On Thursday the 25th of April, 3.00 pm GMT | 10.00 am EDT, Esgaia will host a webinar with industry experts to discuss best practices to mitigate and avoid greenwashing risk, and how to stay ahead of the curve. From processes and governance structures to portfolio alignment and impact, it has become mission-critical for investors to back up their responsible investing claims. Compliance and reporting now represent significant undertakings for investors that cost money and resources. With regulators clamping down on greenwashing across regions, investors face opportunities and challenges to stay both competitive and compliant. Recognising the transitionary phase we’re in, many investors today struggle to keep up with emerging expectations and disclosure regimes. In this webinar, we aim to provide practical insights for investors, covering: Policy and standards with the CFA Institute Insights and recommendations from Morningstar The practitioner’s perspective by Danske Bank Speakers: Nicole Gehrig, Director, Global Industry Standards, CFA Institute Lindsey Stewart, Stewardship Director, Morningstar Oshni Arachchi, Head of Active Ownership, Danske Bank Rickard Nilsson, Head of Stewardship Success, Esgaia (moderator) Note: The webinar will be hosted live on the LinkedIn, directly on the event page.

Enjoy this interview with Susheela Peres da Costa and Esgaia's Head of Stewardship Success, Rickard Nilsson, where Susheela shares important perspectives on the progress of investment stewardship, and where we need to go next. Q: Working in the nexus of sustainability, investment stewardship and corporate governance, you will have experienced some of the tensions between diversified investors and individual corporates, how do we bridge the structural differences? Shareholders are typically well-diversified. One of the things we need is clarity that directors’ obligations to shareholders are not to the shareholding per se. The Shareholder Commons, for instance, argues (in its Delaware court case) that when Meta directors opt to optimise profits and ignore the externalised harms caused by that profit-seeking, this harms Meta’s diversified shareholders. Shareholders can address this by electing directors who are willing to exercise ethical restraint with respect to the company’s impacts and externalities. There is an obvious role for proxy voting agencies and others who can provide data points attesting to these qualities in board candidates. We also need to reconsider elements of conventional governance practice that may not be serving us well - for example, “motivating” executives by basing their remuneration on the company’s relative TSR (total shareholder return) rewards them for undermining the performance of other companies. Q: Following on above, given how many issues are systemic or systematic in nature, do you think investor stewardship (as currently practiced) is too focused on individual company engagement and performance? Very much so, and this myopia limits its effectiveness. Part of the problem is that many institutional investors are incentivised to focus on relative (rather than absolute) investment performance - even many of those traditionally described as “asset owners.” Q: What changes have you seen in investment stewardship and corporate governance over time? The largest change is its popularisation. When I began this work, most companies prioritised the asset managers who attended their briefings, and largely ignored the institutional investors whose assets they were managing. In some cases, becoming aware of these investors' and their interests sufficed to bring about change. That’s no longer the case. When it went mainstream, companies became better resourced for and more practiced at “managing” investors like any other stakeholder. This makes the quality and content of stewardship much more important. Q: Let’s bring in the geographical perspective, what’s your view on balancing global vs local (/regional) in terms of standards and guidance? And, how should investment stewardship professionals think about this as they look to influence investees and markets more broadly? I advise being crystal clear about the question or problem that needs to be addressed before trying to address it or encoding the (assumed) solution in standards and guidelines. I confess to being flummoxed as to why anyone skips this step! Stewardship professionals should really interrogate the intentions they bring to engagement. For example, calls for corporate disclosure are more useful - and more effective - if based on a well-founded view about who should be doing something differently, precisely what information would cause them to make this change, and what prevents them seeking out that information now? You need strong insights into the status quo to generate a robust theory of change. Q: What about balancing the level of prescriptiveness in guidance with differences in investor stewardship maturity levels? Any takeaways for investors here? My ideal is not necessarily one where all investors undertake stewardship, but one where all investors are frank and transparent about what (if any) stewardship they undertake, and their clients differentiate them accordingly. We shouldn’t be encouraging tokenistic activity. Q: Ending this interview with another trip in the time machine, António Guterres, the Secretary-General of the UN, recently noted how “our world is entering an age of chaos”, from a stewardship perspective then, what can investors do to strengthen multilateralism, cooperation, and inclusion? Seek credible feedback from unconventional sources to help Identify which (if any) current actions or omissions undermine multilateralism, co-operation and inclusion. Start there. ------------------ Susheela is a Principal at the Stewardship Centre, and a director on the boards of the Nature Conservation Council of NSW, Beyond Zero Emissions, and US-based think tank, The Shareholder Commons. She was chair / deputy chair of RIAA from 2012-2022. She has been engaging financial institutions and corporates on responsible investment and sustainable business practices, governance, strategy, and implementation since 2006. Her advise extends to some of the world’s largest banks, pension funds, wealth advisers and asset managers.

