State Street Global Advisors believes that the geographic spread and depth of its holdings provide a challenge but also an opportunity for the firm as it develops its engagement strategy. While we would like to maintain a dialogue with all of our portfolio companies, we recognize the need to focus our engagement efforts where we believe we will have maximum impact. Each year, as part of its strategic review process, the Asset Stewardship team develops an annual engagement strategy, and it identifies a target list of companies that we intend to engage with during the year. Factors considered in developing the target list include:
- Companies identified for engagement based on our in-house governance, compensation, and sustainability screens
- Thematic environmental, social, and governance (ESG) issues that the team identifies as potential risks facing investee companies
- In-depth sector specific engagements across our global holdings
- Companies with lagging long-term financial performance within their sector
- Companies at which follow-up engagement is needed based on past discussions
The intensity and type of engagement with a company is determined by State Street Global Advisor’s relative and absolute holdings in that company. In addition, we also factor in geographic diversity in our engagement efforts to reflect the level of economic exposure to various markets. Finally, we also consider the engagement culture in a market or geographic region when developing our engagement target list and approach.
State Street Global Advisors believes in-person meetings facilitate a mutual understanding and trust with the boards and management teams of our investee companies.
However, once we have developed such relationships, State Street Global Advisor’s preferred method for update meetings is via conference calls as we believe this is cost effective for our clients and investee companies. This also helps us reduce our global carbon footprint.