World Environment Day: creating a positive impact with active ownership

This year’s World Environment Day focuses on active measures to protect the environment under the motto “Our Power, Our Planet” – for example through education, stakeholder advocacy, or responsible investing.

In line with this, we at Erste Asset Management have recently published our latest Engagement & Voting Report. In it, we report annually on our voting behaviour at Annual General Meetings (AGMs) and the dialogues we held with companies in the previous year to encourage them to adopt more sustainable and environmentally friendly business practices. Our message is clear: sustainable investing is not a trend, but an obligation – and active ownership is a key tool for us to bring about change in companies through dialogue, the exercise of voting rights, and clear expectations.

What companies did we engage with last year and what successes did we achieve? And what does it actually mean to practise active ownership as an investor? We address these questions in today’s blog post on the occasion of World Environment Day.

What do we mean by active ownership?

The term active ownership means much more than simply exerting influence – it describes a strategic and structured dialogue with companies, combined with the targeted exercise of voting rights. This also provides the Management Boards of the various companies in which we invest with information about the progress investors are seeking, which in turn has a medium and long-term impact. This approach is an integral part of our investment strategy.

In 2024, we carried out:

• 159 Engagements
• 17 thereof new ones
• 15 company dialogues successfully completed

Among other things, these discussions resulted in progress on measuring climate risks, formulating environmental targets, and disclosing political activities. The focus was particularly on companies in carbon-intensive industries, with clear expectations regarding their remuneration policies in order to incentivise climate-friendly behaviour internally as well.

Focus ond biodiversity

A key focus in 2024 was biodiversity – a topic that combines ecological and economic relevance. According to the World Economic Forum, more than half of global GDP depends directly or indirectly on the state of nature – that is around USD 44 trillion! The ongoing loss of biological diversity therefore poses a risk not only to people and the environment, but also to entire economic and financial systems.

To counteract this and to contribute as an active investor, we adopted a Biodiversity Policy back in 2023 and expanded our engagement strategy accordingly. The aim is to support companies in improving nature-related governance structures, disclosures, and strategic measures – and thus put them on a biodiversity-friendly course.

Our 2024 engagements covered a wide range of topics

In addition to biodiversity, our company dialogues focused on the following topics:

• Deforestation: identification of risks in supply chains
• Human rights: ensuring of decent working conditions
• Good corporate governance: separation of positions of power in management bodies
• Climate reporting and political influence

As in previous years, we focused our engagement on dialogues with Austrian and Central and Eastern European (CEE) companies, as we see particularly high potential for impact as a major institutional investor in Austria and CEE. We also held talks with numerous companies from other countries, including Volkswagen, TotalEnergies, Bayer, thyssenkrupp, Deutsche Bahn, and Lufthansa. We were active in cross-sector alliances such as Climate Action 100+ and Nature Action 100. In addition, social and governance-related issues were addressed through joint engagement activities with PRI (Principles for Responsible Investment) and Morningstar Sustainalytics.

Governance case study: TotalEnergies

The case of TotalEnergies is an example of consistent active ownership. In June 2024, we joined 19 other investors in submitting a shareholder motion calling for the separation of the roles of CEO and Chairman of the company’s Management Board – a key governance issue. Although company management failed to put the resolution on the agenda of the AGM, we remained in dialogue with TotalEnergies. In a conference call in June, the company argued in favour of retaining the dual role.

We, on the other hand, believe it is very important to talk to oil and gas companies not only about environmental but also about governance issues. After all, good governance plays a crucial role in facilitating the energy transition in these sectors. The message: sustainability dialogues include not only environmental issues, but also governance and transparency issues – especially in transition industries such as the oil and gas industry.

Voting season highlights interesting trends

In addition to company dialogue, actively exercising voting rights is an equally important component of active ownership. Last year, we exercised our voting rights for EUR 9.5bn worth of the share capital we were holding and voted at more than 700 AGMs in 37 different countries. Our voting volume had continued to rise significantly compared to previous years. We report on our voting behaviour on an ongoing and transparent basis in the voting section of our website.

The motions submitted by shareholders during the past voting season revealed an interesting trend: approval rates for motions on environmental and social issues varied on both sides of the Atlantic. According to an analysis by ShareAction, the support rate for such issues in the USA was still around 40% in 2021. By 2024, the rate had fallen to just 19%. The picture in Europe is completely different: from 2021 to 2024 shareholder approval for social and environmental issues rose from 68% to 82%.

Challenges for 2025: strengthen ESG & credibility

In the context of increasing political polarisation and ESG-critical voices in some countries, one thing is clear: it is not enough to simply call for sustainability – it must be implemented credibly and consistently. This year, we will once again be focusing on a number of key areas in our active ownership activities:

• Remuneration policy: precisely because companies are prematurely withdrawing their climate targets, it is essential to align incentives for key decision-makers with the goals of climate-positive transformation in order to ensure credible and sustainable corporate management.
• Political engagement of companies: companies should be transparent about how they influence regulatory developments.
• Enhanced dialogue: there will be a targeted approach for companies that have not been willing to engage in dialogue to date.
• Assessment of companies’ net-zero strategies: in addition to ambitious targets, the key factors here are feasibility, financial viability, the timeframe and the progress achieved.

Conclusion: positive impact through active investment

The Engagement & Voting Report 2024 shows that as an active investor, we are in a position to drive real change – through structured engagement, systematic voting, and clear sustainability goals.

In times of increasing uncertainty, active ownership can provide a stable foundation to encourage companies to act responsibly and with a view to the future – in the interests of investors, society, and the environment.

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📘 More information

Please visit this link for the complete Engagement & Voting Report 2024 👉 Publications & guidelines of Erste AM

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