Do better conversations improve ESG ratings?
The Engagement
Bayer’s ESG Investor Engagement team holds a joint engagement project with a number of institutional investors who are ready to actively engage on ESG matters with the aim to improve mutual understanding, thus supporting Bayer to progress in line with investor expectations, to strengthen trust in the investor sphere, and to facilitate further ESG-based investments in the capital markets. The dialogue started in late 2021 and investors with more than €4.6 trillion Assets under Management1 are involved, including Generali Insurance Asset Management, Union Investment, and Northern Trust Asset Management. The engagement activities comprise topics like Environmental Impact Reduction in crop protection, product safety and stewardship in crop protection, and sustainability governance, amongst others.
(As computed by investors)
Bayer’s Testimonial
"The exchange is of great importance for us as it helps us to better understand investors’ perspectives on ESG matters and their specific information needs. And it has had its noticeable impact, especially in terms of our once more extended disclosure that serves as a proof for our transparency pathway. Moreover, it generates additional input for our internal resource allocation, sharpens our strategy and will result in better impact.”
Matthias Berninger, Head of Public Affairs, Science, Sustainability & HSE
“The engagement supported us to get deeper insights into investors’ perspectives on our Environmental Impact Reduction target, to better understand their approach to sustainability governance and to rethink our disclosures and processes in light of investors’ expectations whose fulfillment required a joint effort within the organization. Concerning product stewardship in crop protection the engagement helped to close certain disclosure gaps, e.g., on our safety commitments and on product monitoring where we are now figuring out the potential for further robust data points that could be reported externally. At the same time, we got a better understanding of investors’ expectations re governance mechanisms and internal reporting. In the area of scientific affairs, we specified our disclosure on ghostwriting that is strictly prohibited, while we tried to be more specific on our already existing policies on lobbying. We see the increased information need on this topic and are therefore in the process of conducting a consolidated lobbying report. We also fixed the integration of ESG in M&A in the Bayer regulations.”
Dr. Klaus Kunz, Head of ESG Strategy
“The whole engagement has been effective because of a constructive spirit that has been fed by each investor’s input. While every single investor valuably contributed to the discussion, we would like to emphasize the work and readiness of Generali Insurance Asset Management who has taken a notable role in initiating and structuring the engagement from the investor side as well as detailing out the specifics in terms of investor expectations.”
Dr. Jan Henning Sohlmann, Senior Manager ESG Investor Engagement
and Bayer project lead
Investors’ Testimonial
“As long-term responsible investor, we want to manage environmental, social and governance (ESG) risk of our investment. We believe engaging with companies is an efficient tool to support transformational forces inside a company and contribute to generate real-world impact by working with them to improve their ESG practices. Bayer Crop Science products having a reach on 13% of the world arable land, we believe this is a conversation worth having with the company. Indeed, this collaborative engagement we initiated has enabled to give more focus on the reduction of environmental impact of Bayer Crop Protection products, to share new disclosures on Product Stewardship (Research and Development, Internal Standards, Regulatory approvals, Labelling and Packaging, Marketing and Sales, Self-regulations, Training, Product Monitoring), Scientific Affairs and Lobbying (Ghostwriting, Whistleblowing), Sustainability governance (incidents management, responsible marketing, new decision bodies). It also enabled to have the confirmation of the integration of ESG criteria in Bayer’s M&A procedure. We expect Bayer to issue soon its consolidated lobbying report. We encourage Bayer to pursue its efforts towards more sustainable products and responsible operations, especially on the reduction of the environmental impact of its pesticides.”
Francois Humbert, Lead Engagement Manager,
Generali Insurance Asset Management
“The environmental product impact engagement was the missing piece to complement our engagement efforts on the climate side with Bayer. Through constructive dialogue and collaboration, we have witnessed a significant enhancement in transparency surrounding Bayer’s sustainability processes and governance. Furthermore, the engagement has played a pivotal role in driving improvements in product stewardship and environmental impact reduction in crop science at Bayer. We were also pleased to see the integration of ESG factors into M&A due diligence. We look forward to the publication of the integrated industry association report which will close a gap investors have brough up for years.
Angela Quiroga, ESG Analyst Union Investment
”As long-term investors we welcome Bayer’s enhanced disclosure on product stewardship in crop protection and greater focus on environmental impact reduction targets. Sustainability considerations have become key drivers in M&A activities and we also commend the company for integrating these into their M&A due diligence. The constructive dialogue with Bayer shows once again that collaborative engagements with portfolio companies lead to positive stewardship outcomes.”
Philip Vernardis, Senior Vice President and Head of EMEA Stewardship,
Northern Trust Asset Management
