Which of the following is an example of a bottom-up ESG engagement approach? An asset manager:

Which of the following is an example of a bottom-up ESG engagement approach? An asset manager:
A . joining the PRI Collaboration Platform
B . sending out a letter to the CFOs of all investee companies
C . initiating dialogue with an investee company’s investor relations team

Answer: C

Explanation:

A bottom-up ESG engagement approach involves direct interaction with specific investee companies to address ESG issues. Initiating dialogue with an investee company’s investor relations team is an example of this approach.

Direct Communication: Engaging directly with the investor relations team allows asset managers to discuss specific ESG issues relevant to the company. This direct line of communication can lead to more detailed and company-specific insights.

Targeted Engagement: This method focuses on individual companies, enabling asset managers to address specific concerns and influence company practices more effectively. It allows for a deeper understanding of how ESG issues are managed at the company level.

Active Ownership: By engaging with companies, asset managers exercise active ownership, encouraging companies to adopt better ESG practices. This can lead to improved ESG performance and, ultimately, better long-term investment returns.

Reference: MSCI ESG Ratings Methodology (2022) – Highlights the importance of direct engagement with companies as part of an effective ESG strategy.

ESG-Ratings-Methodology-Exec-Summary (2022) – Discusses various engagement approaches and emphasizes the value of direct dialogue with investee companies in improving ESG practices.