In the news

Investors including Aviva, Jupiter and Royal London demand banks release more information on climate change

September 14, 2017

Investors with assets totalling nearly $2 trillion (£1.5 trillion) have today called on the world’s largest banks to reveal how they will deal with climate change.

The 100 investors, which include names such as Aviva, Royal London and Jupiter Asset Management, are demanding enhanced disclosure from the chief executives of banks of their climate-related risks and opportunities.

They have issued their demands via letters, coordinated by responsible investment non-profit group ShareAction and Boston Common Asset Management, to institutions such as Bank of America, HSBC and JP Morgan.

“As a result of climate change and the low-carbon transition, banks now face risks and opportunities that are real, wide-ranging, and material to investors,” said Isabelle Cabie of Candriam Investors Group, one of the signatories to the letter.

“As long-term investors, better disclosure of climate risk allows us to judge how specific banks are performing compared to their peers, and so we ask that banks pay heed to this important call from the investor community.”

Recent recommendations were issued by the Financial Stability Board’s Task Force on Climate-related Financial Disclosures (TCFD) to compel banks to disclose more on their climate change strategies.

However, the recommendations are non-binding and, according to ShareAction, depend on investors applying pressure.

“Limiting global warming to less than a two degrees Celsius rise requires a major shift in the way we operate financially and economically,” said Lauren Compere of Boston Common Asset Management.

“As climate risk becomes recognised as critical to banks, investors want to know whether this risk is being managed well and at the highest levels of the organisation.”

As providers of capital, banks will have a role to play in the Paris Agreement’s goal of “making finance flows consistent with a pathway towards low greenhouse gas emissions and climate-resilient development”.

According to ShareAction, $93 trillion of investment is required by 2030 to limit global warming to two degrees and the private financial sector has a “pivotal role” to play in enabling the transition to a low-carbon future.

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Ethical funds show that doing good CAN be profitable as they beat rivals by backing firms loved by millennials

July 23, 2017

Fund managers trying to woo younger investors are backing firms that do good in the world. Ethical funds are undergoing a major overhaul as asset managers try to work out what is important to the next generation of investors.

Catherine Howarth, chief executive at ShareAction, a charity which promotes responsible investment, says: ‘There is a generational shift taking place in investing. Ethical funds in the 1980s were focused on avoiding arms, pornography and tobacco, but millennials are more interested in labour rights and the environment.

‘Funds need to reflect the priorities of a new generation.’

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Investors attack FCA plans to pave the way for Saudi Aramco float in London

July 13, 2017

Investors have rounded on plans unveiled by the Financial Conduct Authority (FCA) to pave the way for Saudi Aramco to float in London with an easier route on to the stock exchange.

Analysts believe any listing by the oil giant would be the world’s biggest flotation, with the company valued at around $2 trillion (£1.5 trillion), potentially leading to a big payday for any advisers on the deal.

Saudi Aramco is planning to sell only around 5pc of its shares, with London and New York the final two candidates. The company is the world’s largest oil producer and controlled by the Saudi royal family. It is eyeing a float in late 2018. The FCA has proposed a rule change that would allow state-owned companies, such as Aramco, to apply for a special category of premium listing with less onerous disclosure and regulatory requirements.

The City’s strict rules currently block a premium listing unless at least 25pc of the stock is sold. It is understood firms going down the proposed route would not have to disclose transactions with their sovereign owner, while shareholders would not be able to vote in or out independent board members.

The proposals have raised fears among institutional investors of ­watered down standards. Chris Cummings, chief executive of the Investment Association, which represents 200 investors managing over £5.7 trillion, said: “A premium listed segment without these investor protections is not a premium segment and will not provide the protections that investors expect.”

Ashley Hamilton Claxton, corporate governance manager at Royal London Asset Management, said: “It looks like the FCA is consulting on amending the existing listing rules to accommodate the peculiarities of one company, which is not a very effective strategy for regulating the market as a whole.”

Meanwhile, investor rights group ShareAction also expressed reservations, saying the changes risked repeating the mistakes of the past, after the London Stock Exchange was forced to tighten up its controls four years ago following governance failures at foreign ­tycoon-owned Bumi and ENRC.

“As a financial centre, London must be careful not to damage its own reputation for high governance standards,” added Catherine Howarth, chief executive of ShareAction.

However, the London Stock Exchange welcomed the plans, saying “discretionary access” for investors was key to the capital’s success as a global financial centre. The FCA has launched a consultation on the proposals.

Andrew Bailey, chief executive of the FCA, defended the plan, saying it would make UK markets “more accessible whilst ensuring that the protections afforded by our premium listing regime are focused and proportionate”.

He added: “Sovereign owners are different from private sector individuals or companies – both in their motivations and in their nature. Investors have long recognised this and capital markets are well adapted to assess the treatment of other investors by sovereign countries.”

The Saudi royal family is trying to move the country away from its reliance on oil into other industrial sectors under a plan called Saudi Vision 2030.

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M&S should pay Living Wage and change negative narrative surrounding the business

July 11, 2017

If M&S bosses had their brains in gear they would realise that it might be quite a good idea to listen to the shareholders who are calling for the company to pay the living wage and become an accredited Living Wage Employer.

Yes, it’s not just the protestors outside the AGM beating that drum. A group of investors with £100bn assets under management also think it would be a good idea.

Co-ordinated by ShareAction, they don’t just argue for the move because it’s the right thing to do (although it is). They say it would be of benefit to their investment portfolios.

I should say at this point that the living wage is not the same as the Government’s National Living Wage, which is the re-branded minimum wage. It is set by the Living Wage Foundation, which calculates the rate based on how much it costs to maintain a decent basic standard of living.

The reason that Share Action’s group wants M&S to join the more than 3,000 employers that have sought, and achieved, accreditation is simple: They stand to benefit as much as M&S staff.

Living wage employers experience lower rates of absenteeism and staff turnover (handy in a tight labour market). The quality of the work they receive also tends to improve. There is a solid economic and business case for paying it.

M&S is the sort of company that could use something resembling a solid business and economic case. Put simply, it’s struggling. The latest set of figures show that.

The 1.2 per cent fall in like-for-like clothing and home sales (the number excludes new store openings or closures) for the first three months of this year has been touted as better than expected. The pace of decline is slowing, and M&S is doing better with more profitable full price sales than it was.

It doesn’t change the fact that if you have to celebrate a 1.2 per cent decline you’ve got problems.

The glass half empty case takes into account that last year’s comparative figures were themselves pretty awful. Easter fell late this year too, boosting M&S’s figures by an estimated 0.6 per cent. And then there was the weather. It was great for clothing sales, as the numbers put out by Sainsbury’s and Primark demonstrate.

So, M&S’s numbers were actually pretty grotty.

That won’t surprise too many people. M&S has been this way for ages. To address the problem the company has done what companies usually do. It has paid a revolving door of middle aged blokes in fancy suits a stupendous amount of cash in the hope that one of them will stop the rot. They have all failed.

That latest incumbent – Steve Rowe – has all but given up on M&S as a clothes retailer in favour of prioritising food. Which was also a disappointment (sales were down 0.1 per cent). Again, worth noting that M&S’s rivals have been doing much better (see Sainsbury’s again, but it was hardly alone).

So here’s an idea for M&S: Do something different. Instead of wasting money on over paid executives, spend some of it on your staff. Display the living wage accreditation mark prominently. Not only will you get better work from your people, customers might start to feel good about shopping at M&S again. They might even be willing to pay a bit more to do so.

The company did something stupid a while back, ramming through a new contract that hurt some of its longest serving and most loyal staff. But that doesn’t mean that the narrative can’t be changed. And change is what M&S needs.

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Investors push companies for greater workforce disclosures

July 3, 2017

A group of 79 global investors managing a combined $7.9 trillion have joined forces to encourage companies to provide more information about how they manage their global workforces to help identify best-performing businesses.

The group, which includes Schroders (SDR.L), Amundi (AMUN.PA) and Legal & General (LGEN.L), has requested information from 50 of the biggest British companies, plus 25 other large global businesses.

“As a large and long-term investor, information on a company’s culture and employee engagement is important to understand the sustainability of business practices and long-term prospects,” said Jeannette Andrews, corporate governance manager at Legal & General Investment Management.