In October, the Swiss Stewardship Code was launched. Across nine principles, the new code provides the Swiss asset management industry with guidance on responsible investment stewardship and how actors should engage with companies and other entities to encourage sustainable development and long-term value creation. This blog post discusses its core principles and how Esgaia's platform can help investors meet requirements. It was released by the Swiss Asset Management Association (AMAS) and Swiss Sustainable Finance (SSF), two organisations with jointly several hundred members and network partners. Ranging from guidelines on governance and resources to voting and engagement, the code has been aligned with key global and national standards, particularly the Global Stewardship Principles of ICGN, UN PRIs framework, and the UK Stewardship Code. It is applied on a voluntary basis, meaning the recommendations are non-binding. The code contains the following principles: Principle 1: Governance Principle 2: Stewardship Policies Principle 3: Voting Principle 4: Engagement Principle 5: Escalation Principle 6: Monitoring of Investee Entities Principle 7: Delegation of Stewardship Activities Principle 8: Conflicts of Interest Principle 9: Transparency and Reporting Governance structure and processes: To ensure oversight, monitoring and accountability for effective stewardship, investors should explain their governance structure and processes, as well as assess, review and improve its effectiveness regularly. Using Esgaia, clients can: group users together by defining roles and permissions, implement a review process for recorded efforts, and define one or more templates for engagements and activities, tailored for example to different teams or asset classes. Voting: Investors should define and disclose the overall process for arriving at voting decisions or recommendations, making sure that votes are made in a well-informed and responsible manner, and that the rationale should be disclosed to clients if requested. On Esgaia, clients can increase voting and engagement alignment by linking votes to objectives, and use it for analytics and reporting. This enables investors to bring information together to access data in one place. Individual Engagement Investors should define their own engagement topics, identify relevant and measurable KPIs, and include the purpose and the process of engagement activities based on the positive and long-term sustainable outcomes they aim for. One of Esgaia’s modules is the Engagement Tracker, which provides a purpose-built system for the recording, monitoring, and reporting of engagement objectives and activities. This empowers investors to optimise the workflow and enhance data quality. Collaborative Engagement Investors should define the relevant collaborative engagement initiatives and/or coalitions they are joining and/or forming, and the rationale to do so, as well as to outline the outcomes based on predefined time-bound KPIs (if available). The Esgaia platform can be used by individual clients to track collaborative dialogues, and by engagement initiatives as a central repository for engagement data management and coordination. We are committed to helping empower increased collaboration among investors through technology. Public Policy Engagement To adequately perform public policy engagement, investors should assess and review the effectiveness of the public policy engagement approach and objectives regularly to inform further engagement actions and investment decisions. To keep track of related efforts, in Esgaia, it’s possible to add entities other than companies. Meaning clients can link stewardship activities to different organisations, either by adding individual organisations, or by grouping stakeholders together such as: ‘Clients/beneficiaries’, ‘Industry stakeholders’, ‘Civil society (e.g. NGOs, Academia, Trade associations)’, ‘Public sector (e.g. policy consultations, governments)’ Escalation The code states that investors should e.g. define the relevant engagement activities used in case of escalation. Using our platform, clients can easily flag certain interactions as part of an escalation strategy by implementing a dedicated custom field in activity templates. By linking these efforts to objectives over time, investors can implement a systematic approach with complete data trails and activity timelines. Monitoring of Investee Entities Investee entity monitoring should be integrated with the investor’s engagement programme, and where investors have separate stewardship, research, portfolio or investment management teams, these teams should fully align to maintain consistent communication with investee entities. It also notes that where both debt and equity is held, both the fixed-income and equity teams should consider the benefits of joint engagement across asset classes. Esgaia’s platform is used by both ESG and stewardship teams, as well as the investment departments. Importantly, clients customise their workspace to fit their needs, including establishing aforementioned review processes, templates and custom fields of interest. Together with the automatic link of funds to engagement targets, this empowers investors in their coordination and information sharing, providing a sound structure to stewardship data management. Delegation of Stewardship Activities Asset owners should describe how they oversee the activities carried out by delegated parties and how they monitor them. Aside from due diligence processes and questionnaires, Esgaia’s platform can support clients in evaluating manager stewardship to assess if policies and practices match up. That is, by using Esgaia to implement a workflow for data retrieval, analysis/comparison, and aggregation for reporting purposes. Transparency and Reporting Investors should regularly, and at least once a year, publicly publish a stewardship report, including e.g. the main stewardship priorities of the past year, the main topics addressed with investee entities in governance and sustainability engagements, and the progress made on the set stewardship priorities. Reporting is a primary use case in Esgaia. Using the platform, clients save time in their reporting strategy with purpose-built analytics, data visualisation, and export features. And with our Engagement Disclosure Service (engagement data provided through website plugin), investors can access a cost-effective solution to better tell the stewardship story. View this video for a quick overview of reporting capabilities: //The Esgaia Team

Enjoy this interview with John Howchin and Esgaia's Head of Stewardship Success, Rickard Nilsson, where John shares his knowledge from 25 years of working with responsible investing. Today, John runs the advisory firm Transition INC., with official assignments as the Head of European Operations at BanQu, and as the Global Ambassador for the UN-convened Global Tailings Management Institute. He served as the Secretary-General of the Council on Ethics for the First, Second, Third and Fourth Swedish national pension funds for just over a decade, stepping down in 2022. Q: John, looking back at your extensive career in finance and sustainability, what comes to mind? My career has truly been a rewarding and exciting journey. I’ve had the pleasure of working with great smart people, where we together have contributed to establishing the concept of responsible investing and the importance of it for investors. When I started out, many of the issues facing companies and investors were not as tangible as they are today. We are now living the consequences of climate change, and other sustainability challenges. It’s not strange then that the finance industry, similar to other industries, recognise they have a responsibility to understand these issues for better, more informed decision-making. With this in mind, as we discuss different transitions, it’s important to understand and be realistic about timeframes. For example, early on in my career, at ABB, we sent electric motors to Volvo as part of its electrification journey, but it’s not until now that electric car-making is really taking off, 35 years later. Similarly, I visited Vestas in the beginning of the 90ies, and now, 30 years later, we finally reached the point where the industry is achieving cost parity with efficiency levels to meaningfully drive change at a global level. Acting with the urgency needed to address challenges today will require that we recognise that global problems require global solutions. We need collaboration at scale (read industry initiatives, public-private partnerships, blended finance etc.) and to focus deployment where it truly matters, where the utility is the greatest. Q: You had a long tenure (10+ years) as the former Secretary-General of the Council on Ethics for the 1st, 2nd, 3rd, and 4th Swedish national pension funds, what did you learn from this experience? I had a great time at the Council in a fascinating role! Much of my work over the years focused on investment stewardship, and the responsibility and incredible power that comes with the ownership of companies. Intellectually it was very rewarding. The breadth and width of issues, having to deal with everything from conflicted regions to human rights violations and environmental disasters taught me a lot. Regardless of the issue, it’s been great to see how investor interest and engagement have picked up and gone from a marginal phenomenon to center stage for investors. It’s also been a lot of work, managing differences in opinions, and addressing a broad set of stakeholders. Altogether though, it’s been a fantastic journey, and I’m super proud to have represented the AP funds in a global setting, acting as a sort of “diplomat” and messenger when