FinanceMap scores this financial institution in the following areas. Please navigate to the relevant tab for in-depth analysis
FinanceMap assesses these portfolios for this financial institution. Please navigate to the relevant tab for in-depth analysis.
Fossil fuel production companies are defined as those with primary sector of operations in the up-, mid-, and/or downstream segments of fossil fuel production. Green companies are defined as companies having over 75% revenue deriving from Substantial Contribution to Mitigation activities under the EU Taxonomy.
Portion of AUM Assessed: $45.2B
| Holding Name | Contribution to Sector Production |
|---|---|
| Duke Energy Corp | 27.4% |
| Southern Co | 15.1% |
| Dominion Energy Inc | 12.8% |
| American Electric Power Company Inc | 9.8% |
| PPL Corp | 6.6% |
| Nextera Energy Inc | 4.0% |
| NRG Energy Inc | 3.9% |
| Public Service Enterprise Group Inc | 3.6% |
| Alliant Energy Corp | 2.6% |
| National Grid PLC | 1.6% |
| Holding Name | Contribution to Sector Production |
|---|---|
| Honda Motor Co Ltd | 51.6% |
| Hyundai Motor Co | 18.4% |
| Renault SA | 12.0% |
| Stellantis NV | 5.9% |
| General Motors Co | 5.2% |
| Subaru Corp | 3.7% |
| Ford Motor Co | 1.5% |
| Volkswagen AG | 0.9% |
| Guangzhou Automobile Group Co Ltd | 0.7% |
| Tesla Inc | 0.1% |
| Holding Name | Contribution to Sector Production |
|---|---|
| CONSOL Energy Inc | 78.9% |
| Warrior Met Coal Inc | 21.1% |
| Holding Name | Contribution to Sector Production |
|---|---|
| TotalEnergies SE | 50.3% |
| Matador Resources Co | 6.5% |
| Pioneer Natural Resources Co | 4.9% |
| Exxon Mobil Corp | 3.9% |
| Antero Resources Corp | 3.8% |
| Talos Energy Inc | 3.6% |
| Marathon Oil Corp | 3.3% |
| Aker BP ASA | 3.1% |
| Hess Corp | 2.8% |
| Shell PLC | 2.5% |
Federated Hermes, through its stewardship and engagement arm Hermes EOS (Hermes), appears to be a leading corporate engager on climate change. The asset manager has a robust climate engagement framework which assesses the extent to which companies’ climate ambitions are aligned to 1.5C. It has a high-level process to define engagement success, using a four-stage milestone system that allows to track company progress. Additionally, Hermes has a clearly defined escalation strategy and has provided numerous examples of escalation activities in its reporting, highlighting that it is prepared to escalate through voting against companies, asking questions to the board, filing shareholder resolutions, etc.
Hermes appears to be engaging companies to align their business models with the Paris Agreement. For example, it engaged with Siemens Energy to set science-based targets that cover Scope 3 emissions and with BASF on net zero targets. The asset manager actively engages companies on climate policy influence and its engagements with Duke Energy have resulted in the company publishing a trade association climate review report which outlines the company’s climate position, its views on effective climate policy and review of trade association memberships. Hermes is a highly active collaborative engager on climate and in 2021, led a delegation of eight institutional investors who spoke at LyondellBasell’s shareholder meeting in its role as CA100+ lead.
The asset manager has clearly described the processes in place to review the effectiveness of stewardship policies and activities. For example, Hermes’ Engagement Plan is updated on an annual basis using a structured horizon-scanning exercise. Additionally, it integrates client views and feeds this back into its stewardship approach through an annual client survey and bi-annual client meetings. It is fully transparent about engagements, disclosing numerous case studies in its quarterly engagement reports and annual reviews. Hermes discloses its voting records along with voting justifications in quarterly reports on its website, however, its documents do not detail the resolution name that it has voted for or against.
