1.3 A non-profit organization published a report listing companies with a large plastic footprint.
A portfolio manager believes the report will impact the valuation of a portfolio company.
According to the Investor Forum, which of the following forms of engagement would be
the most effective? (V4 Mock #54) A. Discussing the report with the company during their annual review dialogue
B. Writing a tailored letter to the company requesting additional details about their plastic footprint
C. Participating in a collective engagement in collaboration with other investors to address the reportCorrect Answer: C
C is correct because a collective engagement is most likely to fulfill all six success factors of effective engagement published by the Investor Forum i.e. "SFl - Objective(s) should be specific and targeted to enable clarity around delivery", "SF2 - Objectives should be strategic or governanceled, or linked to material strategic and/or governance issues", "SF3 - The engagement approach should be bespoke (tailored) to the target company", "SF4 - The participants should have clear leadership with appropriate relationships, skills and knowledge", "SFS - The scale of coalition gathered (both scale of shareholding and overall AUM of group) should be meaningful", "SF6-The coalition should have a prior relationship and/or cultural awareness of the target company."
A is incorrect because the manager's engagement is an example of a "housekeeping engagement" which is an "annual dialogue to help maintain and enhance a relationship with a company, but with only limited objectives." Housekeeping engagement is somewhat likely to fulfill the Investor Forum success factor of "SF6: Depth of relationship" but not likely to meet the other success factors for effective engagement.
Bis incorrect because tailored letter-writing is somewhat likely to fulfill the Investor Forum success factors of "SFl: Clear Objective" and "SF2: Material and strategic" but not likely to meet the other success factors for effective engagement.