traveling, performing site visits, and so forth. Q: The Council’s approach is to engage companies on norms breaches and to promote sound practices across proactive thematic engagements, what’s your view on the effectiveness of this approach and the dialogues? Long before the Ethical Council was created, in the early 00’s, the AP funds gained a reputation of engaging with companies. With Sweden’s strong reputation globally acting as a door-opener, the funds have been able to “punch above their weight” so to speak. The focus on compliance with international norms and conventions has helped create a hygiene level of acceptable behaviour for investors globally. However, we must remember that ethical and responsible companies are a living process, and many lose momentum, why constant work is needed to align with evolving best practices. Helping to raise such minimum standards should be the starting point for most investors I believe. As long-term owners, with intergenerational commitments and time horizons, engagement needs to be a partnership. It should be about helping companies address issues and make progress (within acceptable timeframes), understanding that the journey and work continues and can be revisited over time. Q: Collaboration stands out to me as perhaps the most important ingredient in investor stewardship. Under the right circumstances, it can e.g. increase influence, reduce duplication, and divide resources, what have you learned from collaborating extensively with others? Having engaged hundreds of companies through the years, I believe the most important thing is showing up, wanting to participate and contribute. Creating a space for learning and a strong group dynamic is essential, you should seek out the right mix of investor sizes, regional representation, and expertise. Most investors understand that oftentimes the issues we’re engaging companies on individually are actually system-level issues, better suited to system-level responses and solutions. Thus, we need to have realistic expectations of what we hope to achieve by ourselves versus in collaboration, where the latter is naturally when we can hope to achieve the most. Q: This leads me to your work with the Global Tailings Management Institute (GTMI). Following the disaster at Brumadinho, an initiative representing actors across the value chain was founded in 2019, which managed to implement a Global Industry Standard on Tailings Management (GISTM) and later the GTMI. What would you attribute to its success? Well, it became apparent that the engagement with Vale (following the Brumadinho dam collapse), wasn’t working very well. We saw the need for a global framework, which could be applied across the industry. With support from the finance industry and investors globally, we enabled a triparty discussion between UNEP, the International Council on Mining and Metals (ICMM), and the UN PRI, convened by myself and Adam Matthews. This approach was key to unlocking the tensions sometimes found between universal owners and individual companies. By working collaboratively, across the value chain, toward a set of global standards, we have created a level playing field, which would have been impossible by ourselves. Q: Your answers often highlight the system perspective; the need to address and find solutions to root causes on a system level. How can investors incorporate this into their stewardship programs? In most places, we need simple, straightforward frameworks and structures, aligned on a global level, regardless of region or country, to avoid “arbitrage situations” where companies explore differences for their own gains. Don’t get me wrong, there are ambitious actors, but oftentimes companies and their industry organisations focus on the lowest common denominator. Therefore, they need the pull from others, e.g. via FN, the EU and similar bodies, which can significantly streamline processes and standards development. The best way to achieve this in my opinion is again to collaborate extensively across value chains, and ensure “boots on the ground” to fully understand the issues at hand and what the reality looks like. Then, based on that reality, you build the structures, bottom-up, not top-down. Q: Time for final remarks, if you could ask for one thing of investors, what would it be? Reaching solutions like the aforementioned GISTM requires an enormous amount of energy, activity, and willpower. In many ways, it represents the frontline of global development, however, in many areas, much work still lies ahead of us. For it to succeed, you need collective backing and help from institutions, where company boards, CEOs, investor committees, and personnel feel empowered and supported in this work. Investors have the right and ability to influence company practices to help drive positive real-world outcomes. With that comes responsibility, which requires investors to prepare themselves as it regards policies, processes, governance structures and human resources. This lays the groundwork for value-creating dialogues, where the collective power of investors has an important role to play. This interview has been transcribed from a recording.

On the 7th of November, the ISR label committee announced the Minister of Finance’s support of its proposal for a more ambitious and demanding label. The new version of the label is now being finalised and will come into force from March 1st, 2024 for candidate funds. In this blog post, we highlight some of the requirements pertaining to investors’ active ownership and how Esgaia's platform can help empower investors in meeting requirements. Created in 2016, the ISR label has become a major tool for sustainable finance in France, with nearly 1,200 certified funds. With the strong evolution in responsible investing, the new framework is better adapted to the challenges facing investors as they navigate social and environmental transitions. Aligning with parts of the EU’s SFDR, the updated criteria apply across strategies such as screening, ESG integration and investment stewardship. For the latter, the provisions around shareholder engagement and proxy voting are more precise and binding: 1. Improving the engagement process: The updated criteria outline how funds should demonstrate the implementation of processes to ensure that each ESG engagement action is the subject of: i. a request explicitly made to the issuer; ii. a clear objective, to qualify the degree of success against the goal; iii. a predefined time frame, at the end of which an assessment is formalized; iv. where applicable, follow-ups and escalation actions. Using Esgaia, you can establish engagement objectives which enable you to create profiles with objectives and milestones, link interactions over time, set deadlines, and formalise assessments when concluding dialogues. For more information on engagement process best practices, check out our blog ‘Step-by-Step Guide to Investment Stewardship and Engagement Tracking’. 2. Demonstrating accountability through escalation: The label requires a formalised escalation process, which should outline the steps involved and the actions taken when progress isn’t satisfactory. As investors go about this, they need to track and be able to evidence this process and the different interactions over appropriate timeframes, including the resulting outcomes and investment implications (e.g. divestment). Esgaia’s solution empowers investors to manage the related work- and data flow, for example by setting deadlines on specific objectives, labeling certain interactions as escalation activities, and linking related votes. Activities are logged and visualised on a timeline to ensure a complete “audit” trail of interactions. 3. Influencing through stakeholder engagement: To protect and enhance overall long-term value for clients and beneficiaries, investors should not only engage with issuers and portfolio companies but take a broader stance and engage with stakeholders across their sphere of influence. Herein, the label requires investors to report on the number of stakeholders and performed activities, including, where appropriate, examples of successes and failures. Via Esgaia, investors can create dedicated entity profiles to track these interactions. Depending on needs, clients would either add the different organisations, or label groups of stakeholders together such as Clients/beneficiaries, Industry stakeholders, Civil society, and the Public sector. 4. Enhancing stewardship reporting: The updated label is also seeking to enhance the transparency provided by investors. Therefore, fund ESG commitment reports will need to provide clarity on, and specify: i. the number of ESG engagement actions carried out over the past period, and the portion of the fund covered by at least one ESG engagement action; ii. the classification of ESG engagement actions across the pillars of E, S and G; iii. for collective ESG engagement actions, the degree of involvement, and iv. any other significant action taken with portfolio holdings. With our platform, investors are able to extract all recorded data for specific time periods and funds to better tell their stewardship story. For more information on stewardship reporting best practices, check out our blog 'Six Steps to Improve Your Stewardship Reporting’. End note: What we are seeing now across regions are steps to improve transparency, collaboration and accountability across the investment chain. With that comes higher expectations, also for investment stewardship, where investors are expected to demonstrate best practices by articulating and exemplifying how objectives and strategy translate into actions and then outcomes. To explore how Esgaia can empower you on this journey, please contact us or request a free trial!

