Mapfre’s Inclusion Responsable Fund invests in companies committed to the employment inclusion of people with disabilities. For National Inclusion Week, chief economist at Mapfre Inversión, Alberto Matellán, speaks to ESG Clarity EU about working with companies in the disability space and how the fund’s ethos came about.
Can you explain the methodology behind selecting companies that integrate people with disabilities into the workforce?
We look for companies that have the greatest commitment to people with disabilities, and not just those that integrate them into the workforce, although this is of course the most important way to demonstrate such commitment. But there are others, such as research, working with specific associations or communities, or addressing specific markets.
That said, we have developed our own questionnaire to measure this engagement. We spent a year doing research, including visiting many companies across Europe to understand their relationship to the problem. After all the documentation we obtained during such visits, and interviews with various foundations and academics, we identified about forty key variables, divided into seven different themes. We call each theme a ‘pillar’.
See also: – ‘We are all different’: Improving the inclusion of people with disabilities in investments
Recognizing that it is not easy to measure such a topic, among the seven pillars there may be some variables that get a very good score on some pillars but not on others. So they are not easy to compare. Ultimately, we classify companies based on four levels of commitment, so the fund would normally invest in the top two.
The questionnaire contains both open and closed questions, as well as quantitative and qualitative questions. This is a great opportunity to engage with companies about this topic, as open-ended questions usually provide an excellent starting point for conversations. Ultimately, it is another way to do our work better, namely to know better where we invest.
Do companies have this data readily available? Is it tricker with hidden disabilities?
There are some important data that are always available, for example the known percentage of people with disabilities in the labor market. But this is far from enough.
For multinational companies, disability definitions can change from country to country, even within the EU. So we had to spend time solving that first. But mainly because that figure itself says little.
There are many reasons why a company may have a large number of employees with disabilities, and not all of them show commitment. So it is necessary to dig deeper: into the types of disabilities they have, their role in the organization, whether they are included in promotional or educational programs, the policies implemented and their reach, and many other issues.
For example, one of the most illustrative points is whether disability policies disclose each type of disability and propose specific actions for each type of disability. This is very important, because mental or intellectual disabilities, for example, are much more difficult to manage than mobility problems. As a result, we examine not only the policy, but also the facts: are managers trained in dealing with each type of disability? What percentage of each is in the total percentage? And many others like it.
Returning to the question, most of the data in the questionnaire cannot be found in the usual reports or databases, but we have to specifically look for it. This usually means that you enter into discussions with the company from the very first moment.
It is relatively easy to sense the level of involvement in such interviews. You can see very clearly that some companies, especially the people responsible for these topics, come to the meeting with a genuine desire to show you what they do, because they are proud of it and want to receive our feedback. . At the same time, others feel threatened and try to provide as little information as possible. This is obviously not a basis for investment, but this kind of intuition has a high degree of correlation with subsequent results. I must add that fortunately the latter type is becoming less and less common.
As for hidden disabilities, as far as we know, it’s impossible to work with them because they’re, well, hidden. We’re pleased to see that more and more policies are trying to encourage disclosure of disabilities that some employees may prefer to hide, or even health checks to check for these if even the employee doesn’t know. But a large proportion of hidden disabilities are related to mental problems, which are very difficult to diagnose and still taboo in some contexts. So there is still a lot of work to be done in that area.
Why did you decide to include this as an ESG indicator for the MAPFRE AM Inclusion Responsable Fund?
I wouldn’t say it’s an ESG indicator, but a very thematic indicator. And also something that has proven to be a powerful indicator of financial performance. Actually, that was the original “a priori” investment thesis that we were able to observe in practice.
Several reasons came together at the perfect time, in mid-2017. Our investment teams then started to define our responsible investment policy and long-term strategy. This strategy must fit in with the company’s culture, which is very social. In fact, it was the first company in Spain to have social commitment mentioned in its articles of association (in 1965) and 65% of the shares are owned by a non-profit foundation.
But at that time, so-called SRI was much less developed than it is today, and focused entirely on environmental issues, partly because social data was (and is) very difficult to collect and manage. So one of the main challenges was: how do you implement a good social investment strategy with so little information and without any guidance?
At the same time there was a personal issue, as so often happens. The daughter of one of the oldest members of the team was born with an intellectual disability. So he suggested, why don’t we do this?
That was the moment to demonstrate the company’s belief in innovation and trust in its people, as this director, together with another colleague, was given the time and budget to research the issue and build the investment thesis and methodology. Two years later the fund was operational.
Where would you like to see improvements in companies?
We are happy to see this in many areas, but the most important is awareness. Initially, companies were quite shocked by our demands, as they expected the typical financial or ESG data request. Next, most companies know us and our process as we have already done five waves of the questionnaire. And we see a very clear improvement in the average level of engagement that we measure. This is an impact that we do not need to measure, but it is present.
At the same time, but in a very indirect way, we want to show people with disabilities that their social inclusion can actually be achieved through companies. We found many activities from foundations or associations, which is of course absolutely necessary. But there was nothing on the other side: the labor/economic/business world. This had the unintended consequence of discouraging many people with disabilities.
Will you be discussing this with companies? Can you give examples?
Yes, in different ways. On the one hand, the analysis and investment process requires us to keep an open line with each company. This is done by our analysts in Paris, which turns out to be a very expensive job in terms of costs and time. But it’s the only way to do this kind of research.
In this context, many companies have asked over the past four years what they can do to improve and why this is important to us as investors. While we try to answer such questions, we are not consultants, so we never provide any advice other than explaining our statistics and the practices we see. At the same time, and this is important in our work as investors, we explain why we think an improvement in this area is linked to improvements in financial or economic performance. As a result, there is an ongoing conversation with each company analyzed.