Incorporating Sustainability Into Long-Term Strategy

Summary
• State Street Global Advisors' (SSGA) asset stewardship program is aimed at engaging with our portfolio companies on issues that impact long-term value creation across environmental, social and governance (ESG) considerations

• In the recent past, SSGA has issued extensive guidance on key governance matters such as effective, independent board leadership. SSGA's current focus is on helping boards think about the possible impacts of environmental and social issues and incorporating a sustainability lens into boards' oversight of long-term strategy as a sound business practice

• Our framework for evaluating companies is based on each company's approach to sustainability, drawing upon our past engagements with many companies on these issues

• This framework reviews and categorizes a company's approach to sustainability according to three criteria:

- Has the company identified material environmental and social sustainability issues relevant to its business?

- Has the company assessed and, where necessary, incorporated the implications of relevant environmental and social sustainability issues into the company's long-term strategy?

- Has the company adequately communicated its approach to sustainability issues and its influence on strategy?

• We then classify companies according to which criteria they have met:

- Tier One companies have satisfied all three

- Tier Two companies typically have satisfied one or two

- Tier Three companies have not considered sustainability issues at all

• We believe boards can play an important role in strengthening a company's approach to sustainability. Thus, we have provided a framework that is intended to help boards consider and  communicate how these risks and opportunities affect long-term strategy 

Contact Us
We hope board members of our portfolio companies find this guidance useful. Any questions or comments may be directed to:

Rakhi Kumar
Managing Director & Head of ESG Investments and Asset Stewardship
Rakhi_Kumar@ssga.com

Michael Younis
ESG Analyst, Asset Stewardship
Michael_Younis@ssga.com

Caitlin McSherry
ESG Analyst, Asset Stewardship
Caitlin_McSherry@ssga.com