Esgaia is happy to announce the hire of Johanna Milne as Chief Commercial Officer (CCO). Johanna brings a wealth of knowledge and experience and will help strengthen Esgaia’s position as the leading platform for investment stewardship data management globally. She will focus on driving Esgaia’s commercial strategy, including revenue generation, business growth, and enabling partnerships. Here follows a short profile and interview with Johanna. Q: Please give a brief introduction to yourself and your background in finance and sustainability. I have been working with institutional investors since the early 00’s with everything from venture capital, proxy voting, index provision, ESG data and consulting services. I have had a rather diverse career (nice way to say I have done lots of different things) with two stints at ISS for example, many years with Mercer and its Investment Consulting practice and a few corporate roles in between. This has given me an insight into company-investor dialogue as well as how everything from a small pension fund to a large global investor handles KPI’s and transformative change in terms of reaching targets both from a financial and sustainability perspective. I believe my breadth of experience will be useful to Esgaia and I look forward to working within a smaller, more agile organisation. Q: Why were you interested in joining Esgaia? I first came into contact with Esgaia in 2021 and felt even then that investor stewardship data management was an interesting focus - being a responsible steward of capital has been, is and will continue to grow in importance. However, without a structured approach, engagement dialogue is just discussions without a goal and often with no tangible results. By combining in-house dialogue, engagements by service providers and collaborative efforts with other data such as voting behaviour and ESG research, investors can achieve a more robust and structured process. Couple this with increasing reporting requirements and the quest to showcase your competitive advantage and the tracking of objectives and activities through to outcomes becomes key. Following on above, in my recent role at PwC I headed up the ESG data and tech offering, which saw a growing interest from both companies and investors. Now is really the time companies are starting to report more consistently as well as setting targets and measures for their organisations. Learning how to better utilise this information in the engagement process will allow more in-depth discussions and more concrete change. With growing stewardship capacity amongst investors, through dedicated ESG teams and up-skilling of investment departments, I feel the importance of empowering technology and data management structures is key. Q: What do you hope to achieve in your role as CCO? I hope to grow Esgaia at a faster pace whilst ensuring we continue to develop our solution. The development knowledge here is very high and I hope that through clients, a listening sales process, and partnerships, we can grow faster and smarter. Personally, I love problem-solving, with Esgaia’s modern and flexible platform I feel we can build a system that helps solve investor pain points, ensures happy clients, and a long-term sustainable Esgaia!

On Tuesday the 14th of November, Esgaia hosted a LinkedIn live webinar with industry experts on evolving stewardship expectations and reporting requirements. From the invitation In recent years, we have seen an avalanche of sustainable investment regulation coming online to battle greenwashing and improve transparency and comparability in the market. Investment stewardship is no exception, where the updated UK stewardship code, the new PRI reporting framework and SFDR are shaping the agenda globally. Recognising stewardship as one of the most powerful tools available to investors, it's also scrutinised for not being used to its fullest potential. Many investors today struggle to keep up with emerging best practices and disclosure regimes. In this webinar, we discuss how investors can position themselves to stay ahead of these evolving requirements, covering: Policy insights by the UN PRI, Stewardship recommendations from ShareAction The practitioner’s perspective with Vancity Investment Management Speakers: Rickard Nilsson, Head of Stewardship Success, Esgaia (moderator), Junru Liu, Senior Policy Analyst, UN PRI Susanna Hudson, Senior Engagement Manager – Investor Standards, ShareAction Kelly Hirsch, Head of ESG, Vancity Investment Management

Responsible investing is transitioning into a more regulated arena. Such transitionary phases offer opportunities to reshape expectations and practices but also challenges for market participants to stay competitive and compliant. In this blog, we outline six best practices to mitigate and avoid greenwashing in investment stewardship. Greenwashing can take many shapes and forms, and be intentionally misleading or unintentional. It’s fair to say however that only a few actively strive to break the law, while the rest try to act within it. Risks of greenwashing exist when there is misalignment between what’s being communicated and the reality of actions. Investors need therefore to continuously assess how they articulate, disclose and market their practices. From processes and governance structures to portfolio alignment and impact, it has become mission-critical for investors to back up their responsible investing claims. Cracking down on greenwashing As we've seen across regions lately, regulators have moved into an enforcement stage in preventing greenwashing. Most recently, the SEC cracked down on DWS, finding that it made materially misleading statements about its controls for incorporating ESG factors into research and investment recommendations for ESG-integrated products. Similarly, in a previous instance, the SEC fined BNY Mellon for misstatements and omissions about ESG considerations in making investment decisions for certain mutual funds that it managed. On the industry level, a recent study by The 2° Investing Initiative (2DII) assessed environmental marketing claims related to hundreds of the largest environmentally focussed Art 8 and Art 9 funds. It found, for many funds claiming to “achieve positive effects” or to “reduce negative impacts” through stewardship, that the public disclosures on engagement and voting were insufficient to substantiate such claims. Furthermore, an academic research paper explores how greenwashing and subject matter expertise-related competence greenwashing has been increasing alongside the growth in sustainable finance. Lastly, ESMA, in response to the European Commission's request for input on greenwashing risks and the supervision of sustainable finance policies, reports concerns that issuers and asset managers make engagement claims with little substantiation. The most frequent forms of misleading claims included references to unsubstantiated (empty) engagement strategies that are neither consistent nor transparent, and do not provide important details about the progress of engagement. Table 3 from ESMA's report, summarising the most relevant areas of greenwashing: Best practices to mitigate and avoid greenwashing in your active ownership: What does stewardship refer to? And what does engagement really mean? There is no shortage of sources defining each, which in itself is problematic because the lack of standardisation is impacting on investor practices. Even if we will inherently have some degree of misalignment between regional expectations, there are still some universal truths that investors would do well to follow. 