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Advocacy Influencing June Quarter

Influence target
QBE
Broad theme(s)

Alignment with net zero by 2050

Issues and action

Last quarter, we co-filed a shareholder resolution arranged by Market Forces calling on QBE to align its underwriting and investment of oil and gas assets with keeping the climate goals of the Paris Agreement. This is the third year we co-filed climate resolutions against QBE. While QBE has announced a phase-out of its thermal coal exposure and taken climate action in other areas, its most recent announcements indicate a business-as-usual approach to underwriting new oil and gas projects until 2030 and beyond.

The AGM was held in May. In response to the resolution, the Chairman stated that in the lead up to 2030 QBE will be working with oil and gas customers to satisfy itself that they are on the transition path. Our Head of Ethics Research, Dr Stuart Palmer, pointed out that Climate Action 100+ has found that many of QBE’s oil and gas customers are planning capital expenditure that is not aligned with the Paris Agreement. You can listen to Stuart’s question, and the Chairman’s response: here. We continue to invest in QBE while calling on the company to do more to align its business with the climate goals of the Paris Agreement.

Outcome / next steps

The shareholder resolution was supported by 21.4% of QBE’s shareholders, up from the 13% support a similar resolution received last year. This is significant because this increase occurred despite QBE releasing its oil and gas production underwriting policy in February 2021. It sends a strong signal to the company that shareholders expect it to be doing more.

High emissions companies and sectors
Broad theme(s)

Science-Based Emissions Reduction Targets

Renewable Energy Targets

Electric Vehicle Targets

Issues and action

We supported the Investor Decarbonisation Initiative work of NGO ShareAction, calling on major companies globally to set targets for:

  • Science-based emissions reductions in line with the Paris Climate Agreement
  • Transition to 100% use of renewable energy and electric vehicles in company operations.
  • Decarbonise energy through company commitments to shift to 100% energy use from renewables.
  • Reduce energy consumption with commitments to increase energy efficiency and productivity.
  • Support transport electrification with pledges to switch to electric vehicles and install charging infrastructure.
Outcome / next steps

2021 successes for the ShareAction initiative included:

  • Science-based target commitments from supermarket Sainsburys and packaging company Sealed Air Corporation;
  • Transport electrification pledges from utilities company National Grid and insurance company Aviva
  • Commitments to reduce energy consumption and shift to 100% renewable energy consumption from technology company Siemens

Of these companies, we were invested in Sainsburys at the time of engagement.

All governments
Broad theme(s)

Climate policy

Issues and action

We signed onto the 2021 Global Investor Statement to Governments on the Climate Crisis. The statement delivers the strongest-ever investor call for governments to raise their climate ambition and implement meaningful policies, or risk missing out on a massive wave of investment in tackling the climate crisis. 

The statement urges governments to a global race-to-the-top on climate policy. It calls on all countries to significantly strengthen their Nationally Determined Contributions for 2030 and to ensure a planned transition to net-zero emissions by 2050 or sooner, with roadmaps for each carbon-intensive sector. 

Particularly important for Australia it calls on governments to implement policies to deliver these targets, incentivize private investments in zero-emissions solutions and ensure ambition action before 2030 through:

  • robust carbon pricing,
  • the removal of fossil fuel subsidies,
  • the phase out of coal-based electricity generation,
  • the avoidance of new carbon-intensive infrastructure (e.g. no new coal power plants) and
  • the development of just transition plans for affected workers and communities.
Outcome / next steps

The statement has been signed by 457 investors managing more than US$41 trillion in assets. This represents the largest collective assets under management to sign on to a global investor statement to governments on climate change since the first statement in 2009. It demonstrates that responding to the climate crisis isn’t only the right thing to do, it’s economically essential.

The statement will remain open for further institutional investors to sign until the 26th United Nations Climate Conference of the Parties (COP26) in November.

