Sandra Carlisle: All investment has impact. You can choose to have a positive impact in terms of sustainable businesses that are going to be around for the long term or not. That comes back to the risk-adjusted returns.
The way we do engagement relates to our research process where we're assessing all of the companies. Clearly you're going to become engaged in companies where you are invested and you see a certain amount of risk, yet with attractive returns. You can mitigate that risk, improve the returns, protect your position as a minority shareholder through active engagement.
That's where we would spend the time engaging, rolling up our sleeves and having those one-to-one meetings, whether that's at the board level with executive management or with specialists lower in the food chain. And part of engagement is active proxy voting. You can do both, you can do one or you can do the other, but you should certainly be voting actively if you're an active manager.
Dawn Wolfe: We've been formally engaging with management at global companies since 2000 about the environmental, social and governance drivers that impact the business. We have an annual process to identify the companies we will focus on for the year ahead in terms of engagement. We select companies for engagement where we have the broadest exposure and where the E, S or G risks are most material. That's our starting point.
We also do multi-year engagements. We think achieving real positive change requires much more than an overnight engagement. One thing that really differentiates our ESG team is its incredible breadth of geographic and professional experience. We speak a dozen languages and come from a variety of professional fields. We meet directly with management and boards of directors and can speak knowledgeably to professionals in a variety of different sectors. This enhances the quality of engagement we're able to do.
We also track our engagement, and we put the results out to our clients. It's a credit to this team that in the first quarter of this year alone, they engaged over 240 companies in 29 different countries.
Mary Jane McQuillen: At ClearBridge, we take fairly concentrated positions in a number of holdings. We're typically a top 10 or top 20 shareholder of the stocks that we're investing in. That has allowed us to have a high level of corporate access, and we can meet with management regularly. The sector analysts lead most of the engagements, but the PMs can conduct the engagement as well. What we want to see from the engagement is where the companies currently stand in terms of their sustainability approach, but also how their approach fits from the shareowner's perspective and whether it makes sense as a fiduciary on behalf of our clients.
The engagements that we conduct are on a regular basis and over many years. Each year, as a long-term investor, we'll go back and check in with company management on their progress on some of the targets that they set or new beneficial innovations that they have achieved. But we highly encourage them on any of the company-specific areas that our analysts have identified as being very important long-term issues for them. As we noted earlier with the E, the S and the G, a number of the drivers for long-term sustainability can vary based on the company.
This type of engagement and impact measurement, as a listed equity manager, allows us to continue to monitor the progress and to speak to the companies. We've seen a lot of impact, which is reflected in our ratings: If a company had an A rating before and now it's AAA, we know the company has made progress. Similarly, we also are active proxy voters. That's important too.