1. Align strategy with resources: Investors have different resources. Ensure your objectives and ambition level align with your profile and sphere of influence. By focusing on quality over quantity and capacity building, you can be honest about your approach and what you’re working towards. When deciding on appropriate stewardship resources, make sure to cover: Budget allocation (staff, training, tools) Team (size, expertise, experience) Knowledge and data-sharing structures (coordination, system capabilities) 2. Adopt robust governance arrangements: Appropriate oversight and accountability are essential for a well-run stewardship program. While governance arrangements will vary depending on type and size of organisation, the chosen approach should provide consistency and be integrated with investment decision-making. Common approaches to formalising stewardship governance normally include; establishing an oversight committee, appointing dedicated senior leadership, creating stewardship or ESG teams, and improving the coordination between teams. Team structure and responsibilities often depend on the size of the organisation, with smaller asset managers typically having the investment teams in charge, while larger organisations often split the mandate with ESG/stewardship teams. 3. Get the process right: Optimising your engagement process requires spending time and resources on both workflow and system capabilities. Ensure you build a strong process around the creation, execution, and evaluation of your stewardship program. Reinforce it through strong governance, ongoing training and the adoption of appropriate tools to streamline processes. Follow this guide for insights on how to operationalize the process around engagement recording, monitoring and reporting. 4. Bring engagement and voting together: Proxy voting and engagement go hand in hand, they are both part of the broader investor stewardship toolbox to assert rights and influence over investees. To avoid risks of greenwashing and being called out for not having your house in order, it’s important to demonstrate intentionality and a coherent strategy. Operationally creating and evidencing the link between engagement efforts and subsequent voting decisions requires a structured approach to coordination and data sharing - Stewardship platforms like Esgaia’s can empower your strategy here. 5. Future-proof your data management: Stewardship-related data and operational silos can create barriers to engagement success. Here’s where a dedicated system can help you structure and organise the data, improve coordination and simplify reporting. Excel works until it doesn’t, you can probably sense if it’s sufficient or if the headaches are getting worse. Take time to evaluate your data management needs, coving for example engagement tracking (recording and monitoring), analytics, voting data integration, and tools for reporting. Ultimately, the ambition should be a more integrated and seamless workflow that empowers your asset stewardship. 6. Be honest in communications: Reporting and compliance represent significant undertakings for investors that costs both money and resources. Follow these four steps to further develop your reporting strategy: First order of business should be data quality. You should be able to trust your data, and it shouldn’t require a lot of ex post information gathering to fill in gaps. If you struggle with this, contact us. Secondly, can you substantiate your claims? Given how difficult it is to prove additionality in engagement, be clear about your role and the purpose of efforts. Preferably separate tracking of change-oriented dialogues vs standard monitoring, and use case studies to exemplify value creation. Thirdly, as concerns about greenwashing continues in the market, consider what assurance will be appropriate in the future to reassure your clients and governing bodies. Fourthly, ensure you have a good understanding of reporting expectations and where the trend is going. Remember, more is not always better, but less is not always more, so strive for a balance and employ plain language practices for increased understanding. Finally, telling your stewardship story is not just about the actual numbers, it’s about the whole strategy. From policy and objectives, governance and resourcing, to actions and outcomes, be realistic about your practices and what you hope to achieve. //The Esgaia team If you need help with your data management, please contact us!

Enjoy this interview with Nawar Alsaadi and Esgaia's Head of Stewardship Success, Rickard Nilsson, where Nawar shares his learnings from decades in finance and engaging with companies. Today, he is the CEO and founder of Kanata Advisors, an ESG fintech boutique advisory firm focused on the intersection of finance, sustainability, and data. Q: Nawar, you are what I would call an “Eldsjäl” in Swedish - a passionate and driving force in sustainable investing. As the founder of an advisory firm, tell us a bit about your day-to-day work? Thank you for that kind characterization, I am absolutely passionate about the sustainable finance space, and I believe it to be the future of capitalism. As to my day-to-day work, I spend plenty of my time working with founders and teams of ESG fintech companies to find solutions to operational and strategic challenges. Outside of that, I spend plenty of time keeping up with developments in the sustainable finance space, and when I have time, share content with my many followers on LinkedIn. Q: With your investment background, let’s delve into the do’s and don’ts of active ownership. I know you’ve driven a lot of engagement dialogues over the years, what comes to mind when you reflect back on this? I believe active ownership has come a long way. Back when I started actively engaging with companies, in the late 2000s, engagement was the domain of activist investors, a relatively fringe segment of the investment community. Today, active ownership is widely accepted as a credible lever to drive change, manage risk, and generate returns. However, as is always the case, when an activity becomes “fashionable” a lot of pretenders get involved, and I do fear that many investment firms today are using engagement as an excuse for inaction rather than using it as a real force for change. This is not always by design, but often due to lack of proper tools, lack of expertise, and lack of proper governance structures. Q: Being very vocal about what’s working and not in the current market, would you mind highlighting some examples here? I believe investors have been effective in getting companies to think about and disclose their ESG performance. However, the investment community has been far less effective in getting companies to materially improve their sustainability performance. Let’s take for example Climate Action 100+, despite the collective weight of $68 trillion in assets, 700+ investors, and over 5 years in existence, less than 5% of CA100+ engaged companies have capital alignment with net-zero. And yet, 75% of CA100+ engaged companies have a net zero commitment. What this tells us is that sustainable investors are winning the commitment battle, but losing the capital spending battle. Unfortunately, nature only cares about action, and not about words, and so should investors. Q: I’m worried that stewardship assumptions can get hyperbolised into unreasonable expectations of roles and achievements, are we asking too much of an industry whose primary concern is running money for their clients? I think this is largely a self-inflicted wound. I am saying this because when sustainable investors got started with engagement, many used their ESG engagements as a marketing and a communication exercise, rather than framing these critical company interactions as a risk management exercise. It is incumbent on the industry to reset expectations, to educate clients and regulators, around the possibilities and limitations afforded by active ownership. Due to the uncertain nature of their business, asset managers are not expected to guarantee financial returns. As such, why should they be expected to guarantee non-financial returns? Q: Following on the previous question, what would you focus on if you still worked in asset management? I would create clear internal philosophy around the role and purpose of integrating engagement in the investment process. Investors need