Coles and Woolworths
Broad theme(s)

Plant based protein

Issues and action

We spoke to both Coles and Woolworths about their plant-based protein range, plans for addressing their scope 3 emissions (of which animal agriculture likely plays a large part), and their role as Australia’s major food retailers in helping consumers make more sustainable food choices. These calls were attended by multiple investors and were coordinated by FAIRR (Farm Animal Investment Risk and Return).

At the time of engagement we were not invested in the supermarkets.  

Outcome / next steps

Our assessment is that the growth of plant-based proteins is essential to keeping global warming to 1.5 degrees and addressing industrial animal suffering in food supply chains. We think the supermarkets have an important role to play in the dietary transition. These collaborative engagements and our own direct engagements are ongoing. Both supermarkets have been making good progress in terms of expanding their alternative protein range, committing to addressing scope 3 emissions, and (to differing degrees) acknowledging their role in helping consumers transition toward more sustainable diets.

G20 governments
Broad theme(s)

Emission reduction in animal agriculture

Issues and action

The dairy and meat sectors make a disproportionately large contribution to global greenhouse gas emissions and forest loss. Notwithstanding this, research by WWF indicates that most countries fail to specifically mention agriculture in their sector targets for their climate change commitments.

We signed an investor statement calling on all G20 nations to disclose specific targets for emissions reduction in agriculture and establish frameworks for a transition to more sustainable diets. The investor statement was coordinated by FAIRR (Farm Animal Investment Risk and Return).

Outcome / next steps

The purpose of the investor statement is to put animal agriculture on the agenda for COP26 which is to take place in November 2021. The ‘Where’s the beef’ campaign has been backed by former secretary general of the UN, Ban Ki-moon.

Arthur J Gallagher
Broad theme(s)

Lobbying for tax concessions for ‘clean coal’ production

Issues and action

For over ten years the insurance broking group Arthur J Gallagher (AJG) has invested in the US in “clean coal” treatment facilities which benefit from US tax concessions due to expire this year. We are concerned that the tax concessions are out of all proportion to any environmental benefits of the treatment of the coal, and that AJG has been lobbying for extension of the concession. We have engaged with AJG about alignment of its activities with the goals of the Paris Agreement, including when considering investments and lobbying action.

Outcome / next steps

We expect AJG to report later this year about its management of climate risk and opportunity. While we continue to be invested, we will make a decision about potential divestment based on the company’s commitments and the quality of their reporting against the TCFD climate reporting guidelines.

Best & Less
Broad theme(s)

Fast fashion

Issues and action

We engaged with Best & Less on its approach to sustainability. The company is taking steps towards paying a living wage, a Net Zero emissions roadmap and beginning to pilot some circular economy initiatives. However, we think the company could do more to address overconsumption and the ‘disposable clothing’ mindset that pervades the fashion industry. We are concerned that the standard fashion industry business model relies on unsustainable consumption.

Outcome / next steps

Best & Less responded to our concerns by highlighting the fact it provides affordable clothing options to Australian consumers. We agree that this is important. However we think sustainability can be balanced with affordability. We ruled out investment in Best & Less because of our concerns that their business model may not be sustainable and we explained our reasons.

Coles
Broad theme(s)

Alignment of business activities with human rights

Issues and action

We engaged with Coles about alignment of their business activities, in particular purchasing practices, with human rights. Coles does a lot of important work to address the risk of human rights abuse, including modern slavery, in its supply chain. For example, it conducts due diligence on high risk suppliers, it has good reporting on the actions it takes when suppliers do not meet its standards, and it offers a grievance mechanism for workers to raise concerns.

However, we remained concerned that Coles may be undermining human rights in its supply chain through its purchasing practices. For example, by putting cost and timing pressures on its suppliers. We pointed to the low scores it received from Know the Chain and the Corporate Human Rights Benchmark on metrics relating to alignment of business practices with human rights.

At the time of engagement we were not invested in Coles.

Outcome / next steps

Our assessment is that Coles’ response to human rights issues has improved significantly over time and we think it is taking seriously its responsibility to safeguard human rights in its supply chain. We will monitor closely Coles’ scores in the next iterations of Know the Chain and the Corporate Human Rights Benchmark.

