EUROPE - Quantitatively measuring the impact institutional investor engagement has on companies and their share prices is nearly impossible, according to Karina Litvack, head of governance and sustainable investment at F&C.

Litvack, speaking to mark the 10-year anniversary of F&C's global engagement service reo, said that it was "difficult to put a number on the disaster that never happened", explaining this was the dilemma they faced.

"In ten years we have seen previously esoteric or apparently marginal issues race up the corporate agenda.

"Investors are finally beginning to appreciate that environmental, social and governance (ESG) factors can generate extraordinary opportunities, but can also sink companies if they get it wrong."

She said that the global financial crisis had shocked people into action, but the industry needed to make sure it learned the right lesson.
Litvack added: "The UK Stewardship Code formalises shareholder engagement and sets positive new standards for investors to step up to, just as companies have long been expected to do under the UK Combined Code."
Important issues for engagement in 2010 are set to include water scarcity, dealing with the textile industry, as well as unconventional oil and gas exploration methods, food processing and nutrition, as well as the UK's Stewardship Code and corruption.

Engagement has already led to some improvements in the banking sector where many contracts on remuneration now include claw-back clauses. Several banks are also collaborating on issues such remuneration, according to George Dallas, director corporate governance at F&C.