abrdn announces active equities’ three-year engagement roadmap

The aim is to highlight the themes most important to active equities and our investors, based on our assessment of the financial materiality of these issues. 
This roadmap is an extension of our overall engagement approach which benefits from collaboration across asset classes and with the abrdn Sustainability Group. Our engagement approach aligns with the UK Stewardship Code and its Guiding Principles, which have helped focus our thinking.

Corporate Governance

Corporate governance can be a key enabler of strong corporate performance. A robust governance structure, with appropriate policies and practises in place, and with talented, experienced, and motivated individuals across an organisation, is a necessary precondition for performance on a range of environmental and social issues, as well as financial performance. 

High-quality corporate governance plays a role in not only encouraging long-term value creation, but also in ensuring checks and balances are in place, and risk tolerances understood, so that the right people are making decisions for the right reason. Within this theme, we will prioritise key areas such as capital allocation and return; board composition and diversity; and renumeration. 

Climate Change

Climate change is one of the most significant challenges of the 21st century and has significant implications for society as well as investors. We view climate risk as a financial risk, and as such, are focused on getting a better understanding of ways that investments can help mitigate climate change globally, and in turn, mitigate investment risks. 
As investors, we have a role to play both in helping to fund new technologies to combat climate change and its effects, and in helping drive decarbonisation across portfolios through engagement. Assessing the transition and physical risks and opportunities of climate change is a core driver of this and areas such as governance of climate change; operational decarbonisation; and the ‘Just Transition’ will be prioritised.

Cyber Security

Many companies largely depend on, and make use of, personal data and information and are increasingly interconnected. With a concomitant growth in hacking and cyber incidents, secure and reliable systems are, therefore, a prerequisite for business across several sectors. There is also an increasing focus on the cyber-preparedness of companies which operate critical infrastructure, including national energy grids, power generation and transportation.

Our engagements will focus on companies that we believe are operating in high-risk environments; where management teams have not sufficiently addressed the risk of cyber security events; or where companies have been the victim of a cyber event, and therefore, responses and changes need to be assessed.

Supply Chain Management and Human Rights

Companies are under scrutiny from consumers, civil society and regulators regarding the treatment of both their direct employees and the workers along their supply chains. Supply chains are increasingly fragmented and removed from the consumer, yet with the advent of new technology and social media, the management of supply chains is an increasingly visible component of companies’ behaviour.

We have a responsibility to respect human rights in our own activities by understanding the ways in which our investments affect the rights of others.  We conduct thorough research and analysis on companies’ labour and supply chain issues, including around forced labour and modern slavery. We have made clear that we have zero tolerance for forced labour in supply chains.

Devan Kaloo, Global Head of Equities, abrdn said:

"The active equities engagement roadmap enhances transparency for clients, portfolio companies and stakeholders, focusing on key factors impacting our investments."

Sarah Norris, Head of ESG- Equities, abrdn said: 

“Engagement is an important part of our investment process within active equities: we see engagement not only as a right but as an obligation of investors in our role as owners of companies. We believe informed and constructive engagement helps to foster better companies, enhancing the value of our investments. We are paying particularly close attention to Governance factors, which can sometimes be overshadowed by Environmental and Social topics.”

Andrew Mason, Head of Active Ownership, abrdn, added:

“At abrdn, we align our engagement approach with the UK Stewardship Code to create long term value for clients, the economy, the environment, and our society. Our aim is to both enhance and preserve the value of our clients’ investments by considering a broad range of factors that impact on the long-term success of the company. This roadmap demonstrates how abrdn’s active equities team will apply its company engagement priorities for the next three years.”

Further information on abrdn’s overall approach to engagement is available in the stewardship report.

Notes to editors

About abrdn

Important Information

For Professional Investors only

The value of investments, and the income from them, can go down as well as up and you may get back less than the amount invested. Past performance is not a guide to future results. Tax treatment depends on the individual circumstances of each investor and may be subject to change in the future. We recommend that you seek financial advice prior to making an investment decision.

The details contained here are for information purposes only and should not be considered as an offer, investment recommendation, or solicitation to deal in any investments or funds and does not constitute investment research, investment recommendation or investment advice in any jurisdiction. Any research or analysis used to derive, or in relation to, the above information has been procured by us for our own use, without taking into account the investment objectives, financial situation or particular needs of any specific investor, and may have been acted on for own purpose. No warranty is given as to the accuracy, adequacy or completeness of the information contained in this communication and no liability for errors or omissions in such information. Readers must make assessments to the relevance, accuracy and adequacies of the information contained in this communication and make independent investigations, as they may consider necessary or appropriate for the purpose of such assessments. Any opinion or estimate contained in this communication, are made on a general basis.   No information contained herein constitutes investment, tax, legal or any other advice, or an invitation to apply for securities in any jurisdiction where such an offer or invitation is unlawful, or in which the person making such an offer is not qualified to do so.

Issued in the UK by abrdn Investment Management Limited, registered in Scotland (SC123321) at 1 George Street, Edinburgh EH2 2LL and authorised and regulated by the Financial Conduct Authority in the UK.

AA-120923-168140-1