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Investors regularly engage with the companies they invest in. But does this engagement work? Does it really bring improvements in performance? The answer is yes – providing investors take a tailored approach.

If you can’t dialogue with the companies you want to invest in, there’s really no point in investing. We want deep dialogue, so we understand the business, and we understand its risks. We don’t look at ESG in isolation, this is part of an integrated process.”

~ Ronan Poupon
Senior Equities Portfolio Manager, DNCA Finance


Most of our Affiliates engage – there are clear benefits to doing so. It helps deepen understanding of the companies they invest in. It helps identify risks and opportunities, gauge the performance of management (specifically, its ability to meet targets and objectives), and pinpoint possible improvements. Engagement makes Affiliates smarter investors – and should, ultimately, drive better returns.

Arguably, engagement pre-dates the idea of ESG investing. Indeed, many Affiliates were engaging with company management long before this was seen as “responsible investment.” For Natixis Investment Managers and its Affiliates, engagement is simply part of being an active investor.

This doesn’t mean there are no challenges in engagement. It takes time; where possible, you also need good access to management. And you need portfolio managers willing and able to engage. Most Affiliates invest in engagement – in time, resources and training – because they believe in the benefits. In the United States, Harris Associates alone organized more than 1,500 separate meetings with company management last year.

The key, for us, is a tailored approach. It makes no sense for a private equity investor – like Naxicap or Alliance Entreprendre – to take the same view on engagement as firms that invest in a much broader range of assets. But why is that? What is the difference?

It’s primarily about the nature of these investments. Private equity investors have smaller portfolios. Importantly, they have a more immediate relationship with company management. In many cases, they have seats on company boards. This gives them access: as a general rule, the larger the shareholding, the more immediate the access.


97 percent

79% of Affiliates regularly engage with companies in which they invest.*

93 percent

93% of Affiliates have policies governing their approach to engagement, voting and /or proxy voting.*



For example – Naxicap, our French private equity firm, agrees detailed ESG roadmaps, setting out goals and objectives for management; these roadmaps then provide the basis for continuous dialogue.

For larger asset managers, the approach is different. They have to engage across asset classes. Their portfolios are more extensive, as are the resources required. Here, a joined-up approach is important – making sure (as Ostrum does, for example) that the same team is responsible for analysis, engagement and voting. Larger asset managers are also more likely to make use of collaborative engagement, joining forces with other investors – occasionally through platforms like the PRI, or through multilateral advocacy initiatives, such as the IIGCC. These platforms help pool resources, and give individual investors more leverage. What’s important is that asset managers use engagement to focus on material issues – i.e. those issues they believe will drive returns, reduce risk or provide the social and environmental impact that they are targeting.

Affiliates also take into account the companies they’re engaging. Larger companies may be used to engagement – small or mid-cap companies, on the other hand, may lack the bandwidth either to engage fully, or to implement improvements. Our affiliate Seventure, for example, invests mainly in start-ups, where management understandably spends most of its time on nurturing the business. Even at well-established companies, Boards can overlook ESG in favor of other financial or business issues. The solution is not to reduce engagement, but to focus engagement on the most “material” issues, whether ESG or not.

Engagement may occasionally fail – if, for example, management is unresponsive, or there is not the data to make an effective risk assessment. But this doesn’t happen often – partly because many Affiliates apply an initial ESG filter, excluding potential “problem investments.” Also – though Affiliates reserve the right to divest – they prefer engagement. Divestment very rarely deprives companies of financing – they simply turn to other investors instead. More importantly, divestment removes Affiliates’ ability to influence, or to make changes for the better.

It’s also true that companies, particularly those in Europe, are more open these days to engagement – a reflection of broader social changes.


This article is an excerpt taken from our inaugural Responsible Investment Report titled ‘Making A Difference’.

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This material is provided for informational purposes only and should not be construed as investment advice. The views and opinions expressed are as of the date indicated, and may change based on market and other conditions. There can be no assurance that developments will transpire as forecasted.

Data relating to Affiliates is taken from internal questionnaires completed by the Affiliated Investment Managers as part of a survey conducted by Natixis Investment Managers.

DNCA Finance is an affiliate of Natixis Investment Managers. DNCA Finance - 19, place Vendôme - 75001 Paris - tel: +33 (0)1 58 62 55 00 email: This email address is being protected from spambots. You need JavaScript enabled to view it. - www.dnca-investments.com - dedicated intranet site for independents. An investment management company authorized by the AMF (Financial Market Authorities) under number GP 00-030 on 18 August 2000. Non-independent investment advisor as stipulted by the MIFID II Directive.

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