Helping companies to change
We actively engage many of the companies we own in dialogue to encourage them to make improvements in their (ESG) practices.
Corporate engagement is one of the cornerstones of the Ethical Funds’ approach. In fact, it’s one of the key differentiators of our approach. We don’t just screen companies for sustainable practices, we actively engage many of the companies we own in dialogue to encourage them to make improvements in their environmental, social and governance (ESG) practices.
Active engagement for better results
We never stop building our relationships. Through engagement, the companies we own are held accountable to their shareholders and to the communities in which they do business. It benefits shareholders by potentially increasing the company's value.
3 steps for corporate engagement
What does corporate engagement look like? We use three increasing levels of persuasion to encourage companies to adopt more sustainable environmental, social and governance practices:
- Dialogue
Ethical Funds directly engages company management and Boards of Directors in dialogue. We identify potential issues of concern and encourage company leaders to make changes that would reduce their exposure to ESG risks.
- Shareholder resolution
If dialogue fails to produce results, we file a shareholder resolution to be voted on at the company’s annual general meeting.
- Proxy voting
If the resolution goes ahead, we issue a proxy alert, challenging the company’s response to our resolution and explaining the reasons why we believe it should be supported. We devote a great deal of effort to ensuring that the proxies owned by our company are voted in accordance with our detailed Proxy Voting Guidelines. Ethical Funds was the first mutual fund family in Canada to disclose its Proxy Voting Guidelines and activities — long before it was made compulsory.