Today, China A-share companies engage with shareholders, which was not the case 10 years ago. Investor engagement used to be solely about dividend policies. Analysts only needed to get their assumptions right on revenues, profits and valuation to determine whether to invest.
Now that’s not enough. In a market where information is increasingly available, investors need to find an edge. ESG (environmental, social and governance) engagement is how to find sustainable alpha.
Of course, engagement means different things to different people. In practice, there are two types: proactive suggestions around ESG issues; and remedial efforts to get a company back on track in response to a negative event.
In proactive engagement, investors typically focus on ensuring the foundations for growth are in place, particularly around a company’s internal risk controls and the strength of its capital position. Remedial engagement efforts only happen once something has gone wrong.
Although the latter often garners more public recognition, we think investors should focus on the former. Better to be a considered driver than an accident-prone one.
For professional investors (in Switzerland qualified investors) only – not for retail investors
Investment involves risk. The value of investments, and the income from them, can go down as well as up and an investor may get back less than the amount invested. Past performance is not a guide to future results.
Privacy and Cookies Policies
Belgium, Cyprus, Denmark, Finland, France, Greece, Iceland, Ireland, Italy, Luxembourg, Netherlands, Norway, Portugal, Spain and Sweden: For professional investors only. Produced by Aberdeen Asset Managers Limited, registered in Scotland (SC108419) at 10 Queen’s Terrace, Aberdeen, AB10 1XL, and Standard Life Investments Limited registered in Scotland (SC123321) at 1 George Street, Edinburgh EH2 2LL. Both companies are authorised and regulated by the Financial Conduct Authority in the UK. Unless otherwise indicated, this content refers only to the market views, analyses and investment capabilities of the foregoing entities as at the date of publication. Issued by Aberdeen Standard Investments Ireland Limited. Registered in Republic of Ireland (Company No.621721) at 2-4 Merrion Row, Dublin D02 WP23. Regulated by the Central Bank of Ireland
Austria, Germany: Issued by Aberdeen Asset Managers Limited, registered in Scotland (SC108419) at 10 Queen’s Terrace, Aberdeen, AB10 1XL, and Standard Life Investments Limited registered in Scotland (SC123321) at 1 George Street, Edinburgh EH2 2LL. Both companies are authorised and regulated by the Financial Conduct Authority in the UK.
Switzerland: Issued by Aberdeen Standard Investments (Switzerland) AG. Registered in Switzerland No. CHE-114.943.983. Registered Office: Schweizergasse 14, 8001 Zurich.