According to the 2018 Climate Change and Sustainability Survey conducted by EY, 97% of institutional investors evaluate environmental, social and governance (ESG) criteria of the companies they have on the radar before deciding to invest in them. The importance of ESG criteria is on the rise; in the previous year, 2017, 78% of percentage of investors were concerned with these criteria.

Larry Fink, the CEO of BlackRock expressed an opinion along these lines in the yearly letter he sent to the senior management of the companies invested by his firm , in which he states that “environmental, social, and governance issues will be increasingly material to corporate valuations”.

We are in the midst of the shareholder meeting seasonEnagás held its own meeting a few weeks ago – a key yearly event for any listed company, which has also evolved in recent years to conform to this trend. The major novelty of recent times is that the perspective of shareholders has gained unprecedented, legitimate prominence. The digital transformation has allowed shareholders to have more information at their disposal and greater ability for interaction, and therefore to become more demanding.

In listed companies, shareholders influence and decide not only on financial performance and profitability, but also on ESG issues, because they understand that if a company is not sustainable in these areas, it will not be profitable in the long term.

Circumstances have changed, and climate change, gender diversity, ethical management and quality of employment have become key concerns in our societies. The increasing awareness of citizens has also meant that shareholders and investors are now increasingly interested in placing their money in companies with serious, solid and responsible policies, a feeling that has grown since the 2008 global financial crisis.

In this context, one figure has gained greater importance and influence in recent years: proxy advisers, also known as proxy voting agencies, who carefully scrutinise the issues related to the good governance of companies. Institutional shareholders and investment funds are to a greater extent paying attention to their recommendations on what postures to take when it comes to voting at shareholder meetings.

And it is not limited to large investors. Minority shareholders are also demanding to be heard and taken into consideration. They are devoting time and resources to listening to them and understanding their interests is essential for any listed company.

Reporting is a key point. A new law on non-financial information and diversity has come into effect in Spain this year, through which the country has raised its demands for transparency in relation to the information provided on ESG issues. Although the companies on the Ibex35, such as ours, generally have considerable experience in reporting this type of information, the new law will provide an irrefutable boost for two reasons: because the information that was reported voluntarily has now become an obligation by law, and because non-financial and financial information are now on an equal footing.

However, it is no longer enough to communicate transparently but unilaterally.

Today we must strive for two-way interaction. Knowing shareholder opinions and expectations regarding our management brings us value – at shareholder meetings, indeed, which are a good opportunity to highlight them, but also in our day-to-day activity.

Good corporate governance is therefore a crucial concern for any company. It is not face washing, nor is it a procedure to be followed with the least difficulty; it is a genuine challenge in the management of companies and I believe it is very positive for raising transparency and trust. In general, listed companies have been working on this for some time, with significant progress made.

In the case of Enagás, with a free float of 95% and 75% of shares in the hands of international investors, corporate governance is one of our company’s strengths. It is the result of the importance and the demands we have placed on ourselves in this field for years. We have always moved at a faster pace than the law in many affairs of governance, which have later become compulsory or recommended by the most stringent good practices.

Companies genuinely and purposefully committed to good governance have nothing to fear from this challenge. We have to set an example and continue to demonstrate that, through transparency, accessibility, dialogue and collaboration, this is an opportunity for everybody: shareholders, companies and society as a whole.