to have internal clarity on whether their active ownership program is designed to manage risk or drive impact, or both? These two goals may intersect at some point, but often they don’t. The other issue I will address is building a strong governance process around the creation, execution, and evaluation of the firm active ownership program. This is especially critical when engagements are undertaken by the ESG team rather than the investment team; lack of proper governance in this context can create significant internal friction. Q: How do you foresee stewardship practices evolving over the coming years? I see increased reliance on more robust engagement tools likes Esgaia. I believe many investors are still using very rudimentary and not fit for purpose tools such as spreadsheets to manage highly complex engagement tasks. When I worked with CA100+, many participants were still circulating email threads circa 1995! This needs to change. Outside of the above, I see a growing sophistication around the use of a concept I presented over year ago, which I call Integrated Engagement, which in a nutshell is the process of assessing sustainability risks across asset classes, understanding the linkages between them, and engaging the same ESG risks across multiple asset classes at once. I applied this concept when I worked with Canada Post Pension Plan, where I led an engagement with one of our public holdings, Caterpillar, around decarbonizing their construction equipment product line. The goal of this engagement was twofold: decarbonize Caterpillar, but also reduce the embodied carbon in our future real estate developments by help bring to the market an expanded fleet of electrified construction machinery. Q: Time for final remarks, if you could ask for one thing of investors, what would it be? My ask or advice would be for the investment industry to invest more in ESG capacity building and sustainability education enterprise-wide, and not just for a sub-segment (ie. investment or sustainability teams). Investors need to cultivate a sustainability mindset and a sustainability culture that permeates every aspect of what they do. As they say charity begins at home, and so does sustainability. You can’t ask portfolio companies to be sustainable if your firm is unsustainable. About Nawar: Nawar Alsaadi is a seasoned sustainable investment professional with over 20 years of experience, holding multiple senior roles: Senior Portfolio Manager at Canada Post Pension Plan, Director of ESG at NEI investments, Chief Impact Officer at ScopeFour Capital, and is currently CEO and Founder of Kanata Advisors. Nawar has extensive active ownership engagement experience, and have been involved in several proxy contests with TSX and NYSE-listed companies on matters pertaining to corporate governance and corporate strategy. Nawar holds a CFA in Climate and ESG Investing, a Sustainable Investment Professional Certification, and an FSA SASB Credential. Nawar earned a BBA in International Business from Schiller International University, and an MBA from Boston University. He is also the author of five books, and an active contributor to the financial press.

Summary Öhman Fonder actively engages with companies on various ESG matters. The asset manager’s engagement is directed toward companies that fulfill one or more of four key requirements: Companies aligned with Öhman Fonder's focus areas (Human Rights, Biodiversity, or Climate). Companies that are the subject of initiatives initiated, endorsed by, or participated in by Öhman Fonder. Incidents or controversies have occurred during Öhman Fonder's ownership of the company. Companies lacking adequate sustainability reporting, making risk and opportunity analysis challenging. This case study focuses on W-Scope, a company involved in the manufacturing of lithium-ion secondary battery separators used in portable electronics like computers, smartphones, electric vehicles, and fuel cells. Due to W-Scope being in the early stages of its sustainability reporting journey, the analysis of sustainability risks and opportunities has been challenging for Öhman Fonder. Thus, an engagement has been initiated with W-Scope to address this topic. This case study illustrates how Öhman Fonder employs Esgaia’s platform to follow best practices in engagement tracking, achieving: structured objectives with deadlines, complete activity trails, clear progress evidence, and stellar reporting. Client Öhman Fonder, Sweden's largest independent asset manager, manages approximately 14 billion EUR in assets under management. The firm embraces sustainable asset management through long-termism, responsibility, and active ownership. Challenge While investors are increasingly engaged in their investments, activities like recording, monitoring, and reporting stewardship efforts can be complex without suitable tools. Common systems like Excel lack features such as linking activities to engagement profiles, setting deadlines, and receiving timely notifications, which can hinder the success of long-term engagements. Solution and implementation Engagement Topics: Investors set their own typology of (sub-) topics in Esgaia to be identified by users when they record interactions to ensure engagements and activities are mapped coherently. In this case, as the initiated engagement with W-Scope regarded the company’s sustainability disclosure and ambitions, Öhman Fonder linked the topic of ‘Sustainability Reporting” and sub-topic ‘Climate’ to an engagement profile. Engagement profile: Öhman Fonder created an engagement profile to structure and link information, objectives, and interactions over time. Examples of objectives for W-Scope include: Integrate CDP results in annual and sustainability reports. Disclose scope 3 emissions. Set climate targets. Get climate targets approved by The Science-based Target initiative (SBTi). Activity recording: Specific activities, such as initial email outreach, company responses, and digital meetings discussing the topic, are linked to the engagement profile, forming a comprehensive data trail presented in a timeline. Progress monitoring: As objectives are achieved, Öhman Fonder marks them as completed, adding notes and evidence of progress. Reminders for objectives are set within the software to ensure timely follow-up. Stakeholder reporting: Recorded information is enabled for analytics and reporting, and can either be extracted as an engagement-specific case study (PDF), or in raw format (Excel/CSV) with information about the engagement, progress to date, performed activities, and so forth. Viktoria Voskressenskaia, Sustainability analyst, Öhman Fonder, comments: "With Esgaia's software, we improve our stewardship data management, saving valuable time and resources. The systematic tracking of our stewardship efforts enhances our reporting strategy and responsiveness to client requests amid increasing scrutiny from stakeholders." Video exemplifying user experience and workflow via Esgaia (demo account):

