Federated Hermes - Improving ESG Through Active Engagement with Portfolio Companies

This case study is set in May 2021. It describes how Sarah Lee, Director of Engagement at Federated Hermes (FH) has been engaging with Ruby Goods (Ruby), a consumer goods company that operates in Asia, Europe, Latin America and the United States, to reduce greenhouse gas (GHG) emissions in its dairy operations. The case illustrates how an external stakeholder, an investment management company with minimal formal organisational authority, can influence and drive ESG (environmental, social and governance) performance improvements. While Lee was successful in getting Ruby to streamline its ESG approach and establish the Ruby Corporate Responsibility Council to drive company-wide ESG initiatives, she encountered resistance from Ruby's senior management and the board to commit to the more ambitious science-based targets critical for achieving carbon neutrality by 2050. What should she do to pressure Ruby's senior management into commitment and action while preserving FH's carefully cultivated relationships with Ruby's senior management?