Among other investors to join the initiative, led by campaign group ShareAction, are HSBC Asset Management (HSBA.L), AXA Investment Management (AXAF.PA), Nordea (NDA.ST), Natixis (CNAT.PA) and pension schemes including APG and AustralianSuper.

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Investors demand more information on labour practices

July 3, 2017

A coalition of 79 influential asset managers with almost $8tn under management has written to the world’s largest companies calling for more information on labour practices in order to identify badly managed workforces that are vulnerable to financial shocks.

The WDI was set up by ShareAction, the responsible investment organisation, and funded by the UK’s Department for International Development.

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Institutional investors are the ghosts at the AGM feast

May 15, 2017

We are in the thick of annual general meeting season, that time of year when company directors must endure the ritual of lining up beside each other to face questions from shareholders. An eerie feature of AGMs are the ghosts at the feast: the institutional investors whose presence is only evident at the end when the votes cast beam up on a screen behind the directors. Whatever the mood among flesh and blood investors in the room, one thing is highly predictable: 95 per cent of the votes at 95 per cent of these AGMs are cast in support of management.

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Theresa May promised to tackle greedy bosses – instead she’s helping them

May 2, 2017

Witty Robin Hood financial tax campaigners were demonstrating outside HSBC’s AGM on Friday. As shareholders queued outside the Westminster venue, protesters dressed as pin-striped fat cats laundered fake £50 notes in a washing-up bowl with giant scrubbing brushes, a visual reminder of what the bank got up to.

HSBC has been fined £1.2bn for laundering Mexican drug money, with its annual accounts setting aside £773m to cover ongoing tax investigations. PIRC, the pensions and investments research consultants who rate company performance on behalf of shareholders, noted HSBC’s 62% drop in profits last year, and the bank has closed 62 UK branches and shifted 1,000 jobs to Paris due to Brexit. The Financial Conduct Authority rates HSBC as the second-worst bank for customer complaints about banking, credit cards and mortgages.
Martin Sorrell and the sunset of the superstar chief executives
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Undeterred, HSBC’s chief executive, Stuart Gulliver, is up for a pay rise to bring him to nearly £8m a year. Gulliver, readers may recall, was exposed in the Guardian in 2015 for having sheltered millions of his own money in a Swiss account through a Panamanian company. Although his actions were legal, he was registered as domiciled in Hong Kong for tax purposes, despite living and working in the UK. Leaked documents appeared to show that the Swiss private bank operated by HSBC was complicit in tax evasion and aggressive tax avoidance, doling out bricks of cash to clients, and providing banking services to criminals, drug smugglers and friends and families of dictators.

PIRC recommended that shareholders should vote against HSBC’s “highly excessive” executive pay, with its ratio of 102:1 from the top to average employees. It said the bank’s chair, Douglas Flint, had “failed in his responsibilities” and his position was “untenable”. Flint warned of the “threat of populism impacting on policy choices in upcoming European elections”. Yes, indeed. But did his bank’s actions inflame this populism?

Company AGMs are strange beasts. Once a year directors sit on a high platform so ordinary punters can watch them explain why they are worth millions. Some small shareholders only turn up for the free refreshments. There are vigorous activists, well-known faces nit-picking through annual reports to ask tricky questions. At HSBC, John Farmer is their supremo, pointing at page 166 of the annual report and ending rhetorically: “In eight years of your chairmanship, why haven’t you done better?” A familiar, eccentric Marxist harangues ineffectually until the audience sighs. Others are HSBC groupies, giving oily thanks to the platform. There are campaign groups such as ShareAction, a charity trying to use shareholding to “unlock its potential to be a force for good”, especially on the environment.

But what’s painfully clear is that nothing that happens in this packed hall makes a scrap of difference to anything. This is the comical charade of governance, a half day’s embarrassment. When it comes to voting on top executives’ remuneration, those in the room press little buttons, then up on the screen comes the total of all institutional shareholders: result – 8,885,701,000 votes, or 96%, gifting Gulliver his £8m. It was never in doubt.

After the 2008-09 crash, a brief fluttering of public indignation sparked Occupy and UK Uncut’s protests against corporate tax dodgers at Top Shop, Barclays, Starbucks and Boots. AGMs of 2012 were hailed as a “shareholder spring” though almost all votes against obscene pay failed, with barely a ripple of fear caused to boardrooms.

The High Pay Centre reports executive pay still rising; CEOs in the FTSE 100 earn 130 times the average (not lowest) salary of their employees. Stefan Stern, the centre’s director, says: “Twenty years ago it was 45 to one.” He is waiting to see whether in her election manifesto, Theresa May will turn out to have meant what she said in her “sacred text”, her single speech pitching for the leadership. She said back then that though the FTSE traded at the same level as 18 years ago, “executive pay has almost trebled” with “an irrational, unhealthy and growing gap” between bosses and workers. She pledged “to make shareholders’ votes on pay not just advisory but binding” with full transparency of “the ratio between the CEO’s pay and the average company worker’s pay”. Will that go the way of her promise to put workers on boards – “Because we are the party of workers” – an idea hastily abandoned once she was inside No 10?

The Chartered Institute of Personnel and Development (CIPD) is waiting too, to see if she follows through on executive pay and corporate governance. Its director, Peter Cheese, would do away with remuneration committees that inflate boardroom pay – as do executive search agencies rewarded with a percentage of an executive’s pay rate. He says “there is no evidence in behavioural science” that soaring pay delivers better management. Top pay linked to share price encourages artificial short-term price-raising tricks. Worse, CIPD research shows excessive pay does damage. He says that “70% of employees think CEO pay is too high, and 60% say it demotivates them at work”.

Nothing in the government’s election campaign so far suggests remedies for the great social dysfunctions May listed in her first speech. Top pay in itself is only an emblem of a deeper malaise, with the Institute for Fiscal Studies warning that May’s regime is set to cause inequality to rise as steeply as it did under Margaret Thatcher, with wages stagnant or falling, benefits cut and public sector pay dropping by 12%.

Labour’s pledge to peg the public sector to a pay ratio of 20:1 top to average would affect few: for all the fuss the Daily Mail makes, there are very few high-paid public officials, none anywhere near FTSE CEOs. But Labour’s plan for a pay ratio cap on all the Capita, Sodexo and Virgin-type contractors certainly would shake things up, stopping earnings rising above about £350,000. ComRes finds a hefty 57% public support for capping high pay, with only 30% against. The best Labour can hope to do is taunt May with her own words, challenge her with policies she once pretended to espouse. As with Ed Miliband’s price freeze on energy companies, expect to see popular Labour policies gain currency until they are eventually adopted by the Tories. Meanwhile, Gulliver is off to pastures new that will no doubt be just as lush and verdant as HSBC’s.

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Food groups warned about overuse of antibiotics in supply chain

May 1, 2017

Denny’s, Greene King and eight other food businesses have come under pressure from big investors to end the unnecessary use of antibiotics in their supply chains. Concerns are mounting that overuse of these drugs is damaging human health.

Clare Richards, campaigns manager at ShareAction, the responsible investment organisation that brought the investors together, said: “Sick animals should receive treatment, but medically important antibiotics should have no place in masking the symptoms of poor animal welfare conditions.

“Companies that fail to adequately address this risk are missing a trick: neglecting both their opportunity to offer leadership in the face of a public health crisis, plus the chance to positively differentiate themselves from their competitors.”

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Shareholder spring and executive pay

April 27, 2017

Click here to see Chief Executive Catherine Howarth’s guest appearance on the BBC’s World Business Report. (starts at 5.45)

Mutual funds have exposure to controversial weapons

March 27, 2017

More than 6,500 funds sold to retail investors around the world have high exposure to controversial weapons such as cluster munitions, according to new research that has cast doubt over asset managers’ efforts to invest responsibly.

ShareAction, the responsible investment organisation, said the figures were “horrifying”. “It’s a miserable way to make a profit and does nothing to restore public trust in the financial services industry,” said Catherine Howarth, chief executive of the organisation.

Last year more than 3,000 academics signed a petition calling on USS, the £55bn UK pension scheme for retired university workers, to divest from companies involved with weapons banned under the 2008 Controversial Weapons Convention.

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UK Group Expanding Campaign to Curb Antibiotics in Meat Production

March 21, 2017

A shareholder coalition founded in the U.K. is recruiting investors for a campaign to convince KFC parent Yum Brands Inc and other food companies to protect public health and corporate profits by reducing the use of antibiotics in the meat they serve in the United States and around the world.

