EnBW – a collaborative engagement leading to future disclosures

The issue 

Building on our focus area in power generators, a German utility issuer was identified through our engagement and prioritisation framework under the climate thematic workstream. A majority of its earnings come from regulated activities with a supportive regulatory framework.  

It operates in a highly regulated sector, and its governance is identified by our analysis as a positive feature. The latter was confirmed by Sustainalytics’ strong corporate governance score. Together, these factors combine for a positive investment case. 

We’ve identified it as a climate follower (i.e., its climate strategy has some positive features, but it is not yet rated a climate leader versus its peers) using our proprietary carbon risk rating. Our research indicates that the issuer is pivoting to renewables and more grids: it plans to phase out coal by 2028, and currently, turnover generated from thermal coal is less than 5%. 

Our bottom-up modelling and our own internal carbon risk rating indicate that there are areas of its climate strategy that may, over time, need to be strengthened if it’s to continue driving long-term value creation and risk management for our clients, shareholders, and other stakeholders. As it’s a carbon-intensive holding, it’s a material contributor to the emissions generated in the portfolio. 


Our individual engagement efforts hadn’t yielded a meeting. However, through a collective engagement, we’ve been able to establish a relationship with the issuer and have a meaningful conversation. 

This emphasises why an important part of our assessment of our collaborative engagement initiatives is whether the initiative has sufficient brand recognition, scale, and reach to augment the impact of our engagement efforts on a material section of our portfolio. 

The collaborative team identified several areas for focus, including EnBW’s decarbonisation strategy, particularly around incentives and capital expenditure plans (items we also discussed in our engagement with Vattenfall), as well as other challenges affecting issuers in the sector, such as climate goal setting. 

An interesting element of the engagement was around deepening our knowledge of EnBW’s offset strategy. Circa 17% of the issuer’s strategy to reach carbon neutrality is linked to the use of offsets.  

This is an area of increasing market interest, and the group wanted to probe what these offsets would look like, how they would be guaranteed, and critically, how the issuer could provide clearer disclosure to allow investors to better evaluate its offset plans. 


The dialogue that followed with EnBW was open and positive. The company seemed interested in market best practice, and together we brainstormed what a future disclosure might look like. This two-way dialogue, which ultimately may drive long-term value creation and more detailed disclosure, is a good outcome from engagement. We will review this issuer’s disclosures with interest in 2024 and maintain the dialogue around the other issues identified and discussed with the issuer.