Engagements Progress

As a boutique investment manager, ECO believes that engagement on ESG matters with investee companies is most effectively carried out in collaboration with other like-minded investors. ECO Advisors reviews updates and reports for each ongoing engagement on a quarterly basis, and discloses any changes on this page. The success of each initiative is subjective to the milestones and goals that the initiative organiser(s) has set. The decision to join a collaborative engagement is always communicated to and are made in conjunction with chief staff, so as to inform and be informed by the investment decision making process and to make sure that the activities of the engagement are consistent with our investment and sustainability objectives.

As of June 2021 we have signed onto seventeen collaborative initiatives. As part of most of these initiatives letters are sent to companies in the relevant industry calling for better ESG practices. Thus far we have signed onto or are members of:

 

The 30% Club Investors Group

      • Global mission to achieve at least 30% representation of women on all boards and C-suites globally. 30% represents a critical mass from which point minority groups can impact boardroom dynamics.
      • Focus letters on FTSE350 laggards
      • Members are encouraged to promote the goals through their voting decisions.
      • Next goal: supporting the Parker Review goal for at least one person of colour on every FTSE 350 board. This will be a priority in 2021.
      • First annual report coming out in April 2021
      • Coming out with a toolkit for investors on how to drive diversity in their investments through integration and active ownership in 2021.
      • June 2021 update: Members shared some of the research we’ve done at Aviva Investors as well as key insights from Diversio. A member from CBI presented the Change the Race Ratio. The initiative is supported by the 30% Club which is a founding member. The difference is that this commitment goes further than delivering on the Parker review and the BITC race at work principles in that companies are encouraged to set targets and report on pay gaps. However, firms do have time to deliver on their commitments (reporting 2 years after signing up). A member shared how the Investment Association has put an amber warning on firms that are not disclosing on ethnic diversity. They are providing information to members from their data provider to allow members to vote.

FTSE 350 Votes Against Slavery

      • Letter will be sent to non-compliant FTSE 350 companies who have failed to meet the reporting requirements of section 54 of the Modern Slavery Act 2015.
      • Ongoing, 18 out of 22 companies have now become compliant with section 54 of the Modern Slavery Act 2015.
      • The 2020 VAS engagement finished at the end of 2020. 20 out of 22 target companies became compliant with the Modern Slavery Act 2015. The two remaining companies which were non-compliant as at 31/12/20 were Frasers Group – which posted a modern slavery statement in July 2020 that had not been signed off by a director – and Pollen Street Lending – who we were unable to make contact with and who have now become Alternative Credit Investments plc.
      • Jan 2021: Rerunning engagement in 2021 with FTSE350 companies that have failed to meet the minimum reporting standards of the Act. 
      • Shortlisted for ‘Stewardship Project of the Year’ award
      • Mar 2021: The engagement group realised that Safestore Holdings has its AGM taking place on 17th March so we decided to send a letter detailing this engagement in order to give the company enough time to respond ahead of the AGM. The company responded to our letter within two days having made the changes to comply with the reporting requirements. As such, the final target list was reduced from 62 to 61.
      • Letters to the 61 FTSE350 target companies were sent off last week by post and email. We have heard back from 22 companies so far, 14 of whom have made changes to now become compliant. The other eight are in the process of making changes or have asked for more time to respond. We expect these companies to become compliant soon. We will be sending out a follow up chase email at the start of next week to the remaining 41 companies.
      • May 2021: 48 out of the 62 target companies are now compliant. In the last week, Energean Oil & Gas, M&G and Indivior have all become compliant. Expecting Frasers Group, Hikma Pharmaceuticals, IAG and Premier Foods to be compliant by the end of the month.
      • June 2021 update: 49/61 companies are now compliant. Premier Foods & Hikma Pharmaceuticals have confirmed that their new statement will be available by the end of this week. Frasers Group said the new statement would be ready in April but we have yet to see this statement. We have followed up twice since them but heard nothing back. We are expecting the remaining companies to release their new statements in June & July. We have a call with Sainsbury’s on 21st June at 11am to discuss their statement and approach to modern slavery. 