Scientists warn that the routine use of antibiotics to promote growth and prevent illness in healthy farm animals contributes to the rise of dangerous infections from antibiotic-resistant bacteria known as superbugs, which kill at least 23,000 Americans each year and pose a major threat to global health.

“It’s the kind of risk that doesn’t discriminate. An illness that is resistant to antibiotics could happen anywhere, poor or rich,” Natalie Beinisch, engagement manager at Aegon Asset Management, said by telephone from the Hague.

Members noted that chains like Chipotle Mexican Grill Inc and McDonald’s USA have used strict antibiotic policies to elevate their brands.

“There is the potential for significant opportunity for those food companies that get the recipe for sustainable food production right,” said Jeremy Coller, founder of the Farm Animal Investment Risk & Return Initiative (FAIRR) and chief investment officer at Coller Capital in London.

This year the coalition plans to keep up the pressure on Yum, whose policy lags those of major chains such as McDonald’s Corp, whose U.S. restaurants last year stopped serving chicken raised with antibiotics important to human medicine.

The coalition also is pressing large food companies to set clear timelines for phasing out the routine use of antibiotics in chicken, pork and beef in all markets where they operate.

ShareAction and the FAIRR Initiative lead the group, whose members include Aviva Investors, Aegon Asset Management and Green Century Capital Management. The mostly European and U.S. coalition debuted last year with 54 investors representing about $1 trillion under management. It since has added 17 new members and doubled assets under management.

A broad campaign to curb antibiotics has been gaining steam in recent years with help from rising consumer interest, pressure from doctors and non-profit groups, and meaningful responses from companies such as McDonald’s and Tyson Foods Inc, the world’s second-largest poultry company.

“It’s a domino effect. Once suppliers move … there’s no excuse not to move,” said Leslie Samuelrich, president of Boston’s Green Century Capital Management, who spoke at a coalition event for investors at BlackRock’s New York City offices on Monday.

A broad campaign to curb antibiotics has been gaining steam in recent years with help from rising consumer interest, pressure from doctors and non-profit groups, and meaningful responses from companies such as McDonald’s and Tyson Foods Inc, the world’s second-largest poultry company.

“It’s a domino effect. Once suppliers move … there’s no excuse not to move,” said Leslie Samuelrich, president of Boston’s Green Century Capital Management, who spoke at a coalition event for investors at BlackRock’s New York City offices on Monday.


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$2trn investor coalition calls on food giants to cut antibiotic use

March 20, 2017

A global alliance of pension funds and investors have come together to call on fast food giants such as McDonald’s to slash their use of antibiotics.

Over 70 investors with combined assets under management (AuM) of $2trn, including the £19bn Strathclyde Pension Fund, are backing the call instigated by FAIRR Initiative and ShareAction. These investors are concerned that overuse of antibiotics in animals is reducing their effect on humans.

The plea for action was made in a report, The Restaurant Sector and Antibiotic Risk, published on 20 March and signed by large asset managers such as Aviva Investors and Hermes Equity Ownership Services.

Speaking to PP, ShareAction chief executive Catherine Howarth called on investors to put pressure on companies before it’s too late to react to incoming regulation.

“There is a risk of holding companies that are behind the curve on good practice because this is coming up so fast as an area of public health concern,” she said. “People and regulators are beginning to wake up to the scale of antibiotic use in the farm industry sector.

“It’s quite vulnerable to swift regulatory intervention, which may disallow companies to continue with business as usual. Businesses which aren’t well prepared for that would be at financial risk and so would their investors.

“What we’re saying to the investment community is support companies in putting in place policies that mean they’re not vulnerable to a consumer backlash or, more seriously and problematically, a rapid introduction of a regulatory regime.”

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Vast pay deals for tobacco and mining bosses: BAT and Anglo American chiefs awarded eye-watering salaries

March 13, 2017

Two more FTSE bosses have picked up bumper pay deals despite pledges of a crackdown on fat-cat deals.

British American Tobacco boss Nicandro Durante was awarded £7.6million in pay and bonuses – £3million more than the year before – while Anglo American boss Mark Cutifani took home £3.9million, up from his previous pay of £3.4million.

Recently WPP boss Martin Sorrell was awarded £42million in shares from his advertising firm, Shell boss Ben van Beurden was paid £7.5million and Rolls-Royce boss Warren East also took home nearly £1million in bonuses on top of his £925,000 salary.

Catherine Howarth, chief executive of responsible investment charity ShareAction, said putting asset managers in charge of curbing high pay is like ‘putting the fox in charge of the hen house’ and called for boards to take a tougher line.

She said: ‘Each year it seems we might break the cycle of fatuously large pay awards made to CEOs – and then we don’t.’ 

Bosses are expected to come under increased scrutiny this up coming AGM season, with remuneration policies in the firing line.

Theresa May has criticised the ‘irrational and unhealthy’ earnings gap between bosses and ordinary workers and promised to crack down on fat-cat pay.

Anglo American, which faced a shareholder revolt last year over high payouts, announced yesterday that it would be capping executive bonuses.

The firm said it’s reducing the maximum annual bonus for Cutifani to 300 per cent, from 350 per cent of basic salary – but it still means he could reap rewards of up to £13.1million.

BAT boss Durante, who received his highest ever pay package as chief executive of the tobacco giant this year, is likely reaping the benefits of its £40billion merger with Reynolds American.

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How ‘Responsible’ Are Europe’s Mega-Managers Investing $22.4 Trillion?

March 13, 2017

By Dina Medland

Responsible investment is a mantra among Europe’s corporate governance circles in 2017, gaining supporters by the minute among investors, particularly the young. It is also potentially big business for asset managers keen to jump on that band wagon for branding. But a report just out finds striking variation in both the performance and the transparency of the largest asset managers operating in Europe.

Research conducted by ShareAction, a non-profit group in the U.K. that campaigns for responsible investment, ranks the 40 mega-managers who, between them, invest over €21 trillion ($22.4 trillion) on behalf of pension schemes, charities, universities, and individuals across the world. All of them bar one – – Santander Asset Management – are signatories to the Principles for Responsible Investment (PRI).

The top five performers (scoring out of a possible 90 points) are: Schroder Investment Management (82), Robeco Group (81), Aviva Investors (80), Amundi (77.5), and Standard Life Investments (76.5).

The worst performers, according to the report, are Deutsche Asset Management (15), KBC Asset Management (14), Union Investment (14), SEB (13), and BBVA Asset Management (10).

ShareAction research reveals only eight  asset managers, or 20%, provide a full list of companies they have engaged with over the year. Only seven asset managers, or 17.5%, go beyond the minimum legal requirements, “and even attempt to provide additional explanations of potential direct or indirect fees and charges on their website” it says.  And seven asset managers, or 17.5% “do not include any information at all on environmental and/or social impacts within regular reporting to clients or public reporting.

“Our research exposes a huge gulf in performance between the best and worst firms. This places a big responsibility on pension funds and other institutional clients to undertake rigorous due diligence on the factors assessed in this survey, all of which have a bearing on the interests of beneficiaries such as pension savers” says Catherine Howarth, Chief Executive of ShareAction.

The asset managers have been assessed firstly on their transparency, including the accessibility of information about voting and engagement with investee companies, conflicts of interest policies, and disclosure of investment fees and charges.

All the managers were also sent a questionnaire allowing them to explain in more detail how their investment process incorporates Environmental, Social and Governance  (ESG) factors that are relevant to investment performance. Some 31 out of 40 managers (77.5%) completed the questionnaire and were scored accordingly.

I can’t help wonder if the remaining nine who did  not complete the questionnaire were just “too busy.”

There is certainly a lot on the mind of asset managers at the moment, such as the 200- page “market study” into the U.K. £7 trillion ($8.5 trillion) asset management industry late last year by the Financial Conduct Authority (FCA).

The regulator noted that its sample of asset managers earned a 36% profit margin on average, compared to the 16% average margin of a firm in the FTSE All Share.

In another development around ESG-focused ratings and indices, a study just out from the NYU Stern Center for Business and Human Rights, “Putting the ’S’ in ESG: Measuring Human Rights Performance for Investors,” concludes that while social measurement initiatives abound, none sufficiently evaluate what matters most about companies’ human rights records: outcomes and performance.