Companies in the Asia Pacific region with exposure to human rights risks
Broad theme(s)

Human rights

Issues and action

We joined Investors Against Slavery and Trafficking Asia Pacific. This is an investor-led initiative convened to promote effective action by companies to find, fix and prevent modern slavery, labour exploitation and human trafficking. The initiative represents a group of investors with a collective AU$5.9 trillion in funds under management. As part of this initiative, we have commenced collaborative engagement with a company based in the APAC region.

Outcome / next steps

We expect engagement to be a multi-year initiative. More information can be found on the IAST APAC website.

Aged care providers Estia and Regis
Broad theme(s)

Elder abuse and neglect

Issues and action

We started engagement with aged care providers Estia and Regis to ask what changes they had planned to respond to the issues in the Australian aged care system, in particular incidences of elder abuse and neglect. Specifically, we asked about processes or initiatives to enhance transparency and remediation; cases of non-compliance identified by the regulator (ACQSC) or recent allegations reported in the media; and the role these providers can play to support a sustainable aged care system.

At the time of engagement we were not invested in these aged care providers.

Outcome / next steps

So far we have met with one provider and we are waiting for a response from the other.

Private sector particularly mining, agribusiness, logging and palm oil companies
Broad theme(s)

Defending human rights and environmental defenders

Issues and action

Human rights and environmental defenders are essential to keeping corporates accountable and are at the forefront of protecting human rights, natural resources and our shared planet.

When companies take lawsuits against human rights and environmental defenders they can stop defenders from raising concerns about corporate practices, drain their limited resources and have a chilling effect on the important work they do. These lawsuits are called SLAPPs – which stands for strategic lawsuits against public participation. The Business and Human Rights Resource Centre identified 355 cases brought across the globe since 2015 that can be categorised as SLAPPs with the highest number occurring in Latin America and Asia, and mostly involving mining, agribusiness, logging and palm oil companies.

We signed onto an investor statement that calls on companies to commit to a clear policy of non-retaliation against organisations that raise concerns about the company’s business practices and commit to not using SLAPPs to stop public participation and advocacy.

Outcome / next steps

The Investor Statement on Strategic Litigation Against Public Participation was supported by 44 investors representing over 270 billion USD in AUM.

We also incorporate some of the same concepts in a new human rights framework that we have been progressing. You can read more about our approach to human rights in our modern slavery statement.   

Clothing brands
Broad theme(s)

Human rights and worker safety

Issues and action

We signed onto the investor statement in support of the continuance and expansion of the Bangladesh Accord. The Bangladesh Accord is a legally binding agreement on Fire and Building Safety. It was agreed to by brands, retailers and trade unions following the collapse of the Rana Plaza factory complex in Bangladesh which killed 1,134 workers. The Accord has helped establish safer factories in Bangladesh for over 2 million workers.

The Accord was due to expire on 31 May 2021, putting garment workers at risk (particularly during the Covid-19 pandemic when many workers are already vulnerable). The investor statement urged global brands sourcing in Bangladesh to sign a new legally binding agreement with global unions that:

  • Includes enforceable obligations for brands that ensure worker health and safety is protected
  • Maintains the role of the Accord secretariat as in independent accountability mechanism
  • Is international in scope providing a framework to expand the Accord’s lifesaving inspection and remediation program to other countries
Outcome / next steps

A short term extension of the existing accord has been agreed while talks continue about a longer term replacement accord providing greater protection for vulnerable workers.

Food sector
Broad theme(s)

Animal welfare

Issues and action

Through the Global Investor Collaboration on Farm Animal Welfare, we wrote to 150 food producers, food retails and restaurants about their performance on the Business Benchmark on Farm Animal Welfare (BBFAW), encouraging them to recognise animal welfare as a material business issue. 

Outcome / next steps

The aim of these engagements are to encourage companies to improve animal welfare in their supply chains and operations, as measured by rankings on the BBFAW.

Ethical influencing

We exercise our influence in many ways.

See how we have used our investor position to advocate for a better world during Financial Year 2020.

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