Federated Hermes

Federated Hermes describes its engagement approach on sustainability themes and impact topics with investees. It also publishes case studies describing where it has engaged successfully and unsuccessfully with investees on sustainability themes and impact topics. In addition, Federated Hermes discloses a target to have 45% of women among its permanent workforce and 35% at a senior management level.

Federated Hermes discloses absolute emissions from its real estate portfolio of its international business. Its subsidiary, EOS, discloses that it focuses on all sectors of the economy in its engagement on climate issues, specifically on the topic of alignment with the Paris Agreement. The subsidiary also provides a list of companies it engaged with through Climate Action 100+ initiative. The asset manager discloses that it requires its investees to have a strategy aligned with the Paris Agreement. The financial institution’s international business provides evidence that it requires its investees to have a strategy addressing their nature- and biodiversity-related impacts and that it collectively engages with its investees on the topic of their nature- and biodiversity-related impacts.

Federated Hermes has a grievance mechanism accessible to all workers and external stakeholders to raise human rights complaints and bribery and corruption concerns. Furthermore, it provides a case study describing how it has acted on a salient human rights risk issue. Moreover, it has a policy prohibiting bribery and corruption.

In terms of its approach to senior leadership accountability, Federated Hermes could assign responsibility for sustainability to the group’s highest governing body and link the remuneration of its executive or management teams to sustainability performance criteria. In addition, women are underrepresented on the board of directors where only 1 out of 6 board members are women. The asset manager explains how it integrates environmental, social and governance topics in its investment and engagement processes, but there is no evidence that it explains escalation steps in its engagement across its investment activities.

There is no evidence that Federated Hermes discloses a target to reach net-zero financed emissions by 2050 at the group level. The asset manager could also disclose the amount of its investments devoted to climate solutions. Furthermore, no evidence was found regarding Federated Hermes’ approach to fossil fuels that spans across the fossil fuel value chain and assets under management, such as the amount or share of finance it directs towards fuels, or its stance on financing companies with new fossil fuel projects. While the international business of Federated Hermes is committed to minimising its negative impacts on nature and biodiversity, no evidence was found across all financing activities.

There is no evidence that Federated Hermes has a publicly available policy statement committing it to respect human rights laid out in the UN Guiding Principles (UNGPs) and the ILO declaration on fundamental rights at work. The asset manager has also an opportunity to describe the process for identifying its human rights risks and impacts through its relevant financing activities. While Federated Hermes discloses the ages of its executive officers and board of directors, it has an opportunity to disclose this information for each employee category. To provide transparency on financial inclusivity, the financial institution has an opportunity to disclose the amount of finance directed towards low-income developing countries.