Instead, it says, “the majority of existing investment frameworks claiming to give investors the tools they need to assess whether a company is an ethical investment, actually just report on whether companies have social policies and governance structures in place, rather than if these efforts are actually making a difference.”

ShareAction’s survey also includes questions on measuring the tangible impact of European asset managers’ investment decisions including their stewardship work “to reflect the growing interest by clients and the investing public in this area.”

The rising importance of stewardship has been covered by me repeatedly on Forbes, most recently here on the role of the Financial Reporting Council (FRC): “Fund Managers Held To Account By U.K. Regulator On Stewardship” in taking this forward.

There’s another important point from this year’s survey. “An example of impact measurement is examining, year on year, the carbon footprint of investee companies. Only two asset managers provide comprehensive detail on the impacts of their investments (Natixis and Robeco)” says the ShareAction research report.

The Financial Stability Board’s task force on climate related disclosure (FSB-TCFD) will soon report on voluntary targets for all businesses around adjusting their plans to allow for climate risk. As reported here on Forbes at the start of this year, it is clear that climate-related disclosure for business is a financial imperative in 2017.

“We hope this report will stimulate speedy improvement in the performance of poorly ranked firms, and we have provided individual recommendations for each of the 40 asset managers to help achieve that outcome,” says Ms. Howarth.

ShareAction’s report is timely. Under new measures just signed off by the European Commission, asset managers will be forced to provide investors with predictions of fund performance in the event of another financial crisis.

The measures – which have been called controversial –  are aimed at strengthening consumer protection, and will ensure investor documents include forecasts of fund performance during distressed market conditions, the Financial Times reported.

‘Responsible Investment’ is becoming a badge you have to earn, not merely a plaque you can buy and put on your front door, it seems.

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Another shareholder spring? Execs, companies and institutional investors under pressure ahead of AGM season

March 12, 2017

Highly-paid executives, companies and institutional investors are expected to come under increased scrutiny in the upcoming AGM season, with remuneration policies in the firing line.

Bosses at Shell, Glaxosmithkline and BAE Systems came under pressure last week, and experts are expecting plenty more investor challenges in the coming months.

Many firms are facing the added complication this year of holding binding votes on remuneration policies. This is the first AGM season most firms will hold the votes since 2014, the year the government introduced rules stating that they must be held every three years.

Read more: Martin Sorrell’s share scheme pay is down more than 30 per cent (to £42m)

Catherine Howarth, the chief executive of fund manager industry watchdog ShareAction, told City A.M.: “The directors of companies are incredibly keen not to put forward policies that will attract a lot of controversy, and certainly they’re really nervous about putting out policies that would get rejected.”

She added that, with the government scrutinising corporate governance, institutional investors are also “jumpy” and want to “avoid looking… too weak to stand up to corporate management and vote in favour”.

In January, the world’s largest asset manager, BlackRock, warned companies it will use its weight to vote down excessive executive pay. Meanwhile, a group of UK fund managers has agreed to club together to combat excessive pay.

Research by corporate governance and shareholder services company Morrow Sodali found that executive pay is going to be top of the agenda for shareholders going into this year’s AGM season.

“I would think that there is a lot more concern because of the political climate,” Kiran Vasantham, the firm’s head of investor engagement, told City A.M. “Any increase that the companies are contemplating… the timing of this vote, after the Brexit vote, where there’s a lot of focus on pay inequality within the market, it’s probably not a year that you would want to go and propose a significant pay rise.”

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MPs investing in cigarette companies, oil giants and ‘tax avoiders’ through their pension scheme

March 2, 2017

Pensions paid to British MPs are funded by the profits of cigarette companies, international oil giants and companies who MPs themselves have accused of avoiding tax, The Independent can reveal.

The Parliamentary Contributory Pension Fund (PCPF), whose investments have never been made public before, ploughed more money into British American Tobacco (BAT) and oil giant BP and than any other two companies over the past year. Millions of pounds were also put into oil company Shell and controversial mining firm Rio Tinto, the list of investments shows.

The figures show BAT and BP received roughly £5.59m in investment each from MPs in 2016.

Pension funds, which channel billions of pounds to all corners of the economy, have come under pressure from campaigners to stop profiting from industries that contribute towards environmental disaster, ill health and conflict.

The £621m MP pension fund’s top 20 holdings also includes three US tech companies – Amazon, Google and Apple – that have been accused by MPs themselves of avoiding tax. Another top 20 investment is WPP, the advertising giant at the centre of a 2012 shareholder revolt on the £12.93m pay packet for its CEO Martin Sorrell.

Green MP and party co-leader Caroline Lucas, who has been pressuring the fund to reveal what it invests in for years, said the investment strategy was “deeply questionable” and that that in the case of tobacco investments there was “no excuse” for profiting from “one of the greatest public health crises of our time”.

“After years of resistance, the Parliamentary Contributory Pension Fund has finally come clean and made public their top 20 holdings. This is a good first step but, as expected, the fund has a deeply questionable investment strategy investing in dirty energy and tobacco,” she told The Independent.

“The long-term financial risks associated with oil, coal and gas assets are well known, yet the trustees of the PCPF are refusing to even meet with fund members to discuss this issue.

“If we are to prevent the worst of climate change, then we must rapidly transition away from an economy run on fossil fuels by investing in the renewable energy that we have in abundance. It’s right that the MPs should lead the way on this transition.

“It is well within the scope of the fiduciary duty of pension fund trustees to account for non-financial factors – there is therefore no excuse for profiting from tobacco, an industry that is responsible for one of the greatest public health crises of our time.”

In 2014, former MP Brian Donohoe, chair of the fund’s trustee board, said tobacco investments would be “amoral” but that he did not think the fund should withdraw from investments in fossil fuels.

Health charity Ash told The Independent the revelations about tobacco investments were disturbing because they were fuelling “so much preventable illness and misery”.

“A large majority of MPs and peers understand the terrible damage that smoking does and support strong action to cut smoking rates,” said Deborah Arnott, the charity’s chief executive.

“I think they will be disturbed to see that the parliamentary pension fund is investing in an industry whose products still kill more than 100,000 people across the UK every year.

“I understand that fund trustees have a duty to get a good return from their investments, but this can be achieved without supporting an industry that causes so much preventable illness and misery.”

A number of local councils, which manage more than £230bn in pension fund investments, have led the way in divesting from fossil fuels and in imposing ethical investment policies. Authorities including Oxford City Council, Waltham Forest, and South Yorkshire have been among the first to move to divest from fossil fuels. The PCPF’s trustees, however, say it would not be lawful for them to make sweeping judgments about whether certain investments were ethical or not.

The Church of England has previously come under fire for investing in Google and said it would limit investments in fossil fuel producers.

The MP fund’s top investments as of March 2016 were £55m in UK government bonds; £5.9m in British American Tobacco; £5.9m in BP; and £4.9m apiece in Diageo, Vodafone, HSBC, Royal Dutch Shell and Reckitt Benckiser.

It also invests £3.7m in pharmaceutical company GSK; £3.1m apiece in US Treasury bonds, Lloyds Bank, and Nestle; and £2.5m in BT, JP Morgan Chase, and Google. Rio Tinto, Apple, Amazon, Hartford Financial Services and WPP net around £1.9m each from the fund. The remaining 80 per cent of the fund is invested in other smaller holdings.

ShareAction, which campaigns for responsible investments, told The Independent that the new information showed MPs like Ms Lucas were “fully justified” in their campaign to challenge the fund.

“It’s positive to see greater disclosure from the PCPF following a year of vigorous efforts by MPs to demand a more transparent approach from their scheme,” said Catherine Howarth, the group’s chief executive.

“Many MPs will be dispirited to learn that the scheme’s largest holdings are tobacco giant, BAT, and troubled oil giant, BP. In the week NEST revealed plans for a low-carbon global equities strategy, having outperformed the PCPF’s investment returns in the year gone, it would seem MPs are fully justified in challenging their trustees for answers on carbon and climate risk.”

It is understood that a group of MPs opposed to such investments are considering legal action against the pension fund if policies are not changed.

When approached for comment, the pension fund’s secretariat referred The Independent to the House of Commons media office. The media office provided a copy of the fund’s policy statement on ethical investing, which has been signed off by the board of trustees.

