ESG Teams Are Growing

• The dramatic increase in the number of ESG professionals at key investors means more eyeballs will be looking for ESG leaders and laggards, ramping-up pressure on companies to improve their ESG-related practices

There are markedly more ESG professionals at asset managers according to a recent study by the Financial Times. Dedicated stewardship teams responsible for overseeing ESG issues at portfolio companies doubled in the last three years. BlackRock and Vanguard, the world’s two largest asset managers, unsurprisingly have the two largest teams, but there are surprises when evaluating the numbers for others. For example, State Street Global Advisors is the world’s third largest asset manager but has fewer stewardship professionals than Capital Group, MUFG, Aberdeen, Nuveen, and Invesco. A few major investors also created stewardship teams in the last three years, including Amundi, Legg Mason, and UBS. Stewardship Team Additional ESG Staff Other ESG roles have 0 10 20 30 40 50 0 20 40 60 80 100 grown even more quickly. BlackRock BlackRock Evaluating ESG issues DWS Group DWS as part of an investment Goldman Sachs Goldman Sachs decision has led to Allianz Allianz Sumitomo Mitsui Sumitomo Mitsui dramatic increases in Nuveen Nuveen teams at Goldman Sachs AXA AXA (14 to 50), Capital Group Capital Group Capital Group (0 to 18), and Wellington Aberdeen Vanguard Wellington (5 to 32). Aberdeen Amundi Even BlackRock, with it’s Amundi Invesco Invesco MUFG world-largest dedicated MUFG Schroder stewardship team, Schroder BNP Paribas increased the number of BNP Paribas UBS Legal & General other ESG professionals UBS Natixis from 22 to 86. Legal & General State Street State Street Legg Mason Legg Mason Franklin Templeton Franklin Templeton T Rowe Price JPMorgan MetLife T Rowe Price Northern Trust Northern Trust 2017 2020 Insight 2017 2020

Source: Financial Times (March 2020)

KEY QUESTIONS FOR BOARDS • How often do we discuss the ESG priorities and policies of our major investors? • Who at the company is primarily responsible for engagement with governance professionals?

KING & SPALDING