What is corporate engagement?
In terms of definition, we consider that ‘corporate engagement’ includes any communication between a company and its investors. Defined in this way, public companies have long engaged with existing and potential investors, in large part through their regulatory filings, public disclosures and through targeted investor relations.
This can be contrasted with direct communications between a public company and its institutional investors regarding financial and operational performance, long-term strategy, industry trends and the competitive advantage of the business model.
And, further, and relevant to this Policy, engagement includes direct communications between a public company and its institutional investors regarding ESG factors such as corporate governance and related areas such as executive remuneration, risk management, succession planning, sustainability and similar matters.
Why is corporate engagement important?
Active shareholder engagement aims to promote long-term success and sustainability. In this sense, effective engagement is about creating an alignment of interests between, and to the benefit of, companies and their investors. Apart from our initial due diligence arrangements and research into potential investee entities, we arrange formal meetings at least twice a year by way of corporate engagement with those companies in which we have an interest.
We consider the following to be main objectives of our engagement process:
- developing strong and long term relationships
- gaining information and insights to assist us in making investment decisions
- gaining early warning of potential ESG issues
- building confidence in an entity’s board’s oversight
- gaining increased understanding of executive remuneration, director elections, and other company positions at AGM, and
- encouraging and influencing entities to adopt best practice in regard to reporting on issues such as climate risk, remuneration policy and the modern slavery act.
How does corporate engagement work?
Prior to any corporate engagement meeting, ESG topics for discussion are categorised and prioritised, with any specific questions identified. This then acts as a framework to guide DNR Capital’s ESG engagement activities.
Wherever possible, DNR Capital chooses the form of direct engagement that is most appropriate for the particular topic or issue. This may include; written communication with the board or senior management, conference calls, or in-person meetings. We may also make use of broad, indirect engagement channels to ensure we are equipped with the right information.
Information gathered as part of the corporate engagement process is collated, reviewed and reported to the IC or SRIC, as appropriate. Where any activities are to be undertaken, or additional information/further elaboration to be provided by the entity as a result of the corporate engagement, these will be monitored by the investment team as part of the ongoing review process. In the event that any corporate engagement is considered to be unsuccessful for any reason, DNR Capital may escalate its activity by taking such action as it thinks fit. All DNR Capital’s ESG corporate engagement activities are documented and details may be disclosed (as required) as part of DNR Capital’s ongoing institutional client reporting obligations.