Sustainability in action

Evidence of our integrity in targeting Sustainable Wealth Creation.

Hands holding a light bulb and a movie smack

We invest and engage with conviction and focus on sustainability for the long term. Achieving this is the result of sustained, focused effort over many years.

But what does this require on a day-to-day basis? Here we take a granular look at the short-term activity that compounds towards positive outcomes for investors, society and the environment.

The power of engagement

Returns

7.1%

Engagement success can support outperformance. Research shows that companies undergoing positive change can generate an additional 7.1% in additional annualised returns.1

Assets

€1tn

Through our stewardship team, EOS at Federated Hermes, we have over €1tn in assets under advice.

Objectives

3,942

In 2020, we engaged 1,245 companies on 3,942 engagement objectives and issues.

Governance

42%

Governance objectives featured in 42% our engagements, while environmental topics appeared in 24% of the total.

Companies

80%

We take a long-term view and have engaged with 80% of our companies for more than five years and 54% for eight years or more.

Voting: Coverage

123,988

In 2020, we made voting recommendations 11,759 meetings on 123,988 resolutions.

Voting: Resolutions

17,669

We recommended voting against or abstaining on 17,669 resolutions in 2020.

Voting: Themes

43.5%

Of these, 43.5% were on board structure and 25.3% on remuneration.
Source: Federated Hermes as at 31 December 2020.

1Dimson, E., Karakaş, O. and Li, X. (2015). “Active Ownership,” published in The Review of Financial Studies, 28(12), 3225-3268. Past performance is not a reliable indicator of future returns.

Creating impact through the SDGs

Our SDG Engagement Equity and SDG High Yield Credit capabilities seek outperformance through impact. Through engagement, they focus on helping companies improve to support delivery of the Sustainable Development Goals (SDGs).

SDG-driven engagement in H1 2020

SDG Engagement Equity

0
SDG engagement actions with…
0
portfolio companies

SDG Engagement High Yield Credit

0
engagement actions with…
0
portfolio companies

Collaborating for change

As engagers, we aim to catalyse initiatives, create and strengthen relationships, heighten ambitions and accelerate progress on achieving sustainable outcomes for all stakeholders. In doing so, we recognise that companies ultimately deliver change supporting the delivery of the SDGs.

Focused on a range of key sustainability issues, including:

Women in STEM

Sustainable land use

Employee wellbeing

Circular economy

Carbon-emissions reduction

Corporate governance

Human-capital management

Recycling and waste reduction

Cobalt supply chains

Renewable energy

Human rights

Water use

Collaborating for change

As engagers, we aim to catalyse initiatives, create and strengthen relationships, heighten ambitions and accelerate progress on achieving sustainable outcomes for all stakeholders. In doing so, we recognise that companies ultimately deliver change supporting the delivery of the SDGs.

Achieving the following SDG intensity

The intensity of each strategy’s focus on specific SDGs is shown below. The larger the SDG icon, the greater the number of engagement actions aligned with its delivery.

SDG diagram
SDG engagement hight yield credit

Source: Federated Hermes as at 30 June 2020. Please note: because one engagement action with a company can address numerous SDGs, the sum of SDG-aligned engagement activities shown above will exceed the total number of engagement actions for the period.

Collaborating for change

As engagers, we aim to catalyse initiatives, create and strengthen relationships, heighten ambitions and accelerate progress on achieving sustainable outcomes for all stakeholders. In doing so, we recognise that companies ultimately deliver change supporting the delivery of the SDGs.

Advocating progressive policies

Our involvement in investment and sustainability organisations enables us to help shape the policy architecture governing markets in a way that supports the delivery of Sustainable Wealth Creation.