The asset manager has actively used its shareholder authority to engage companies to become Paris-Aligned, for example, in 2021, it co-filed a shareholder proposal at Berkshire Hathaway requesting the company’s board to publish an annual assessment on how it manages climate-related risks and opportunities.
Insightia data suggests that Hermes has become increasingly supportive in recent years of AGM resolutions InfluenceMap categorizes as in line with the Paris Agreement, supporting 47.3% in 2019, 74.2% in 2020, and 86.7% in 2022. InfluenceMap has not scored Federated Hermes' 2021 voting record as the voting sample size did not meet the threshold for the analysis.
FinanceMap's methodology to measure the engagement process on climate was developed in consultation with several of the world's leading asset managers and uses key aspects of the UK Financial Reporting Council's 2020 Stewardship Code . The Stewardship Code was chosen to benchmark engagement quality as it provides an ambitious framework and detailed definitions of what constitutes effective engagement. FinanceMap defines the term ‘engagement’ as referring to all investor actions undertaken to influence the management strategy of the companies they own including private communications with corporate management and appointed advisors; questions at AGMs/other company meetings; comments on the company in the media; escalation and the shareholder resolution process (filing, voting behavior). FinanceMap’s methodology breaks the engagement process down into a set of sub-activities and looks for evidence associated with these across publicly available data sources.
Climate-relevance categorization of shareholder resolutions is based on the IPCC’s Special Report on 1.5°C and its concluded need for “rapid and far-reaching transitions in land, energy, industry, buildings, transport, and cities.” FinanceMap scored voting on any resolution where the intent and likely outcome is consistent with this IPCC stated need. The voting data is drawn from asset managers' disclosures to the US Security Exchange Commission (SEC), asset manager websites (including third-party websites they link to), directly from the asset managers, and through specialist voting data provider Insightia. The full list of resolutions assessed is available here.
The following table outlines the key queries and data sources, which FinanceMap uses to assess asset managers' corporate engagement programs. Every evidence piece is assessed on a five-point scale of -2,-1,0,1,2 or NA (not applicable)/NS (not scored). All queries, data sources, and evidence pieces are weighted against one another in a matrix system to arrive at a final top-level score. Clicking on specific cells will load the underlying evidence and information on how it has been assessed.
Federated Hermes appears to have had mostly positive engagement on sustainable finance policies. Its stewardship services provider, EOS, appears particularly supportive of regulation on corporate ESG disclosure.
In its 2022 Stewardship Report, Federated Hermes describes advocating for systemic reforms to deliver a sustainable financial system. In its 2021 Climate-Related Financial Disclosures Report, Federated Hermes appears to support efforts to limit temperature rise to 1.5C, and in July 2021 Federated Hermes Ltd. joined the Net Zero Asset Managers initiative, supporting the goal of net zero emissions by 2050. Federated Hermes has stated that policymakers have a “key role” in determining the investment risks and opportunities of climate change, and in its 2021 Annual Report reported engaging on sustainable finance policies in the EU and UK. In comments on the EU’s renewed sustainable finance strategy in July 2020, Federated Hermes supported “major additional policy actions” for sustainable finance, and in comments to the UK Financial Services and Market Bills Committee in October 2022, Federated Hermes supported introducing alignment with net-zero by 2050 as a statutory secondary objective for UK financial regulators. Federated Hermes has advocated for the the post-2020 global biodiversity framework to mandate the alignment of financial flows with biodiversity goals.
Federated Hermes appears somewhat supportive of regulated corporate ESG disclosure. In its response to the European Commission's Public consultation on the revision of the non-financial reporting directive in June 2020, Federated Hermes advocated for a ‘double materiality’ perspective in corporate reporting. In comments to the UK Financial Conduct Authority (FCA) and Department for Work and Pensions (DWP) in 2020, Federated Hermes supported mandating disclosure in line with the TCFD for listed issuers and pension schemes. In response to the US Securities and Exchange Commission’s (SEC) request for input on climate change disclosures in June 2021, EOS called for mandatory disclosure in line with TCFD recommendations, and Scopes 1, 2, and 3 emissions disclosure requirements. However, in June 2022, after the SEC released its climate disclosure proposal, Federated Hermes outlined several objections to the proposal, including its Scope 3 disclosure requirements. EOS also commented on the proposal, taking a strongly supportive position on the rule’s provisions, including Scope 3 disclosures. EOS also supported the International Sustainability Standards Board’s climate disclosure framework in July 2022, advocating for increased ambition in disclosure of transition plans.