It says that “trustees [of the fund] are legally unable to exclude certain investments on ethical grounds” because “the rage of views” among its members means it would be “almost impossible for the trustees to conclude that scheme members would share a moral viewpoint on any one ethical issue”.

Boston Common and ShareAction working on transatlantic bank engagement on climate change

February 28, 2017

ShareAction, the UK-based campaign group, and Boston Common Asset Management, the US SRI specialist, are working together on a shareholder engagement programme with banks in Europe and the US on climate change.

Speaking to Responsible Investor, Juliet Phillips, campaign manager at ShareAction, said it would be co-ordinating a transatlantic strategy for engagement with banks with US-based Boston Common during the upcoming AGM season that could involve co-ordinated statements and letters.

She added that while US investors had been active with engaging with banks on climate change over the past couple of years, not many European investors were currently taking action, and this would be a big focus for ShareAction, which already hosts the new European Responsible Investment Network, over the coming months.

It comes as ShareAction releases an investor report on the issue Banking on a Low Carbon Future. Speaking at the launch event for the report at the City of London Corporation in London, Phillips said there was a strong case for not just engaging with high-carbon industries on the issue of climate change:

“Investors can protect themselves from stranded assets but they remain exposed to macro high-carbon risks. Banks are uniquely placed to influence actors across the emissions chain. By financing high-carbon, banks can contribute to temperature rises. Engaging with banks could avoid portfolio-wide exposure to climate risk.”

The ShareAction report provides guidelines to inform investor engagement with banks including engaging on climate risk and management; and low carbon products and services.

Boston Common Asset Management, which has been coordinating investor engagement with banks on climate change since 2015, has endorsed the report.

In a recent report on its work, On Borrowed Time: Banks & Climate Change, it notes marked progress at many of the world’s largest global banks in addressing climate change, but says more needs to be done.

In the 2017 AGM season it urges investors to engage on a number of things including goals on reducing carbon intensive industries exposure and stress tests.

In 2015, Boston Common led a coalition of investors managing over $500bn in assets to assess the practices and long-term management of 45 global banks on climate-related risks.

Elsewhere, the Bank of England plans to focus on banking and climate change this year, according to Sarah Breeden, Executive Director of the Prudential Regulation Authority.

Breeden, who was speaking at the ShareAction launch report, said it would follow on from the Bank of England’s work on insurance and climate change.

Elaborating on this, Breeden said building on the work of the Taskforce for Climate-Related Financial Disclosures, the Bank of England would work on models with the private sector and think tanks to find out what exposure firms may have through lending. She added, “mapping the financial system with a climate lens is a big challenge for us”.

Pension fund executives call for more ESG pressure on money managers

February 23, 2017

Pension fund executives have called on other asset owners to remember they have the power to put pressure on money managers to take environmental, social and governance integration seriously.

Speaking at a panel discussion on sustainability at the World Pensions Council investment forum Thursday, Mark Thompson, chief investment officer of the HSBC Pension Scheme, London, said that even if asset owners are smaller in size, they still have the ability to change their managers should the managers be reluctant to implement ESG policies.

Responding to fellow panelist Janice Turner, chairwoman of the Association of Member Nominated Trustees, who pointed out that trustees of smaller plans often encounter managers’ unwillingness to change or take ESG into account, Mr. Thompson said: “If your money managers won’t do it, there are other managers out there who would.”

Philippe Desfosses, CEO of the €26 billion ($27.6 billion) Etablissement de Retraite Additionnelle de la Fonction Publique, Paris, said the key to understanding ESG is not to think of it as a diversification tool, “but that a pension fund’s approach should be global as many companies have global supply chains,” he said.

Catherine Howarth, chief executive at shareholder activist group ShareAction, agreed and added that ESG goes as far as making sure that the companies in a portfolio not only have no carbon intensive operations, but also that they are not lobbying for a delay to bringing ESG into the financial system.

Banks financing high carbon companies risk ruin, says report

February 23, 2017

Shareholders and bondholders should pressurise banks to clean up their acts on climate change, sustainable finance experts said this week.

The responsible investment movement has begun to lean on companies to acknowledge climate change and do more to prevent it and adapt to it – but so far, most effort has been aimed at what are seen as the worst emitters: coal, oil and gas companies and utilities.

But some investors are keen to go after banks, too, as they are exposed to huge climate risks and have the power to put pressure on industrial companies.

“Banks have a critical role to play — we need to support and encourage them,” said Catherine Howarth, chief executive of ShareAction, a UK NGO that promotes sustainable investing.

ShareAction has produced a guide for investors on how to engage with banks on climate change — meaning to talk to them and request improvements.

The guide, Banking on a Low Carbon Future, was launched this week in London. At 40 pages, it is intended to be simple and accessible, and includes a run-down of the risks banks face, a four point plan for engaging, and examples of best practice.

It also includes dozens of sample questions investors can ask bank managements when they meet them.

The value at risk from climate change could reach 20% of all manageable assets by 2050, said Juliet Philips, co-author of the guide with Sonia Herzig. “These portfolio-wide physical risks can only be hedged against with economy-wide decarbonisation,” she said. “Banks are almost uniquely placed to influence other actors, so strategic engagement with banks can help investors reduce their systemic exposure.”

While climate change is often thought of as a long term risk, so that bank loans, often of less than five years’ duration, might be free of it, ShareAction disputes that view.

“Short term loans to high carbon infrastructure can contribute to climate change,” Philips said.

There are upsides, too: the BP Energy Outlook had repeatedly underestimated the take-up of renewables.

There were many things investors could ask banks to do, Herzig said. They could ask banks about their climate risks and management of these; encourage them to adopt the disclosures recommended by the Task Force on Climate-Related Financial Disclosures (TCFD); call for loan pricing to be recalibrated to reflect climate risk; rethink their exposure to fossil fuel companies, whose reserves will take the world beyond 2C of warming if they are used; encourage banks to finance green infrastructure and the transition to lower carbon technologies; demand that banks check whether their clients’ lobbying activities support green policies; and align management’s performance targets with climate needs.

HSBC in the spotlight

HSBC, one of the banks keenest to promote itself as engaged on sustainability, has done some of these things, and is working on others.

Francis Sullivan, the bank’s deputy head of group sustainability, who used to work at the World Wide Fund for Nature, spoke at the report’s launch. He claimed HSBC had become the world’s first carbon-neutral bank and said that last year it had introduced an enterprise-wide commitment to align itself with the Paris Agreement.

The Agreement, reached by all countries in 2015, is intended to limit global warming to 2C, but is in fact expected still to lead to warming of 3C-4C or more, which would cause catastrophic environmental change.

HSBC’s climate risk assessment considers scenarios such as a category 5 typhoon hitting Hong Kong. Sullivan said that originally, this analysis centred on what would happen to HSBC’s own buildings, but now the bank modelled the effect of such events on its customers.

It also considers transition risks: the danger that clients’ business models will be damaged if the economy moves to low carbon technology and they get left behind.

Sullivan said many of HSBC’s big clients now used internal carbon prices, mostly of $25 to $40 a tonne, with outliers as far as almost zero and $100, but he added: “Very few have a strategy aligned to achieving a 2C outcome.”

He called for an agreed common disclosure framework such as the TCFD and better metrics on companies’ climate risk exposures.

“For over a decade, we have excluded deforestation, coal-fired power and thermal coal mines,” Sullivan said.

The bank is keen to collaborate with policymakers because “our role is only going to be as good as the ecosystem that supports it”.

HSBC has trained over 1,000 staff in the past eight years in its climate leadership scheme, and last year included sustainability indicators in the performance scorecards for its CEO and heads of business lines.

Aramco conundrum

Yet HSBC also illustrates the ambiguity of banks’ role in the economy’s transition to low carbon. Last year it was the eighth biggest bookrunner, globally, of bonds for oil and gas companies, according to Dealogic, a $218bn market, and the 10th biggest lender to them in syndicated loans.

HSBC has been one of the banks most closely contending for the mandate to lead the IPO of Saudi Aramco, which could be the largest equity issue ever, and will involve convincing investors that oil has a bright future.

Asked why HSBC needed to wait for companies in general to improve their climate disclosures before it could make a decision on whether to work on the Saudi Aramco IPO, Sullivan said that, “on large oil and gas multinationals”, if the bank acted too precipitately, “we could be making random decisions”.