Enjoy this interview with Fiona Reynolds and Esgaia's Head of Stewardship Success, Rickard Nilsson, where Fiona shares her story and learnings from decades in finance and responsible investment. Today, Fiona is an independent director and advisory board member working across the business and investor sectors on ESG and sustainability issues. She served as the CEO of the UN PRI for just under a decade, stepping down at the beginning of 2022. Q: As the former CEO of UN PRI, you are certainly a well-known name in the industry. Today, as an experienced Board Chair, Director & CEO, focused on advancing sustainability, what drives and motivates you? My motivation has always been about how we create capital systems that benefit the majority of the population and not just those sitting at the top of it. I started my career working in the pension sector in Australia. Compulsory superannuation or private pensions for working Australians came into being in 1992. These pension funds (called superannuation funds in Australia) were designed so that all profits were returned to members, set up as trusts with the board of trustees having equal representation from both employers and employees or their representation. Today the assets held in those funds are over $3.3 trillion (AUD). Across the globe in the largest pension markets of Australia, Canada, Japan, the Netherlands, Switzerland, the UK, and the US approximately $US45 trillion is held in pension funds, which is more than 60 percent of the GDP of these countries. When we think about the size and scale of those assets, we must remember that this large pool of capital is owned by everyday working people, therefore it stands to reason that it should be managed in a way that serves their interest. This led to my interest in ESG issues. Pension funds invest capital for the long term and they must consider the risks to those assets over a multi-decade time frame and for a multi-generational cohort of members. I also believe that pension funds must think about the world into which their members will retire and not cause harm and damage through the way in which they invest, through damage for example to people or to the planet. As large holders of capital, pension funds have the power to shape the way they invest, through their investment choices and their stewardship. Money talks and pension funds can help shape the future. Pension funds have a major role to play in our economy, but also in the outcomes. We must find the right balance between people, profit, and planet, all can be aligned in my view, but it takes new ways of thinking and a move from shareholder primacy to balancing the needs of all stakeholders. This is a different way of investing and why the responsible investment or ESG movement was created. Q: Under your leadership at the PRI, the initiative grew to become the world’s biggest responsible investing initiative, today with over 5,000 investor members representing €130 tr in AuM. First of all, hats off to such an amazing journey! In retrospect, what are you most proud of? Thank you, I am immensely proud of my time at the PRI, and the role that PRI has played in promoting responsible investment. It of course was just not me on my own, many have contributed along the way, including its founding executive director, James Gifford and I hope many others will continue to contribute to its growth and success. When I first started at the PRI in 2013, I was surprised to see that despite the very big threat that climate change posed to investors, few investors were really taking it seriously or incorporating climate issues into their investment decision-making, so in 2014 we created the Montreal Carbon Pledge, where investors committed to measuring their carbon footprint. Today that does not seem very revolutionary, but a decade ago it was and of course, the beauty of this pledge was once you have measured your carbon footprint you have to actually do something to reduce it. The next phase included the creation of initiatives such as Climate Action 100+ and other major climate initiatives such as the Net Zero Asset Owner Alliance. I was also determined to see S issues rise up the agenda and for investors to understand the interconnections between the E, the S and G. For example, whilst climate change is an environmental issue, it is also an economic issue, and it is most definitely a social issue and at the PRI we worked with others to promote the need for a Just Transition. Q: With responsible investment ‘growing up’, its complexities, limits and possibilities have come under increasing scrutiny. Right or wrong, it’s impacting industry practices, how do you see it shaping investors' stewardship practices? Investment stewardship is a very important part of responsible investment and one of the key levers that investors have is their ownership in companies. Through their engagement and voting rights they help shape the direction of a company. Stewardship however needs to be meaningful; it needs to be more than a tick-box exercise so that you can report that you have been to X number of meetings throughout the year. Stewardship needs to be about outcomes and investors need to have a clear plan for their stewardship activities, including an escalation plan for when engagement is not working. To me, we see a lot of engagement activity, but we are not seeing directors who aren’t taking action be voted off boards in the way I would have expected. Q: Sometimes, efforts made can feel rather hopeless against the never-ending stream of climate troubles and social injustices, in such moments of disbelief, what would you do? You can definitely feel like – what’s the point of it all sometimes, but in times of disbelief, I think about where we would be without investor action on ESG issues, as I am convinced that we would be even further behind the curve than we are today. Investors are not just influencing company behavior they are also influencing policymakers; they are influencing government actions and we are seeing far more cooperation between the private and public sectors. Change is of course not happening at the scale, or the pace required, and we cannot just sit back and rest on our laurels, we need to escalate our actions. There is still so much that needs to be done and we have only just touched the surface. I also think back to when I started working in the responsible investment space, when ESG was seen as a niche issue, a nice to have – today it is a mainstream issue and a must-have. Change can happen, just not always in the time frame you would like, but once it happens and becomes the norm, then it is likely to remain in place – and that is success. Q: One approach I can think of is to focus on your sphere of influence and how stewardship resources are allocated (and optimised) across different stakeholder groups. From your experience, how should investors think about this? This is why I strongly believe in collective action, no one investor can move the dial on their own, it is through working together that we can make a difference, expand our sphere of influence, and use our resources wisely. Investors can also learn from each other, particularly when they invest globally but might only be headquartered in one country where they cannot possibly, be on top of every issue on every topic in every country. It is why organizations like the PRI were created and continue to be important. Q: Time for final remarks, if you could ask for one thing of investors, what would it be? If we really want to solve the climate issue, if we want to solve human rights violations, if we want to meet the aims of the SDG’s, then capital needs to move from developed to developing countries, from the global north to the global south. This is not happening anywhere near the scale required and as investors we need to work on ways to develop the standards and the investment vehicles to make this happen, otherwise we will not reach net zero, we will not solve the climate crisis. We have to remember the world is interconnected. About Fiona: Fiona has 30 years' experience in the financial services, superannuation and pension sector. She joined the PRI from the Australian Institute of Superannuation Trustees (AIST), where she spent seven years as CEO. Today, Fiona is the Chair of the UN Global Compact Network Australia; she also serves on the Board of Frontier Advisors and the Australian Sustainable Finance Institute. She is on the Advisory Boards of Quinbrook Infrastructure Partners, Affirmative Investment Management, and ROC Partners. She chairs the ESG Advisory Committee for Qualitas and is on the think tanks Climate Catalyst, and the UBS Sustainability and Impact Forum, as well the Advisory Committee for the NSW Commissioner for Anti-Slavery and the Australian Human Rights Institute. Fiona was named one of the 20 most influential people in sustainability globally by Barron’s magazine and has twice been named one of Australia’s one hundred women of influence by the Australian Financial Review.

