Engaged Capital’s approach to ESG starts with “Governance”

We believe that effective processes and practices begin at the top (with the Board of Directors) with the way a company is governed – which is why we (and our partners) physically sit on the board to lead changes from within

With the right governance practices in place, the foundation is set for making the right strategic, environmental, and social decisions

Due to our unique investment style of catalyzing changes from inside a company, we are a force of good in the boardroom to drive actions that most investors only talk about

Since its founding, Engaged Capital’s investment process has focused significant attention on improving governance in each and every investment, with a focus on:

  • Board composition and prioritization
    • Having the right mix of directors in the boardroom (diversity, skill sets, and independence)
    • Setting the right agenda for the board and company (focus on what is important in creating long-term, sustainable value)
  • Incentive compensation alignment
    • Ensuring compensation programs clearly incentivize the achievement of well-defined strategic priorities and are fair and equitable across the management team
  • Positive culture change
    • Being the example for an ethical and inclusive culture in the boardroom and the company (content employees, stable suppliers, and supportive communities lead to better performance)

ESG is Fully Integrated into Our Investment & Engagement Process

  • Identify under-managed businesses with a need for change – almost always including cultural and governance changes
  • Develop a deep understanding of value drivers and identify key risk factors that may be exacerbated by substandard ESG protocols: political, cultural, environmental, governance, and economic
  • Develop comprehensive strategies and an engagement plan to address shortcomings
  • Catalyze changes to what matters by engaging directly with the other directors and management on initiatives that drive:
    •  sustainability
    • inclusive cultures
    • good corporate citizenship
    • shareholder value
  • Tracking and measuring progress on the identified initiatives to ensure impact
  • Ensure lasting and better business processes in the boardroom and throughout the organization to ensure the changes that were  implemented are embedded in the company’s DNA for the present and future

Our Bespoke Process Includes A Focus On Industry Specific Issues

  • We don’t believe in a one size fits all approach to anything – every company we invest in is unique
  • Companies may share some of the same issues so our learnings can translate from one company to another but every industry and every company has it’s own set of ESG related areas to consider
  • Because Engaged has analysts focused on a sector basis, we are highly attuned to the industry specific ESG issues in the sectors we cover

Sector Specific Social Risks Evaluated As Part Of Our Process

Sector Specific Environmental Risks Evaluated As Part Of Our Process