Engagement - dialogue
of the companies
in the portfolios
were engaged with
Encouraging investee companies to improve their sustainability performance is part of the investment strategy of the fund. In engagement with companies, the fund raises awareness on sustainability issues, provides insights to convince, motivate or enhance the company’s sustainable performance. Engagement takes place throughout the initial research process and subsequent dialogues and by providing them with a written analysis of the sustainability performance of their operations. This dialogue strengthens a company’s insight into those issues that are important to shareholders. During 2017, the fund engaged with 80% (88% in 2016) of the companies represented in the sub-funds as per December 31, 2017.
The most prominent topics of engagement were basic labour rights (17%), climate change (15%) and animal testing (11%). Engagement on basic labour rights included the living wages project dialogue with garment and footwear companies, and dialogue on child labour in the cobalt supply chain with Renault and Tesla. Engagement in climate change included the participation in ShareAction’s work, which encourages companies to join initiatives and commit to using 100% renewable energy or to increasing energy productivity to 50% by a set deadline. Engagement on animal testing took place throughout the analysis of healthcare companies to confirm that the companies met the fund’s minimum standards.
Some results of the fund’s engagement efforts are:
Carrefour: the dialogue about the company’s animal welfare policy and practices – started in 2014 in the context of a wider engagement project on farm animal welfare – was continued. Over the years, the company has developed several programmes and initiatives to improve animal welfare and has increased its range of products that meet higher animal welfare standards. In addition, the company traces animal welfare information in the supply chain. However, Carrefour has not yet developed a more comprehensive and formalised animal welfare policy. The company has committed to developing a group-wide animal welfare policy. The fund is pleased with this concrete commitment and will continue the dialogue and assess the policy in detail once available.
RELX: in dialogue with RELX, the fund discussed the impact on climate change in the context of the Paris Agreement and in particular scope-3 emissions. In addition, remuneration, and issues related to share buybacks in relation to remuneration incentives, and issuance of shares without pre-emptive rights were discussed. In preparation for the Annual General Meeting (AGM), the fund had contact with the company to discuss concerns and questions related to the agenda for the AGM. The company proposed a new remuneration policy at the AGM. Many of the concerns that the fund had with the old remuneration policy and that were raised many times in the past are addressed in this new policy. The fund considers it particularly positive that the remuneration policy has been simplified, moving from four schemes to two, and that the company no longer provides options and has abandoned the share matching programme. However, some concerns remain. The fund’s biggest concern is related to the potential excessiveness of the remuneration package. This concern has not been addressed. Also, the long-term incentive plan’s vesting period is three years, whereas the fund would have preferred a longer vesting period. The fund will continue to engage with the company about these concerns. In addition, the fund also participated in a stakeholder consultation about CSR priorities for the company. The fund’s focus areas for RELX are (open) access to scientific information, data privacy, transparency about unpublished studies, R&D spending and more clarity about definitions used for CSR data.
Renault: the fund has engaged with Renault about the company’s use and sourcing of conflict minerals since 2012 and in 2017, the fund also addressed the risk of child labour in the cobalt supply chain. In December 2017, Renault informed the fund that it had joined the Responsible Raw Material Initiative, an initiative developed by the Responsible Business Alliance (RBA1) to improve the mining sector. The RBA has longstanding experience in developing supply chain due diligence tools and has been the driving force behind the Conflict Free Smelter Initiative. Renault also stated that in regard to conflict minerals, it pursues due diligence in cooperation with suppliers, based on the OECD Guidelines for multinational enterprises, in order to ensure that the company sources minerals responsibly. The fund is pleased to see this development in Renault’s sourcing practices and aims to continue its dialogue to further enhance these practices.
1 The Responsible Business Alliance is the new name of the Electronics Industry Citizenship Coalition that has wide experience in supply chain due diligence programmes e.g. with its conflict free smelter initiative, on which the Responsible Minerals Initiative builds.