“Once we get improved disclosure it allows banks to think about what is best to do,” he said. “We may need to be providing more financing to help them make the transition [to lower carbon business models], or specific project financing to help them diversify. Without disclosure, it’s very difficult to say where funding is best allocated.”

On Monday this week, HSBC published a new, stricter policy on financing palm oil producers, after a campaign by Greenpeace criticising it for financing rainforest destruction in Indonesia.

Stuart Gulliver, the bank’s CEO, who had to answer a question about the issue during a panel discussion at the World Economic Forum in Davos in January, this week recorded a video explaining the new policy.

Financial system must change

Speakers at the ShareAction event agreed that banks and investors needed to move together on climate issues — sometimes one party would lead, sometimes the other.

“We met over 50 institutional shareholders around the world to discuss ESG [enviromental, social and governance] issues,” said Sullivan. “Climate change was high on the agenda with a number of shareholders, but there are a number who do not engage with us on climate just yet.”

Herzig said asset managers also needed to be kept under scrutiny. If they proclaimed “we don’t divest, we engage instead”, their clients should have a way to test whether they were really engaging sufficiently.

Edward Bonham Carter, vice-chairman of Jupiter Fund Management, said his firm had changed its approach to engagement. “We now spend more time with the chairman and non-executive directors,” he said, “trying to focus on the culture of the company and remuneration.” Unless sustainability was embedded at that level, there would not be progress, he argued.

Sir Roger Gifford, head of SEB UK and chairman of the City of London’s Green Finance Initiative, pointed out that banks were governed by risk-weighted capital allocations. “At no stage is any benefit given to environmental factors,” he said. “If it was, you would see a revolution. Until the BIS stops the situation that credit is the only thing we look at, we are not going to get the incentive” needed.

Sarah Breeden, executive director of international banks supervision at the Prudential Regulatory Authority, part of the Bank of England, downplayed the idea that risk weightings could be used to green ends, but said the Bank would this year begin to investigate much more closely the climate risk exposures among banks it oversees.

Investors urged to push banks for support on low carbon transition

February 21, 2017

ShareAction report calls on investors to demand climate-credible business models in the banking sector to protect against climate risks

Investors must play a much greater role in demanding that major banks provide more support towards the low carbon economic transition, according to charity ShareAction.

A new report by the responsible investment charity urges investors to better engage with the banking sector on climate risk and to use their voting rights to request that banks play a much more active role in the low carbon transition.

Published yesterday, the Banking on a Low Carbon Future report provides guidance for investors wishing to question banks on how effectively business risks and opportunities associated with climate change and the low carbon transition are being addressed.

Catherine Howarth, chief executive of ShareAction, said timely and economy-wide decarbonisation was the “only way” investors could protect themselves against high-risk climate change scenarios. “Banks are uniquely placed to help catalyse this transformation,” said Howarth. “Fiduciary investors seeking to mitigate exposure to climate risks have everything to gain from strategic engagement with the banking sector.”

Who are the most influential people in Britain today?

January 20, 2017

Who are the most influential people in Britain today? Who determines the laws of our country? Who runs our national institutions, who chooses the groceries we buy, the films we watch, the clothes we wear, even how we manage our money? This list of the 500 most influential people in the country, compiled by Debrett’s, presents a fascinating kaleidoscope of individuals who have a vast impact on our daily lives – and our futures.

It was compiled by experts at Debrett’s, which has been identifying the most influential people in British society for almost 250 years, with the help of experts and commentators, including Daily Telegraph journalists. All candidates live or work in the UK and were selected on the basis of their level of influence over the lives, choices and ideas of others. Yet they are all extremely different.

Some are at home on the red carpet (actress Dame Helen Mirren, lawyer Amal Clooney and fashion designer Victoria Beckham, who has recently been awarded an OBE), while others plug away behind the scenes (MI5’s Andrew Parker has given few interviews since becoming director general in 2013). Some were raised in royal palaces (the Duke of Cambridge, included on this list for his extensive charity work), while others have rather more humble backgrounds (Turner Prize-winning sculptor Helen Marten produced her early work in her parents’ garage, and Calvin Harris, now the world’s highest-paid DJ, worked in a fish factory to raise funds for his equipment).

Yet they all have one thing in common: tremendous, epoch-changing influence. This is the Debrett’s Most Influential 500 of 2017.

Catherine Howarth, CEO, Share Action

ShareAction promotes responsible investment and campaigns against corporate practices that have a negative environmental or social impact. Established 10 years ago, it was formed out of a campaign by student organisation People & Planet that persuaded the UK’s largest pension provider to adopt a policy of responsible investment. It is now working to ensure the government protects UK pensions in the wake of the Brexit vote. CEO Catherine Howarth obtained a First from Oxford and a Master’s from LSE. She was lead organiser for West London Citizens, part of Citizens UK, for eight years, and joined Share Action as CEO in 2008.

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Juliet Phillips – Climate Change & the power of the pay slip

January 13, 2017

Money talks, but it is strategy that really counts when it comes to limiting temperature rises

With executive pay set to remain a hot topic in 2017, attention is increasingly turning to the role that remuneration can play in cooling the climate. The Task Force on Climate-related Financial Disclosures – led by Bank of England Governor Mark Carney in his role as head of the Financial Stability Board – has called on energy companies to link compensation to climate risk. The recommendations suggest that remuneration policies should reflect how stricter environmental laws, extreme weather events and efforts to curb demand for fossil fuels could take their toll.

To successfully limit temperature rises to well below 2°C in line with the Paris Agreement, oil majors will need to wind-down exploration and production of hydrocarbons. Capital could then be reallocated within the companies to develop low carbon products and services, or returned to shareholders through increased dividend payments and share buy-backs. The transition will require far-sighted executive vision, which risks being obscured by reward packages that incentivise short-term thinking and ‘business as usual’. Investors are wise to ensure that reward packages are linked to a managed transition to a low carbon business model.

Ultimately though it is strategy, not incentives, which will drive change. Incentive structures follow from and aid the delivery of strategy, reinforcing key priorities and objectives. The decision to wind down high carbon operations cannot be executed by the remuneration committee, nor the choice to make large investments in low carbon assets. These are the decisions that will be vital in determining the resilience of oil companies in a <2°C world.

The golden thread between strategy and remuneration nonetheless make it an important ground for setting expectations of low carbon resilience. Engagements on remuneration —including binding votes at company AGMs — provide investors with the opportunity to voice assent or disapproval of the direction that executives are rewarded to drive the company in. There is also a positive case for focusing on remuneration. Underpinned by a <2°C aligned strategy, innovative compensation structures could play a supportive role in focussing executive attention on its delivery.

Given the key role of strategy, investors must approach remuneration policies that nod to climate, but are not underpinned by robust transition plans, with a healthy dose of cynicism. The proposed updates Shell has made to the company’s remuneration policy are an interesting point in question. Shell has included a 10% weighted greenhouse gas metric in the annual bonus calculation. This will be rewarded based on the company’s ability to meet operational emissions reduction targets. Operational emissions make up roughly 10-20% of the company’s total carbon footprint – the rest expended by consumers. Running an oil refinery on renewable electricity does not address the fact that for <2°C, 80% of known fossil fuel reserves must be kept in the ground. The remaining 90% of Shell’s Annual Bonus also fails to signal a strategic shift from business as usual: with a 12.5% weighting for hydrocarbon production, a 12.5% weighting for project delivery, and a 30% weighting for cash flows from operations. The Long Term Incentive Plan includes no recognition of the low carbon transition either. The sincerity of Shell’s commitment to aligning for a low carbon world thus cannot be determined from the inclusion of this greenhouse gas target.

With the concerns of clients and pension savers in mind, investors are beginning to hold oil majors to account on adapting for a <2°C world. Those concerned about the low carbon transition will not be aiding its delivery if they vote to approve pay packages that continue to incentivise business as usual. This is particularly pertinent for 2017 AGM season, where BP and Shell face binding votes on their remuneration policies. If approved by 50% of shareholders, these will remain in place for the next three years. Investors should carefully scrutinise the corporate strategies that underpin these policies, and consider whether it is really in the best interests of savers to support incentive structures that reward their delivery.

Juliet Phillips is Campaigns Manager at ShareAction.

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Church of England launches climate change ranking

January 11, 2017

The investment arms of the Church of England, the Environment Agency Pension Fund and several high-profile asset managers have launched an initiative to identify companies that pose the biggest climate change risk.

