Active Engagement

Moneyworks believes that fund managers have a responsibility to engage with the companies in which they invest on behalf of their investors. The extent and effectiveness of this engagement varies significantly between fund managers.

At a minimum, we expect fund managers to exercise their voting rights on shareholder resolutions. Voting is a basic mechanism for influencing company behaviour and signalling expectations around governance, environmental, and social issues.

Beyond voting, active engagement involves fund managers raising concerns directly with company boards and management about problematic practices or behaviours. In the context of ethical investing, this includes engagement on issues often described as “nasties”, such as environmental harm, labour practices, or governance failures.

The effectiveness of active engagement depends largely on influence. This influence is shaped by the size of the fund manager’s shareholding and can be strengthened through collaboration with other investors who share similar concerns.

Active engagement can be a powerful tool for driving change. However, it only works when engagement is genuine, persistent, and supported by sufficient influence. Simply claiming an “active engagement” approach is not enough. We expect fund managers to provide clear examples of the issues they have raised and the outcomes of that engagement.

Some ethical fund managers publish detailed information on their engagement activities, including the companies involved, the issues addressed, actions taken, and follow-up outcomes. This level of transparency makes engagement easier to monitor and assess, and while still evolving, disclosure in this area is gradually improving.

When a fund manager holds an investment in a company with concerning practices, we examine the rationale for that holding. If the investment is retained to facilitate change, and the fund manager has a realistic ability to influence outcomes over time, this can form part of a credible ethical investing approach.

Many ethical fund managers also publish annual Impact Reports, outlining how their engagement activities and underlying investments have contributed to measurable environmental or social outcomes.