Investors are using our benchmarks to hold companies to account for their impacts
WBA methodologies and benchmarks help to close the information gap and help stakeholders, such as companies, investors, banks, governments, multi-laterals, civil society and media, make more informed decisions. Similarly to 2022, we saw an exponential growth in the number of investors using our materials to inform engagement with companies, with this number increasing from 41 in 2022 to 325 in 2023.
How investors are using our methodologies and benchmarks to act
WBA works with asset managers, asset owners and key actors across the investment industry to accelerate corporate accountability and compel transformation towards more sustainable systems. WBA’s first independent evaluation in 2020 established investors as a key stakeholder group WBA needed to engage with further in order to maximise our reach and hold companies accountable. We witnessed a significant increase in the total number of investors using our data in their work (from five recorded cases in 2020 to 233 by 30 June 2023).
Our insights therefore facilitate a shared understanding of sustainability priorities. Investors contribute to the development of our methodologies, co-host events to share their insights and work with WBA though our engagement activities, such as our Collective Impact Coalitions (CICs). In order to better communicate our investor engagement work externally and empower others, we launched, in 2023, the Investor Engagement section of the WBA website and published a new edition of Stories of the WBA’s Alliance that provides a snapshot of how investors are using our benchmarks and insights to inform their activities. We worked, throughout 2023, to build awareness of WBA’s work with investors, including by speaking at numerous events, such as the Oxford Sustainable Finance Summit, Responsible Investor Europe and ESG Investor’s first Stewardship Summit.
We also connected with Allies and key actors in the investor ecosystem by ensuring an engagement team presence at Davos, Ceres Global Conference, WBA’s Allies Assembly in Mexico and New York Climate Week. Additionally, WBA’s Investor Engagement Strategic Lead visited Singapore, Bangkok and Hong Kong in November 2023 to meet with financial institutions and other key actors within the finance industry. Given that a large proportion of SDG2000 companies have their headquarters in Asia (30% in East Asia and the Pacific and 6% in South Asia) it is important for us to build connections with investors and explore levers for influencing companies in the region. This will be a continued priority for 2024.
Informing proxy voting with our benchmark results
Proxy voting is a core component of any asset manager’s fiduciary duty. It is a tool for clear and effective investment stewardship and is a way that asset managers can send clear signals to companies on social, environmental and governance issues. To exert our influence during these processes, we piloted the publication of one-page, company-specific updates on companies covered in our climate and energy benchmarks. These were published three weeks before each company’s annual general meeting (AGM). This is the moment when asset managers can vote on both company-filed as well as shareholder filed resolutions. These learnings are being utilised as we move forward with CICs and other engagement plans, and as we work on updating our research processes over the coming two years.
How investors are using the Social Benchmark Framework to track the performance of 40 companies in the mining and renewable energy sector
In November, the UN-supported Principles for Responsible Investment (PRI) launched the assessment framework for its human rights stewardship initiative Advance. The initiative announced that it would use WBA’s Social Transformation Framework to track the performance of the companies targeted by this collective investor initiative rather than developing its own benchmark. PRI Advance brings 265 investors together, with over USD 35 trillion assets under management, to initially target 40 companies in the mining and renewable energy sector. Among the reasons for choosing WBA’s framework and data, PRI highlighted that our Social Benchmark “covers the highest number of companies of any benchmark considered across all sectors of the economy – this allows for comparability as Advance expands to more sectors in the future.”
Simplifying the decision-making process for responsible investments in food and agriculture
In support of the 2023 Food and Agriculture Benchmark, we released an Investor Guidance highlighting key questions investors can ask on topics relating to the five key findings highlighted in the benchmark. The second finding on nutrition is also supported by the Access to Nutrition Initiative’s work with investors. The guidance simplifies the decision-making process for responsible investments in food and agriculture.
How financial sectors can play a role in influencing national oil companies in the energy transition
Most WBA investor engagement to date has focused on leveraging shareholder influence through one-to-one and collective investor engagement. However, we have seen the limits of this approach with certain benchmark issue areas. One example of this is with national oil companies (NOCs), which account for half of oil and gas production, 40% of investments in the sector and two thirds of the planet’s hydrocarbon reserves. In November 2023, WBA published a brief developed in collaboration with the International Institute for Sustainable Development and the UC Santa Barbara 2035 Initiative. It explores how financial actors (banks, investors and credit rating agencies) could play a role in influencing internationally exposed NOCs in the energy transition. The brief received some traction in the media and was cited by several civil society organisations who work on this topic. WBA will engage with key actors linked to this brief across 2024.
In 2020, 26 financial institutions were members of WBA’s Alliance. There are now over 50 financial institutions in the Alliance, representing over USD 15 trillion in assets. The last investor Ally to join in 2023 was Norges Bank Investment Management, one of the world’s largest asset owners, which has stakes in about 9,000 companies worldwide and holds 1.5% of all listed companies globally. This story is an excerpt from our 2023 Annual Report.