Active ownership is an investment approach that goes beyond simply buying and selling stocks or other assets. It involves actively engaging with the companies in which investors hold ownership stakes to drive positive change and enhance long-term value.

Active owners, such as institutional investors and asset managers, recognize that they have influence and responsibility as shareholders. They believe that by actively participating in the decision-making processes of companies, they can promote better corporate governance, environmental sustainability, social responsibility, and ethical business practices.

Key Matters and Considerations in ESG

Through active ownership, investors may:

– Exercise voting rights: Active owners vote on important matters at company shareholder meetings, such as electing directors, approving executive compensation, or approving mergers and acquisitions. By voting, they can influence the direction and decision-making of the company.

– Engage in dialogue: Active owners engage in constructive dialogues with company management and boards to address concerns, share insights, and encourage improvements in areas such as environmental impact, labor practices, diversity and inclusion, supply chain responsibility, and risk management.

– Support shareholder resolutions: Active owners may propose or support shareholder resolutions on specific topics to raise awareness and prompt action on issues that align with their investment principles, such as climate change, human rights, or executive accountability.

– Collaborate with other investors: Active owners often collaborate with other like-minded investors through initiatives, such as investor networks, to amplify their influence and advocate for collective change. By working together, they can have a stronger impact on corporate behavior and encourage industry-wide improvements.

The goal of active ownership is to create sustainable, responsible, and well-governed companies that generate long-term value for both shareholders and society at large. By actively engaging with companies, investors seek to align financial returns with positive environmental, social, and governance (ESG) outcomes.

It’s important to note that active ownership is not a one-size-fits-all approach. Different investors may prioritize different ESG issues based on their values and investment objectives. However, the common thread is the active commitment to shaping companies’ practices and promoting sustainable and responsible business behaviors.