Climate Action 100+ 

      • Letter calls for companies to take action to reduce greenhouse gas emissions, consistent with the goal of the Paris Agreement, provide enhanced corporate disclosure in line with the Task Force on Climate-related Financial Disclosures recommendations, and implement a strong governance framework that clearly articulates the company board’s accountability and oversight of climate change.
      • The 160 companies engaged by the Climate Action 100+ initiative represent over 80% of global industrial emissions and are, as a group and individually, critical to progressing the global economy to net-zero emissions by 2050. 
      • In 2020, the initiative developed the Climate Action 100+ Net Zero Company Benchmark, which will be used to publicly benchmark focus companies. The first company scorecards will be released in early 2021. 
      • Nearly half (43%) of companies have set a net zero by 2050 target or ambition in some form, which is an important signal to investors that companies understand and are preparing for the transition. However, only 10% of focus companies have net-zero targets that explicitly cover the companies’ most material scope 3 emissions. 
      • Our subcommittee group, which focuses on Toray Industries: March 2021 update: Last meeting with Mr. Hirabayashi, Corporate Vice President of CSR & Investor Relations was Jan 27, 2021. The company plans to make a public announcement in the spring establishing a clearer & more comprehensive governance structure, setting a net zero target for 2050 for Scope1&2, and disclosing TCFD scenario analyses in terms of 1.5°C, 2.0°C, 4.0°C  

The Investor Agenda 

      • A collaborative initiative to accelerate and scale up the investor actions that are critical to tackling climate change and achieving the goals of the Paris Agreement with the aim of keeping average global temperature rise to no more than 1.5-degrees Celsius.
      • Letters thus far include the Investor Statement to Governments on Climate Change and the Investor Statement to EU leaders on Sustainable Recovery from COVID-19.
      • May 2021 update: The founding partners of The Investor Agenda released today a new tool to enable institutional investors to step up action to tackle the climate crisis and accelerate the transition to a net-zero economy. The Investor Climate Action Plans Expectations Ladder and Guidance provides investors with clear expectations for issuing and implementing comprehensive climate action plans, including steps investors can take to support the goal of a net-zero emissions economy by 2050 or sooner. The framework aims to help investors navigate existing expectations and initiatives on climate change. It is inclusive and unique in that it sets out expectations for investors wherever they may be on their climate journey.

CDP

      • CDP runs a global disclosure system for investors, companies, cities, states, and regions to manage environmental impacts. It is the world’s largest, most comprehensive dataset on environmental action. At the request of investors and stakeholders, CDP supports thousands of companies, cities, states, and regions to measure and manage their risks and opportunities on climate change, water security, and deforestation. 
      • June 2021 update: We signed onto the CDP’s newest engagement, the 2021 Global Investor Statement to Governments on the Climate Crisis. This year’s Statement raises climate ambition and increases the specificity of the policy asks. In particular, it asks governments not only for updated NDCs, but also to commit to a domestic mid-century, net-zero emissions target and provide clarity on the transition timetable for each carbon intensive sector.

FAIRR Sustainable Protein Supply Chains

      • Letter calls on multinational food retailers and brand manufacturers to develop an evidence-based approach to diversify protein sources away from an over-reliance on animal proteins.
      • Ongoing, phase 5 is now underway, asking 25 global food retailers and manufacturers to publicly disclose their intentions for transitioning protein portfolios towards lower impact and more sustainable sources. Letter being sent January 26. 

FAIRR Global Investor Engagement on Meat Sourcing

      • Letter calls on fast food companies to de-risk their meat and dairy supply chains against climate and water risks
      • Ongoing, milestone reached by engaging six companies
      • 2021 focus continuing on these six companies

FAIRR Overuse of Antibiotics in Protein Supply Chains engagement

      • Antimicrobial resistance (AMR) is now globally acknowledged as a fundamental threat to public health and the global economy. Animal agriculture and factory farming are the largest consumers of antibiotics globally and a key contributor to AMR. It is projected that by 2030, antibiotic consumption in farm animals will rise by 67%. 
      • Engaging with 20 companies on their overuse of antibiotics in their protein supply chains. 

