At the half-year mark, I wanted to take the opportunity to provide an update on our Stewardship Plan for 2024. Our plan was published in January, and you can view our five-point plan here.
For a quick recap on our stewardship activities:
1) Owning a share comes with certain shareholder rights.
2) You can take part in a company’s financial success, and you may influence change through various mechanisms such as voting and engaging (collectively known as stewardship).
3) When we manage sustainable portfolios for our clients, our stewardship is a key common thread that supports best outcomes for all.
As part of our extended stewardship plan, we attend Annual General Meetings (AGMs) to engage directly with the underlying companies in some of the EQ portfolios.
AGMs are a valuable opportunity for shareholders to directly address the Board of Directors and the company’s decision-makers on areas of concern. We aim to be constructive and to highlight areas that are important to shareholders.
While corporate management teams often engage with shareholders, Board members, who have significant influence over long-term corporate strategy are often non-executives with little interaction with the day-to-day and so may be disconnected with shareholder concerns. We were first introduced to the power of AGM engagement through our collaboration with ShareAction.
First half of 2024
To date, the EQ team have attended seven AGMs across the UK.
To reflect EQ’s ongoing strategic engagement theme on climate risks in banks, we attended the AGMs for both Standard Chartered and HSBC to question the board on their green financing targets, and specific requests on strengthening their fossil fuel financing policies.
While Standard Chartered was highly successful and further meetings are now planned, HSBC cut the Q&A section short and left many shareholder questions unanswered – including EQ’s – a frustrating and uncommon occurrence.
Continuing the climate theme, our attendance at Rio Tinto requested greater transparency over how the company will work to provide the “future facing materials” we need for the energy transition in a responsible, just manner that respects human and community rights.
At Kingfisher Plc – the holding company of the home-improvement stores B&Q and Screwfix – we asked the Board to re-commit to the “gold standard” science-based targets initiative, and disclose how it plans to achieve its carbon target on the use of its sold products in the longer-term – currently one of the largest sources of the company’s emissions.
The second strategic theme concerns human rights safeguarding in supply chains. Moving away from a “controversy” avoidance approach to encourage companies to embrace proactive policies, audits and remediation offers has been a major engagement focus with EQ’s selected fund managers.
We also attended the AGM for Antafogasta to push for change here. While the copper miner doesn’t have a controversial track record, we did push for more transparency over how it is identifying, assessing, and addressing human rights impacts and risk, and to disclose the findings of independent audits from their sites. Board members at once saw the relevance of this and promised improvements on our request in the next reporting year.
The third strategic theme covered was biodiversity risk. While many companies are dependent on nature and its free services, they are depleting it – creating long-term risk. We asked Severn Trent, the UK water utility, on how it will connect infrastructure spending with climate impact analysis – given that recent freshwater pollution events were driven by extreme rainfall which will only become more exacerbated as our global temperatures rise.
We also attended Croda’s AGM, asking the Board of the UK speciality chemicals company, to substantiate its “land positive” aim with certified sourcing targets across all its important bio-based inputs.
In summary
Overall, we continue to see AGMs as an under-used stewardship tool, an important space for public accountability and where change really can happen. We would be happy to tell you more about how just one share can provide access to this democratic space, and how the fantastic work ShareAction undertake can connect individuals with these opportunities too.
Please remember, this content is provided for information purposes only. Investment involves risk. Past performance is not a guarantee or indication of future results. Investment return and the principal value of an investment may go up or down and may result in the loss of the amount originally invested. All investors should seek professional advice prior to any investment decision, to determine the risks associated with the investment and its suitability.