The initiative involves the launch of a tool, developed with the Grantham Institute at the London School of Economics and using data from FTSE Russell, the index provider. It will rank companies by two measures: how well their management is dealing with climate change risks, and how effective they are at achieving carbon reduction.

“The launch of this tool signals appetite for a more ambitious approach to corporate engagement on climate [change],” said Juliet Phillips, campaigns manager at Share Action, the investor rights group.

“If enough shareholders are serious about engaging with investee companies around [carbon reduction targets] and are prepared to take a tougher course of action with laggard companies, this could be seriously impactful in helping decarbonise the economy.”

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Catherine Howarth – Schemes need to understand their members better

January 10, 2017

Catherine Howarth says schemes need to explore different avenues to help members take ownership of retirement saving.

This year promises to be another busy one for UK pensions, not least as the government kicks off a wide-ranging review of auto-enrolment.

In the meantime, the DWP is occupied with the Pensions Schemes Bill. This has its final reading in the Lords this month and will shortly head across to the Commons. This is legislation the government had to introduce having recognised that master trusts were dangerously under-regulated.

The sheer prospect of the bill becoming law has catalysed early merger talks between master trusts. Smaller schemes are unlikely to be able to handle the regulatory regime that will soon come into place.

ShareAction welcomes this consolidation, indeed we believe it probably needs to go further. The LGPS is on its way to being managed as eight large pools, each of a size that allows for the achievement of real value for money and the ability to access investment opportunities that the world’s best performing pension funds have long been able to utilise.

These types of opportunities, often in more illiquid asset classes, should be available to the UK’s auto-enrolled defined contribution (DC) savers. Small, even medium-sized, DC schemes will never pull that off. Further contraction of the market into a small number of well-governed, high-functioning mega-schemes that are allowed to access illiquid investments is in the best interests of the UK’s auto-enrolled DC savers.

Wider issues

The government is keen to limit the scope of the Pensions Schemes Bill to the immediate risks identified in the master trust sector. Nevertheless, debates on the bill have offered an opportunity to open up a bigger set of questions about private pension provision.

To be fair, the government’s spokesman in the Lords, Lord Young of Cookham, has responded in a positive manner to a variety of amendments tabled. A key theme of the interventions has been how schemes will engage with their members and what requirements may be needed to enable a healthy relationship between schemes and savers.

Lord Young has, helpfully, articulated the government’s view that “Member engagement is important, and members should be encouraged to develop a strong sense of ownership of their pension saving,” adding that “communications are not quite the same as engagement, which is a somewhat broader notion including the idea of a two-way exchange.

Effective communications certainly contribute to good levels of engagement but they are not the only factor that determines whether a member develops a sense of ownership of their savings.” This is a welcome statement, which chimes with Richard Harrington recently saying that his “vision for pensions is to get people taking more ownership of their own money”.

A number of mechanisms are available for schemes to engage more meaningfully with members, not just as they approach retirement but also to encourage saving from an early age.

More schemes are choosing to hold an Annual Members’ Meeting. Rather as a company holds an AGM to which its shareholders are invited, there is great merit in schemes offering a once-a-year opportunity for members to meet face-to-face with their fiduciaries and with the executives managing their assets. Schemes that hold an Annual Members’ Meeting speak of the benefits for all concerned.

Other mechanisms include member surveys, consultation with members on scheme policies and member involvement in scheme governance. Of course none of these ideas require legislation.

Enlightened schemes, including those in the master trust sector, are already experimenting with new ways to achieve that ‘two-way exchange’ that is recognised as essential to establishing a healthy savings culture in the UK.

My hope for 2017 is that more schemes and their members get to know each other in the interests of a high-performing UK pension system. If that fails to happen voluntarily, legislation may in time be necessary, just as it has been to keep savers safe from rogues in the master trust sector.

Catherine Howarth is chief executive of ShareAction

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Antibiotic resistance: The story that won’t go away

December 28, 2016

Headlines about antibiotic resistance – the increase in so-called “superbugs” – have been persistent in 2016. The issue of infection-causing bacteria becoming increasingly resistant to the drugs used to fight them poses a pressing risk to public health worldwide, and according to a 2014 report from the World Health Organization, “threatens the achievements of modern medicine.”

The financial world has also made a contribution to fighting antibiotic resistance. ShareAction, an organisation which encourages investors to fund ethical causes, earlier this year formed an investor group which includes Aviva Investors, Natixis Asset Management and Coller Capital to pressure food companies into minimising the use of antibiotics in the production process.

The project is managed in conjunction with the Fair Animal Investment Risk and Return Initiative, and assets under the management of the investor group supporting the initiative now stand at $2 trillion, double the initial figure when launched.

Clare Richards, campaigns manager at ShareAction, told CNBC via e-mail that “all companies have responded to our engagement … (with) more than half report(ing) that they are either reviewing the use of antibiotics in their supply chain, or that they are considering changes.”

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Politicians are worried that their pensions are destroying the planet. Is yours?

December 7, 2016

The lack of transparency at the highest levels of government may seem shocking. But it shouldn’t. According to Grace Hetherington from the charity ShareAction, such opacity is nothing new: “The response the MPs had was particularly poor – but it is surprisingly standard to have difficulty finding out what your pension is in.”

So if MPs can’t get the inside story on their investments, what hope is there for the rest of us? Here are five things to know about protecting your pension from petroleum implosion:
Should you be worried about your pension’s exposure to fossil fuels?

Yes. Most pensions are invested through something called “Defined Contribution Schemes”, in which how much you get at the end is entirely dependent on how well your investments do. This means savers bear all the risk if their investments take a tumble.
What’s the worst-case scenario?

It is almost impossible to calculate the rate at which societies around the world will make the transition to a clean or low-carbon energy mix. However, according to this seminal 2013 report from the Carbon Tracker initiative, markets have failed to fully address this trend. As a result, the oil and gas stocks could face “a $6tn carbon bubble in the next decade”.
How come pension funds are not already responding themselves?

Most pensions involve long chains between the saver and the money. Many pensions are set up by employers, who in turn choose a pension fund to invest the money. These funds often outsource to investment consultants and asset managers, who then choose which shares to go with.

Unfortunately, not all pension trustees are signed up to the ethical – or financial – risks posed by climate change. In fact, 53 per cent, according to a recent survey by Professional Pensions, do not see the issue as a “financially material risk” to their portfolios.
What needs to change?

ShareAction, who promote responsible investment by institutional investors, think that we need to see closer alignment between the interests of savers and the actions of pension funds. Just as Theresa May has said she would like to see worker representation on company boards (though this won’t be mandatory), so too might the government encourage funds to better represent their savers.

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USS members launch renewed assault on weapon investments

December 5, 2016

Members of the Universities Superannuation Scheme (USS) have relaunched their campaign pressing trustees to ditch weapon investments, arguing they need a “pension to be proud of”.

The scheme, which has around 375,000 members and £50bn of assets under management, was on 1 December presented with a petition signed by over 3,000 members backing the divestment campaign.

The petition – which has been coordinated by the Ethics for USS pressure group, ShareAction and the National Union of Students (NUS) – is pushing USS trustees to withdraw investments in controversial weapons such as cluster bombs and landmines.

The campaign follows on from an earlier attack on the scheme’s investment policy in 2014. The Listen to USS! campaign also attracted a 3,000-member-strong petition from members.

It also hopes to build on the Law Commission’s 2014 ruling that trustees can take ethical considerations into account if they believe members have significant concerns in the area. However, the ruling said trustees must also consider if such a move would cause significant financial detriment to the scheme.

Ethics for USS member Professor Tim Valentine said the scheme was failing to take members’ views into account.

“USS needs to understand that controversial weapons make controversial pensions,” he said. “Two years ago, scheme members called on USS to adopt an ethical investment policy based on members’ views.

“Yet in 2016, USS still invests our money in cluster bombs and other controversial weapons. Today, we are renewing our call. The law allows USS to take our views into account. It is time to give us a pension to be proud of.”

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‘Trump trade’ threat to US responsible investment

December 3, 2016

In the world’s largest economy, ethical and responsible investment is still widely understood to mean the exclusion of “sin sector” assets such as gambling, alcohol and tobacco stocks by religious investors — a niche pursuit rather than an essential move in long-term finance.

