Great news! Esgaia now offers custom engagement templates, which enable clients to define their own template(s), including topic or industry-specific ones. In this case study we demonstrate how to implement a net zero engagement framework in Esgaia, modeled against the Net Zero Investment Framework (NZIF).
In order to drive the transition of underlying assets over time, investors should set specific alignment criteria, assess the current and forward-looking alignment of assets, and communicate their expectations together with suitable engagement objectives.
To help guide investors, there are several different frameworks available to support their net-zero ambitions, including how to engage with issuers on climate change and transition plans.
The Net Zero Investment Framework
The criteria set forth in the NZIF can be modified to fit with other frameworks or be supplemented with sector-specific alignment criteria.
For listed equity and corporate fixed income, as noted in IIGCC’s ‘Investor Expectations of Corporate Transition Plans: From A to Zero’, six criteria are used to assess the alignment of a transition plan. These criteria broadly cover:
Ambition, emissions targets, performance, and disclosure (criteria 1, 2, 3 & 4 respectively),
How emissions reductions are going to be delivered (criteria 5 & 6), and
Four “additional criteria” to be incorporated in transition plans where feasible, covering policy engagement, governance, just transition, and accounting.
Implementing a net-zero template
A net-zero engagement framework should reflect a criteria-based engagement and voting strategy for nonaligned assets and issuers, with clear escalation strategies. Depending on the baseline position, investors should set time-bound (ideally annual) objectives and longer-term goals for companies, while adjusting for sector-specific alignment criteria as appropriate.
The video further below outlines how to implement a net zero engagement template in Esgaia. It highlights the following:
Template creation: Admin users are able to create multiple templates with voluntary and mandatory fields to be populated by other users.
Objectives:
The objectives reflect the criteria discussed above. For each objective, users can add additional information such as notes and files.
If implementing a thematic template, you will see an aggregated progress overview for the applicable companies.
Milestones & evidencing progress: To mark progress against the objectives, in this example, we have included a scale with different levels aligned with the NZIF. For more information and examples of milestones, see e.g. IIGCC’s ‘Net Zero Stewardship Toolkit’ and Exhibit B.
Entity-level criteria alignment: NZIF outlines five maturity stages as:
i) Not aligned,
ii) Committed to aligning,
iii) Aligning towards a NZ pathway,
iv) Aligned to a NZ pathway, and
v) Achieving net zero.
Such entity-level data can be separately imported by clients to the software as a standalone dataset, or manually mapped for engaged companies by users.
Reporting: As a core feature of Esgaia, all of your engagement and activity records can be exported, either on a company-level or aggregated, to support reporting and more extensive analytics.
Video - implementing a net zero framework in Esgaia
As a final note, just as net zero investor guidance evolves over time, so too will Esgaia’s supporting features. This engagement template feature is one such example that will help enhance data quality and reduce unnecessary admin around engagement records.
Please contact us to discuss how our software can empower your stewardship efforts and net zero engagements!
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