The views expressed are those of the teams comprising Wellington’s Impact Platform including our impact equity and fixed income investment teams and IMM Practice. For these teams and strategies, impact measurement and management and engagement is a core component of the investment process. These practices do not necessarily extend to other strategies that Wellington Management offers. Views are those of the authors at the time of writing, and other teams may hold different views and make different investment decisions. The value of your investment may become worth more or less than at the time of original investment. While any third-party data used is considered reliable, its accuracy is not guaranteed. For professional, institutional, or accredited investors only.
Approach to engagement
Wellington's impact investment teams believe partnership and engagement with companies and issuers in which we invest can create lasting value for our clients while enhancing our investments’ positive impact.
Engagement is a means of deepening our fundamental analysis of a potential investment and gauging the viability of our impact thesis. Our impact investment teams seek to approach engagement as we do our investment research, leveraging a multidisciplinary analysis that spans equity, fixed income, impact, and ESG perspectives. As a fiduciary of our clients’ capital, we believe it is our objective to understand the full mosaic of an investee entity’s business or financial model, industry structure, and capital allocation decisions. We also believe that this approach is the most effective way to further our intended positive impact on people and the planet.
Once invested, engagement can help us drive the desired investment and impact outcomes. Specifically, in relation to impact, we find that by educating and supporting management teams, we may be able to help them exceed expected positive environmental and social outcomes.
During our engagements, we have three main objectives:
Our impact investment teams, collaborating with Wellington’s ESG Research Team, take a hands-on approach to engagement, meeting in person with boards, management teams, and other relevant decision makers. We also write letters and host calls, in some cases, multiple times each year. In practice, we tend to approach an impact engagement with the initial objective of understanding how management sees a company’s or issuer’s ability to effect positive change; this allows us to define the opportunity and outline longer-term goals.
Management teams are increasingly receptive to our requests for transparency or additional reporting on business strategies. However, they may need more time and support to evolve their practices and develop the resources and tools needed to assess and measure impact. Engagement enables us to work with them on how they can enhance impact contribution at a corporate strategy level, which in turn can empower management to articulate a stronger value proposition. We believe improved communication and transparency also lead to greater alignment across stakeholder groups.
Proxy voting
Within our equity portfolios, we see proxy voting as an important engagement tool that allows us to be more transparent with our investee entities and drive change. Where required, we seek to leverage the proxy season to have robust conversations with management and boards ahead of votes; if these discussions do not yield the required outcome, we use our vote with the aim of escalating our concerns.
Expanded fixed income engagement
While the use of proxy votes is not an option in fixed income portfolios, we believe we can further our impact investment goals by broadening our engagement. Examples of nontraditional engagement modes may include:
Impact measurement
Our engagements create a valuable feedback loop for delivering and measuring impact across our 11 themes. Specifically, active engagement helps us identify where we believe improvements can be made; encourage companies and issuers to measure their impact — both positive and negative; and report meaningful data.
We continue to evolve and hone our approach to engagement. Inputs, including the current market environment, cross-theme impact challenges, or new developments within or across our impact themes, inform and shape our methods. While major areas of attention will evolve over time, meeting our three main objectives remains integral. In each engagement, we seek to gather valuable, additive insight into company and issuer strengths and weaknesses. This information helps confirm that our investments have the potential to generate strong long-term financial returns along with intended impact.
Impact reports
See impact highlights from each of our strategies, along with measurable impact results from the companies and issuers in which we invest.
