We created the Pay X-Ray as a framework for a comprehensive
and rigorous analysis of company pay schemes. In this piece we talk
through what we do and don’t like to see in executive pay plans, as well
as giving case study examples of how we use proxy voting to emphasise
our point.