ESG arm of ISS to engage SDG laggards on behalf of investors

New ‘collaborative engagement’ service will focus on climate, biodiversity, gender, water and the blue economy

ISS ESG, the responsible investment arm of big US proxy advisor ISS, has said it will launch an engagement service targeting 150 companies that are underperforming against the UN Sustainable Development Goals (SDGs).  

The ISS ESG Thematic Engagement Solution, which will go live in January, will focus on SDGs 13, 6, 5, 14 and 15 – Climate Action, Clean Water and Sanitation, Gender Diversity, Life Below Water and Life on Land, respectively. For each goal, it will identify around 30 companies “based on poor track record or performance” to engage over two years.     

ISS ESG said it would carry out engagement on behalf of clients – by writing letters and having meetings, among other things – and that it would “formulate a clearly articulated goal based on participating investors’ expectations” for each of the five objectives.  

The offering will sit alongside ISS ESG’s existing Norm-Based Engagement Solution, which has some $3.7trn of assets signed up. It will be part of the firm’s new Collaborative Engagement Services, launched yesterday.   

The ESG arm of the big proxy firm claimed that the new service will support investor compliance with “voluntary and statutory stewardship frameworks,” including the EU’s Sustainable Finance Disclosure Regulation (SFDR) and Shareholder Rights Directive (SRD II).   

Edouard Dubois, ISS ESG’s Global Head of Stewardship & Engagement told RI that under SFDR, “ESG Funds must explain how they use engagements to support their sustainability objectives and their process in case of controversies. ISS ESG provides engagement solutions that help to address these requirements.” 

When asked how the offering would complement existing collaborative engagement programmes like Climate Action 100+ and the upcoming Nature Action 100+ – which already count many large investment houses as active members – DuBois said it monitors these initiatives “closely” and would “seek to align where possible to drive action”.