Engagement with Social Media Companies 

      • Letter calls for social media companies to strengthen controls to prevent the live streaming and distribution of objectionable content
      • Ongoing, several milestones reached. Organisers of initiative have met with target company representatives on several occasions. The target companies appear to be in the process of strengthening controls. 
      • The engagement has been covered by the Financial Times, Responsible Investor, Investor Strategy, Financial Standard and The Logic , Newsroom and NZ Herald
      • NZ Crown-owned investors have committed to an additional 12 months (to mid 2021) of leading engagement with these companies.
      • January 2021: Next focus is board-level accountability and strengthened governance
      • May 2021 update: As a direct result of the engagement,  the charter for Facebook’s Risk and oversight Committee has been updated to state that the Committee will review with management at least annually the company’s assessment of the ways it can be used to facilitate harm or undermine public safety, including through the sharing of content on its services.

Brazil Anti-corruption Engagement

      • Letter calls on 19 companies to substantially reduce corruption and bribery
      • Ongoing, milestone reached as currently arranging meetings with nineteen target companies
      • April 2020 update: Temporarily suspended due to COVID-19

Global Investor Expectations on Climate Lobbying

      • Letter calls on companies to implement robust governance, public reporting, and engagement on climate policy with policymakers
      • Ongoing

Access to Medicine and SDG3

      • Letter calls on pharmaceutical companies to access new markets and increase reporting
      • Ongoing, milestone reached by engaging nineteen companies
      • June 2021: Signed onto updated letter stating that we will review and take into account the analysis generated from the Access to Medicine Index as appropriate in the ESG analysis we conduct on the companies we invest in.

Investor Support for Deforestation-free Procurement Acts in the U.S.

      • Legislatures in both NY and CA are considering legislation to support Deforestation-Free Procurement by the government. The Bills require certain government contractors and subcontractors to have “No Deforestation, No Peat, No Exploitation” (NDPE) policies and do some public reporting on their forest-related practices. The 2021 letter calls for the development of and compliance with NDPE policies, drive transparency, and potentially lead to deforestation-free government bonds — all to the benefit of investors. 
      • Ongoing

Cerrado Manifesto Statement of Support

      • Partnered with FAIRR, the Statement demonstrates to agricultural producers operating in the Amazon’s Cerrado region that there is market and capital support for zero deforestation.
      • Ongoing

PRI Investor Working Group on Sustainable Palm Oil

      • Unified investor voice in support of sustainable palm oil and the Roundtable on Sustainable Palm Oil, engaging with companies in support of more sustainable practices.
      • Ongoing, milestone reached: 35 letters have been sent, 27 companies have responded, over 15 meetings have taken place.
      • November 2020: Following the recent UK consultation on deforestation supply chain due diligence requirements from companies, today the UK’s Department for Environment, Foods & Rural Affairs has confirmed they will move ahead with the introduction of this legislation. In addition the EU Commission are also looking for high-level input into potential demand-side measures they can use to address imported deforestation and degradation.

SEC petition against raising resubmission thresholds for shareholder proposals

      • The SEC plans to raise the resubmission thresholds for shareholder proposals in the U.S. from the current 3%/6%/10% to approximately 6%/15%/30%, investors are invited to submit public comments.
      • Ongoing

CDP – Science Based Targets Initiative

      • The Science Based Targets Initiative (SBTi) provides companies with a roadmap for reducing their carbon emissions, including how much and how quickly they need to reduce emissions. SBTi offers offers a range of target-setting resources and guidance, and independently assesses and approves companies’ targets in line with its strict criteria.
      • In partnership with the SBTi, this investor initiative involves a letter sent to target companies that encourages them to sign the SBTi Business Ambition for 1.5°C Commitment letter, which is the mechanism for formalising the commitment to reach net-zero emissions by no later than 2050.

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