Optimising your engagement process requires spending time and resources on both workflow and system capabilities. Follow this guide for insights on how to operationalize the process around recording, monitoring and reporting. And who knows, you might just end up avoiding suboptimal use of resources and improving your stewardship overall! Step 1. Objectives and Strategy: Start by establishing the baseline for your organisation’s investment stewardship approach. That is, what’s your profile, who are your clients, how do you optimise your influence, and so forth. Nothing you haven’t heard before really, except for the often overlooked area of stewardship and engagement data management, which is what this blog is about. Oftentimes, stewardship responsibilities can be categorised into two buckets: one with the investment team in charge (with operational support), and one with a split mandate between the investment team and an ESG/stewardship team. Data management requires its own set of goals and expectations. In active ownership, at a minimum, ESG teams shouldn’t have to administer and police things like activity recording, notes, and progress monitoring. However, the reality is that many investors do struggle to systematically record and manage this data, which, in turn, can hurt the quality of their stewardship and related disclosures. To assess if your system capabilities are adequate or not, preferably you evaluate your current setup and perform a benchmark of available alternatives. Here’s a stewardship system evaluation template you might find useful for comparison. Step 2. Prioritisation: Prioritising stewardship efforts normally reflect a combination of a bottom-up and top-down approach to monitoring and more dedicated, objectives-based, engagement dialogues. While the former is often guided by unique investee circumstances, engagements can be initiated either on the back of such findings or because of specific engagement criteria. Here are some examples of typical engagement prioritisation criteria: Focus topics based on client and beneficiary interests, largest holdings, credit quality/duration of FI holdings (e.g. less balance sheet flexibility for negative ESG impacts, or exposure to ESG factors over certain timeframes), worst performers based on specific ESG data (e.g. breaches of international norms, poor ESG risk rating scores), value chain engagements, often through collaborative initiatives focused on specific topics or industries with significant material/systemic ESG risks/impacts. Using Esgaia and system integrations, you can decide what information should flow to and from the software for enhanced information access, for example by importing relevant ESG research. Step 3. Preparation: Depending on the purpose of the dialogue, the nature and scope of preparation will look different. As part of this process, investors generally: collect background information from relevant sources such as corporate disclosures, investment & ESG research providers, external benchmarks, media, and NGOs, establish best practices by performing peer analysis and considering global/industry-specific frameworks, and determine the asks and objectives, i.e. what are you looking for and how will you monitor progress, including suggested actions and timeframes. With Esgaia, you can add relevant information on entity-, engagement and activity level, such as notes and files, with flexible progress frameworks available in engagement profiles. Step 4. Dialogue & interactions: To further build trust and enhance the probability of success, investors consider things like; intentions and expectations; entry points; timing; regional considerations; and timely follow-ups. From a data management perspective, to ensure systematic stewardship tracking, there are certain information you might want to consider capturing, such as: for interactions: activity and counterparty types, purpose, participants, topics discussed, and notes, in engagements: ESG category and topics, SDGs, PAIs, objective(s), performed activities, and next steps. Esgaia provides an intuitive user experience where you can e.g. establish custom fields, and define engagement and activity templates for more complete data capture. By linking up Esgaia with internal and third-party systems you can share active ownership data more effectively across teams, for example by importing emails with our Outlook Add-in. Step 5. Progress monitoring For stewardship to become more effective and adequately meet stakeholder (reporting) expectations, investors need to better assess the status and progress of dialogues over time. This is where you monitor progress against your asks and objectives, capture dialogue sentiment, and list the next steps. Via Esgaia, users can structure progress frameworks in alignment with their strategy by defining specific milestones and or objectives. And, you can set deadlines and follow-ups to ensure timely action and accountability. Step 6. Escalation (if needed) When progress is insufficient, investors should escalate dialogues accordingly. There is no one size fits all approach here, rather escalation strategies should be specified on a per-fund or strategy basis to account for e.g. different asset classes’ rights and influence. Several activities can fit into an escalation strategy, such as: sending a letter to the CEO or the Board with expectations and escalation implications, utilising the AGM and its different routes (e.g. asking questions, filing or supporting a shareholder resolution, voting against director re-elections), seeking collaborators to increase influence, reweighting or divesting from holding, using official position statements, blacklisting or litigation. Using Esgaia, you can choose to label activities as part of an escalation strategy. Where linked to specific engagement profiles, these activities will then show up on a timeline for a complete “audit trail" of interactions. Step 7. Concluding engagements There can be many forms of stewardship outcomes. From outcomes relating to investors’ internal work around process, governance and resources, to the results from their outward-facing stewardship efforts. Regardless of good or bad, be clear about your stewardship outcomes, your stakeholders deserve honest and reliable claims about your ambitions, and the correlation between activities and results. In Esgaia, you can record progress over time, as well as dialogue results, entity outcomes, and investment implications for concluded engagements. Step 8. Reporting Evolving reporting regimes require investors to outline their stewardship strategy, demonstrate their efforts, and evidence the outcomes, using both statistics, text-based disclosures and detailed case studies. Good data management supports higher-quality disclosures, which can help enhance your market influence. Conversely, if you don’t take data management seriously, reporting can become a real challenge with often fragmented unstructured information, and incomplete records of interactions. Via Esgaia, all data is automated for smooth entity and product-level analytics and disclosures. It can be accessed and displayed on the platform, via exports, PDF case studies, or using website plugins with live disclosures. Step 9. What are you waiting for? Time to get going! It’s time to bring your stewardship data management to the next level! Contact us to learn more about our digital workspace for asset stewardship, designed to seamlessly bring investment, ESG and reporting teams together! For additional insights, check out this blog on 4 Stages of Engagement Tracking: From Novice to Expert, where we map the maturity of engagement strategies to common system capabilities across four different levels.