Investment giant ClearBridge is increasingly asserting its influence
ClearBridge's ESG head said more than 1,000 meetings with portfolio companies over the past year are shaping up the firm's stewardship approach
As a top 20 shareholder in more than 242 public companies around the world, ClearBridge Investments faces a busy proxy season, particularly since the investment giant increasingly takes a pro-active stewardship approach.
The company with around $151 billion in assets under management is more and more using its influence to push through changes and steer its companies in a particular direction.
The transition to net zero is one of the key elements of that approach, according to Mary Jane McQuillen, the firm's head of ESG and portfolio manager, who joined ClearBridge nearly three decades ago.
Last year, she was named 'Fund Manager of the Year in North America' by Investment Week.
"Assessing how companies will remain competitive and resilient amid a net zero future is part of our fiduciary duty to our clients," McQuillen explained to Net Zero Investor.
"Active stewardship is key, primarily through proxy voting, company engagements and thought leadership," she added.
In 2022, ClearBridge voted on 16,830 proposals at its portfolio companies, continuing its track record of casting 100% of its proxy votes.
And the numbers do not stop there.
Over the past year, the firm conducted more than 1,000 meetings with company decision makers to share expectations on a range of topics, inquire about ESG-related goals and set objectives for the future.
ClearBridge's top engagement theme in 2022 was climate-related issues, followed by disclosures, net zero, and diversity, equity and inclusion.
The company also introduced an enhanced internal engagement initiative, Engage for Impact, aimed at encouraging more targeted engagements that have a greater likelihood of creating positive impact, as the company's CEO, Terrence Murphy, explained.
"As stewards of client capital, our role is to communicate the fundamental and fiduciary drivers supporting our conviction in ESG integration," Murphy wrote in an email.
"We believe in addressing the urgent sustainability challenges faced by investors and global society, seeking progress through improvements to our ESG practices and providing ongoing support to existing industrywide collaborations," he added.
"Engagements remain at the heart of our stewardship efforts, as the long-standing relationships we have cultivated with company managements help contribute to meaningful change across sectors and industries," Murphy stressed.
ClearBridge, which is owned by Franklin Templeton, is a signatory to the Net Zero Asset Managers initiative (NZAM) and has committed to achieving net-zero emissions across all its investment portfolios by 2050.
In 2022, the firm submitted its first net-zero emission reduction targets, which were accepted and published by NZAM, and the firm's net-zero approach was selected as a case study by the United Nations-supported Principles for Responsible Investment (UN PRI).
In measuring the alignment of the firm's in-scope assets, McQuillen said that ClearBridge found that 43% of applicable assets were net-zero aligned, representing a 7% increase from the firm's baseline and 3% over its target net-zero pathway.
The firm continued its practice of publishing a stand-alone Climate Report aligned with the Task Force on Climate-related Financial Disclosures (TCFD) framework, describing ClearBridge's approach to integrating climate-related risks and opportunities in its investment process.
The company also signed a joint investor statement calling on governments to make advancements on their collective response to the climate crisis, specifically around policy making, net-zero commitments and actions to strengthen national climate plans.
In addition to net zero and climate-related issues, Murphy was keen to stress that the company has also made human rights a priority.
In 2022, ClearBridge joined Advance, the UN PRI's recently launched stewardship and collaborative engagement initiative for human rights and social issues.
Advance is endorsed by over 200 investors with collectively more than $30 trillion in assets under management. As a collaborating investor, ClearBridge has committed to engaging a focus company within the metals and mining sector and will publish a detailed firmwide human rights policy in 2023.
"Protecting human rights and advancing diversity, equity and inclusion are priorities that have informed much of the work we have done across public advocacy, individual company engagements and in our own recruiting and human development efforts at the firm," Murphy concluded.