Morgan Stanley IM: Engage Autumn 2024
The latest edition of Engage, the International Equity Team’s semi-annual update on their ESG engagement activity.28.10.2024 | 05:45 Uhr
In this edition:
Accounting for all costs
Our decade-long engagement on pay with a German multinational
software company we hold in our global and international portfolios
concluded satisfactorily with the company’s decision to include
share-based compensation (SBC) in its earnings. In this piece, we look
at the increasing prevalence of SBC in employee compensation and why
excessive use of it can be problematic.
The importance of accuracy
The reporting of inaccurate data can pose a potentially financially
material risk to credit rating companies, including litigation and
reputational risks, as these companies play a key role in helping
creditors make decisions about granting individuals loans. In this
engagement, we met with one of the credit rating companies we hold to
discuss accuracy in credit reporting.
Seeing the wood for the trees: EUDR 101
With potential fines for companies of up to 4% of total European
Union (EU) turnover, the EU Deforestation Regulation (EUDR) has the
potential to pose financially material risks to companies doing business
in the EU. In order to understand the risk facing companies in our
portfolios, we set out to assess the exposure of companies we own and
engage directly with those we consider to be at potential risk. In our
engagements, we focused our discussion on the visibility and
transparency of companies’ supply chains today, as well as any planned
changes to meet the new rules.