Cast study: ACTIAM engagement

ACTIAM engages with approximately 200-250 companies a year, both individually and collaboratively.

The investor’s approach to engagement is split between responsive engagement (e.g. responding to controversies, negative screening) and proactive engagement (e.g. asking a company to achieve sector best practices around a specific issue). Engagement is not sector-targetted, but based around climate, water and land issues. Their engagement on anti-bribery and corruption is carried out on a case-bycase basis using compliance with the UN Global Compact principles to help determine areas of weakness.

In 2012, ACTIAM decided to lead on the dialogue with a global engineering services company in their portfolio due to anti-bribery and corruption issues with financial repercussions, such as:

• formal charges made against former employees;
• share price falling significantly;
• lawsuits filed against the company;
• contracts being lost including a suspension of the right to bid and work on projects financed by the World Bank, and a suspension of the right to receive funds from any loan made by the World Bank.

Despite these allegations on bribery/corruption, the focus of the dialogue was very much on improvements going forward.

Steps taken by the investor included:

• a letter sent to the CEO, which encouraged best practice disclosure regarding the effectiveness of the company fs new anti-bribery and corruption programmes, including disclosure of the scope, frequency, and results of internal audit and monitoring procedures;
• to seven further calls with the company fs Chief Compliance Officer, Compliance Team and Investor Relations department over the following three years.

Considerable improvements in anti-bribery and corruption policies and procedures were made across a number of areas by the company during the course of the engagement, including the explicitly forbidding facilitation payments and provision of a whistleblowing hotline. ACTIAM is still encouraging the company to provide usage figures of the compliance hotline after the formal engagement process finished in 2015.