In comments on the renewed strategy in July 2020, Federated Hermes advocated for the EU taxonomy to extend to harmful activities. In an October 2021 insights paper, Federated Hermes advocated that a UK taxonomy should be science-based and help the UK achieve its net zero targets, while also recognizing the need for transition. In November 2021, Reuters reported that a group of investors, including Federated Hermes, had signed a letter urging the European Commission against allowing intensive farming to be considered “sustainable” in the taxonomy. In 2022, Federated Hermes objected to efforts in the US and EU to introduce quantitative thresholds for funds with certain ESG-related names.
In comments to the UK FCA in April 2019, Hermes Investment Management expressed support for clarifying that fiduciary duty requires incorporating ESG factors. In response to the European Supervisory Authorities’ consultation on the EU Sustainable Finance Disclosure Regulation (SFDR) in 2020, Federated Hermes argued against the prescriptiveness of proposed principal adverse impact indicators, supporting weaker policy on disclosure on investor ESG impacts. However, in comments on the EU’s Renewed Strategy in 2020, Federated Hermes advocated for the creation of an EU stewardship code to encourage investors to engage with companies to get them to adopt more sustainable business models. In 2020, Federated Hermes opposed a Trump-era Department of Labor regulation that sought to limit shareholder rights. However, when the Biden-era Department of Labor proposed rules to overturn this regulation, Federated Hermes cautioned the Department against elevating ESG factors over other factors. Similarly, in comments to the SEC in August 2022, Federated Hermes outlined objections to the Commission’s proposed ESG disclosure requirements for investors, warning against emphasizing ESG over other factors.
In Federated Hermes’ July 2020 comments on the EU’s renewed strategy, the company advocated for increased ambition in incorporating ESG risks into prudential regulation, and suggested that capital requirements should be adjusted based on climate risk. In August 2022, Federated Hermes signed onto the Global Investor Statement to Governments on the Climate Crisis, advocating for increased ambition in incorporating ESG factors into prudential risk supervision.
Federated Hermes Limited has disclosed a list of its industry association memberships but without details of the sustainable finance policy positions of these groups. Federated Hermes lacks a comprehensive disclosure of its memberships, and Federated Hermes is a member of industry associations that are actively engaged on sustainable finance policies, including the Investment Company Institute and Invest Europe.
InfluenceMap’s methodology for assessing lobbying on sustainable finance policy closely follows InfluenceMap’s established methodology on climate policy engagement, which is used extensively by investors, including via the Climate Action 100+ investor engagement process. Our full methodology can be found here.
Under our assessment of sustainable finance lobbying, InfluenceMap considers engagement on all financial policies which intersect with climate and/or other sustainability issues. The analysis takes into account both the engagement of the financial institution and the activities of industry associations they hold membership of.
InfluenceMap’s methodology covers seven publicly available data sources, searching for evidence of engagement and corporate positioning since 2017. To determine the policy issues within the scope of the analysis, InfluenceMap breaks down sustainable finance policy engagement into a series of subcategories, or 'queries'. These are designed to cover high-level issues relating to the importance of sustainable finance, as well as more specific areas of sustainable finance policymaking. InfluenceMap’s research process searches for evidence of an organization's engagement with each sustainable finance policy issue, across each of the data sources.
The following table outlines the key queries and data sources, which FinanceMap uses to assess financial institutions’ sustainable finance policy engagement. Every evidence piece is assessed on a five-point scale of -2,-1,0,1,2 or NA (not applicable)/NS (not scored). All queries, data sources, and evidence pieces are weighted against one another in a matrix system to arrive at a final top-level score. Clicking on specific cells will load the underlying evidence and information on how it has been assessed.
