Two of France’s public pension funds are heading the establishment of a major new project to help investors assess how effective their corporate engagement is.
Fonds de réserve pour les retraites (FRR) and Établissement de Retraite Additionnelle de la Fonction Publique (ERAFP) are part of a new taskforce, launched today, that will establish best practices for shareholders and lenders seeking to influence their portfolio companies on ESG issues.
Focusing on transparency and outcomes, the initiative said it would address “a proliferation of engagement activities without a clear evaluation framework”.
More specifically, it will endeavour to strengthen the credibility of corporate engagement, and reduce the risks associated with overpromising and underdelivering on engagement activities.
Other members of the taskforce include Generali Asset Management, AXA Investment Management, Candriam, CDC Croissance, Edmond de Rothschild Asset Management, MAIF, Malakoff Humanis and Sycomore Asset Management.
A number of academics are also involved in the project, which is coordinated by FIR, the French forum for responsible investment.
The asset-owner members will drive the initiative, FIR said in a statement, by guiding the taskforce’s work and proposing to use the results to evaluate their own asset managers.
“Our aim is to define criteria for evaluating engagement actions, in order to achieve a concrete result that can be used in our calls for tender and fund selections, as well as to monitor and deploy best practices in this area,” explained Mickael Hellier, FRR’s head of SRI.
The group is scheduled to have submitted an initial version of its framework and proposed terminology to FIR by the summer.
A consultation will follow, before the final methodology is published towards the end of 2025.
French engagement activity
French investors are required to report on their stewardship strategies as part of their obligations under the country’s Energy and Climate Act, and many publish detailed reports on the topic to back these claims up.
According to a study published at the end of 2024, the most recent batch of those reports ranged from four pages to nearly 400.
Novethic, the Paris-based consultancy that produced the paper, noted that there was an even bigger spread when it came to voting activities.
“The number of shareholder proposals voted on by the investors ranged from 12 to 2,862, giving an average of 358,” it wrote.
The median average for voting on routine issues at annual meetings was 97%.
“At a pivotal moment of high expectations for shareholder proposals, we note that only four investors on the study panel detail how many of these were successful at AGMs,” Novethic said.
Further delays to SRD II
Many investors are hoping that long-awaited revisions to the Shareholder Rights Directive, SRD II, will include new provisions to make it easier to vote at annual general meetings (AGMs).
However, a leaked version of the European Commission’s upcoming workplan suggests it will not move forward this year on the updates, which have already been delayed since 2023.
They are not mentioned in the leak, which includes a detailed list of the European Commission’s plans for 2025. An official version of the document is due to be released this week.
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