Sustainalytics, a leading global provider of environmental, social and governance (ESG) research, ratings and analytics, and Cass Business School, today released a new research report titled, Engagement: Unlocking the Black Box of Value Creation. The study presents a new typology of investor engagement, and provides insights into the interaction between ESG integration and engagement as well as the multiple values associated with engagement.

Engagement is one of the fastest growing responsible investment strategies globally together with ESG integration, and is considered an effective way to fulfill investors’ fiduciary duty and stewardship obligations. Yet, while investors have been actively involved in engagements for many years, little is known about engagement practices, processes and successes.

To better understand various ESG engagement approaches, the partners conducted 36 in-depth interviews with institutional investor representatives across France, the Netherlands and the United Kingdom. The findings reveal that managing the environmental and social impacts of engagement requires more attention. While progress is being made, there is the need for greater consistency in the scope, content and quality of investors’ ESG engagement disclosures across all three countries.

Dr. HendrikGarz, Sustainalytics’ Executive Director of Thematic Research, said: “Our extensive analysis can potentially serve as a valuable opportunity for institutional investors to benchmark their activities against their European peers and inform policy development on engagement.  We enjoyed working with Cass Business School on this first initiative and look forward to advancing the dialogue around this critically important topic.”

Jean-Pascal Gond, Cass Professor of Corporate Social Responsibility (CSR) and current head of the ETHOS research centre, said: “We now have a better understanding of the challenges facing institutional investors in identifying and recording the specific environmental and social impacts of their engagement activities. Greater collaboration by multiple stakeholders to develop comprehensive metrics will likely enhance the environmental and social outcomes of investor engagement efforts.”

The full report can be accessed here.