In this section, we depict graphically the relationships the corporation has with trade associations, federations, advocacy groups and other third parties who may be acting on their behalf to influence climate change policy. Each of the columns above represents one relationship the corporation appears to have with such a third party.
In these columns, the top, dark section represents the strength of the relationship the corporation has with the influencer. For example if a corporation's senior executive also held a key role in the trade association, we would deem this to be a strong relationship and it would be on the far left of the chart above, with the weaker ones to the right. Click on these grey shaded upper sections for details of these relationships. The middle section contains a link to the organization score details of the influencer concerned, so you can see the details of its climate change policy influence. Click on the middle sections for for details of the trade associations. The lower section contains the organization score of that influencer, the lower the more negatively it is influencing climate policy.
InfluenceMap Data Point on Corporate - Influencer Relationship
(1 = weak, 10 = strong)
Federated Hermes is a member of ICI
not specified
InfluenceMap Data Point on Corporate - Influencer Relationship
(1 = weak, 10 = strong)
Peter Germain is on the Board of ICI.
Peter J. Germain (Chief Legal Officer, Executive VP, & General Counsel, Federated Hermes)
InfluenceMap Data Point on Corporate - Influencer Relationship
(1 = weak, 10 = strong)
Federated Hermes is a member of ICI
not specified
InfluenceMap Data Point on Corporate - Influencer Relationship
(1 = weak, 10 = strong)
Peter Germain is on the Board of ICI.
Peter J. Germain (Chief Legal Officer, Executive VP, & General Counsel, Federated Hermes)
InfluenceMap Data Point on Corporate - Influencer Relationship
(1 = weak, 10 = strong)
Elias Korosis is Vice-Chair of the board of directors at Invest Europe (last checked September 2023).
Elias Korosis (LIMITED PARTNERS PLATFORM COUNCIL, Federated Hermes GPE)
InfluenceMap Data Point on Corporate - Influencer Relationship
(1 = weak, 10 = strong)
Federated Hermes is a member of Invest Europe (last checked September 2023).
not specified
--no extract--
InfluenceMap Data Point on Corporate - Influencer Relationship
(1 = weak, 10 = strong)
Elias Korosis is Vice-Chair of the board of directors at Invest Europe (last checked September 2023).
Elias Korosis (LIMITED PARTNERS PLATFORM COUNCIL, Federated Hermes GPE)
InfluenceMap Data Point on Corporate - Influencer Relationship
(1 = weak, 10 = strong)
Federated Hermes is a member of Invest Europe (last checked September 2023).
not specified
--no extract--
InfluenceMap Data Point on Corporate - Influencer Relationship
(1 = weak, 10 = strong)
Federated Hermes is a member of The Investment Association (last checked September 2023).
not specified
--no extract--
InfluenceMap Data Point on Corporate - Influencer Relationship
(1 = weak, 10 = strong)
Federated Hermes is a member of The Investment Association (last checked September 2023).
not specified
--no extract--
InfluenceMap Data Point on Corporate - Influencer Relationship
(1 = weak, 10 = strong)
Bruce Duguid is a board member at the IIGCC (last checked September 2023).
Bruce Duguid (Head of Stewardship, EOS at Federated Hermes)
InfluenceMap Data Point on Corporate - Influencer Relationship
(1 = weak, 10 = strong)
Federated Hermes is a member of the IIGCC
not specified
--no extract--
InfluenceMap Data Point on Corporate - Influencer Relationship
(1 = weak, 10 = strong)
Bruce Duguid is a board member at the IIGCC (last checked September 2023).
Bruce Duguid (Head of Stewardship, EOS at Federated Hermes)
InfluenceMap Data Point on Corporate - Influencer Relationship
(1 = weak, 10 = strong)
Federated Hermes is a member of the IIGCC
not specified
--no extract--
Open PDF file of Data Source