Now, with Mr Trump headed to Washington, many fear the limited progress for ethical investment made under the Obama administration will unravel, setting the country back more than a decade.

Mr Trump has suggested that he will reduce regulation for Wall Street, for example by repealing the Dodd-Frank Act introduced by President Obama after the financial crisis. He is also expected to give companies with offshore profits a more generous tax holiday than a Democratic administration would have.

Investors anticipate the president-elect will scrap the Paris climate change agreement, an international accord that involved 193 countries committing to reducing global warming, and the Clean Power Plan launched by President Obama. This would deal a blow to responsible investment enthusiasts who avoid coal and oil companies on environmental and ethical grounds.

The greatest concern is that corporate governance standards will deteriorate across many industries, while those sectors that were already trailling in ESG rankings will fall further behind. These fears are particularly acute with respect to the banking industry, which has been at the forefront of numerous governance scandals over the past decade.

Catherine Howarth, chief executive of ShareAction, the responsible investment group, believes any unwinding of the Dodd-Frank Act would hamper the responsible investment movement, but she is optimistic the asset management community will not push for this outcome.

“We know from conversations with colleagues in the US that there is concern that opponents of [these] laws will feel emboldened to call for a rollback of such provisions. In our view, all investors, whether ESG specialists or not, will balk at attempts to restrict the information they can use to assess risks to their capital.”

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UK’s USS to meet with members on controversial weapon petition

December 2, 2016

The UK’s Universities Superannuation Scheme (USS) is being petitioned to phase out investments in companies involved with controversial weapons, and in a response has noted that an industrial conglomerate it is invested in has recently announced plans that mean it will no longer be producing cluster munitions.

Members of the £49.8bn (€63.4bn) scheme and the National Union of Students (NUS) presented the petition to USS on Thursday.

It calls on the pension scheme to phase out investments in companies involved with weapons banned under the Controversial Weapons Convention, and to adopt an ethical policy that would be informed by a member survey and an annual open forum event.

The petition was signed by more than 3,000 scheme members, and is co-ordinated by an Ethics for USS campaign with support from ShareAction, a responsible investment campaign group, and the NUS.

Similar demands were made two years ago, when USS was called on to adopt an ethical investment policy.

Tim Valentine, an academic and a leading member of the Ethics for USS campaign, said: “USS still invests our money in cluster bombs and other controversial weapons. Today, we are renewing our call. The law allows USS to take our views into account. It is time to give us a pension to be proud of.”

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Stop investing in arms trade, university pension fund is told

December 1, 2016

Academics are calling on the UK university sector’s main pension provider to sell its stake in a controversial arms manufacturer that has profited from selling cluster bombs, as pressure grows on higher education institutions worldwide to follow ethical investment plans.

Ahead of its annual meeting of institutions on 1 December, the Universities Superannuation Scheme (USS) has been urged to cut its ties with Textron, a US multinational arms firm that, until September, sold cluster bombs – internationally banned weapons that can inflict terrible injuries on civilian populations.

More than 2,200 USS members have signed a petition organised by ShareAction, which campaigns for ethical investments, calling on the USS to divest from companies that manufacture such weapons.

Tim Valentine, emeritus professor of psychology at Goldsmiths, University of London, and former trustee of ShareAction, said that weapons such as cluster bombs were “banned under international conventions, so it is not reasonable to simply ignore members’ concerns on this point”.

In fact, the USS has a legal duty to listen to its members about their environmental, social and moral concerns about investments as outlined by a 2014 Law Commission review, claimed Professor Valentine.

“It seems USS has made up its mind that it will not adopt an ethical stance on this,” he added, having attended a meeting with USS representatives on 23 November.

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Fossil fuel battle heats up at the pension fund for British MPs

November 27, 2016

British politicians are engaged in a heated battle with their own pension scheme over its refusal to disclose how much of the £600m fund is invested in potentially risky fossil fuel companies.

 Two senior British politicians have accused the trustees overseeing their pension scheme of behaving in an opaque and obstructive manner, after calls for greater transparency of the fund’s exposure to climate change were rejected.

Caroline Lucas, co-leader of the UK’s Green party, said the pension fund’s refusal to disclose how exposed the scheme is to fossil-fuel intensive industries, such as oil and gas, demonstrated “a complete disregard to the financial risks of carbon exposure”.

Ms Lucas launched a campaign last year to persuade the trustees of the fund, which provides pensions for retired MPs and ministers, to divest from fossil fuel companies.

The campaign, which won the support of 32 MPs across five political parties, including senior Labour politicians David Lammy and Barry Gardiner, also called for the Parliamentary Contributory Pension Fund to quantify its exposure to fossil fuel companies and to share this information with members.

Catherine Howarth, chief executive of Share Action, the non-profit group that campaigns for responsible investment, said the politicians’ difficulty in obtaining information about their pension fund’s investments highlighted the need for stronger legal rights for UK pension savers.

She said: “Savers across the UK, especially younger savers, are increasingly curious about what happens to their pension savings, but frequently frustrated when they try to get answers. We urge the [Department for Work and Pensions] to act swiftly to develop and communicate a 21st-century framework of savers’ rights.”

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European Parliament passes revised IORP Directive

November 24, 2016

The proposal for a revised EU law on workplace pension funds was passed by the European Parliament today 924 November).

The final draft of a new Institutions for Occupational Retirement Provision (IORP) Directive was passed by 512 votes to 77, with 40 abstentions.

A statement from the European Parliament suggested IORP II covered some 125,000 occupational pension funds with assets worth €2.5trn on behalf of around 75m Europeans, around 20% of the workforce.

The Council of the EU has to approve the new legislation, which is expected to be published officially in early 2017.

The parliamentary passage of IORP II has been welcomed by responsible investment organisations such as the UN-backed PRI and ShareAction.

The latter, a campaign organisation, described the vote as “a landmark moment for responsible investment in Europe” given requirements on environmental, social and governance (ESG) issues in the Directive.

It called on the UK government to commit to transposing the legislation, in particular the sections on ESG, transparency and members’ right to information, despite the June vote for the country to leave the European Union.

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Resisting Resistance: Investors take action to manage risk of antibiotic overuse in farming

November 15, 2016

  • The Restaurant Group commits to reducing antibiotic use following $3 trillion investor engagement
  • New briefing during Antibiotic Awareness Week highlights investment risks of excessive farm-antibiotic use

(London, 15 Nov). To mark World Antibiotic Awareness Week  a new investor briefingSuperbugs and Super Risks – has been released highlighting the risks to global investors from the systematic overuse of antibiotics in livestock farming. The briefing, which points to the rise of ‘Superbugs’ resistant to medical antibiotics as a threat to both human health and portfolio value, has been published by Aviva Investors, the Alliance to Save Our Antibiotics and the FAIRR (Farm Animal Investment Risk & Return) Initiative.

FAIRR has also reported progress on a major engagement with large food companies on the issue of overreliance on antibiotics in farming. In April an investor coalition managing assets of more than $1trillion called for an end to the routine use of antibiotics important to human health in their global meat and poultry supply chains. Just over six months after the public launch of this initiative, coordinated in partnership with responsible investment charity ShareAction, FAIRR reports:

  • The Restaurant Group (including brands such as Frankie & Benny’s and Garfunkel’s) has committed to take steps to phase out the routine, preventative use of antibiotics in their supply chain and to refine its use of antibiotics classed as ‘critically important’ by the World Health Organization.
  • More than half of the companies approached by the investor group report that their usage of antibiotics is under review or they are considering changes. All companies approached by the investors responded.
  • However, the vast majority of corporate farm antibiotic use policies are either piecemeal or unambitious in their scope, with many company responses failing to address the specific concerns outlined by the investor coalition.

Jeremy Coller, Founder of the FAIRR Initiative and CIO of Coller Capital, said:

“The cost of anti-microbial resistance to our health and our wealth is truly frightening. Growing resistance is projected to lead to a 2% to 3.5% drop in global GDP and some 10 million deaths by 2050. It’s already reported to cost the EU around $1.5 billion in healthcare and productivity loss. These and other killer stats prove the time for investors to act is now. 

Alongside a changing regulatory landscape this investor action, with its positive responses from the likes of The Restaurant Group, shows the tide may be turning. Investors can and must use their influence to avert the crippling costs to public health by changing how the world produces meat. To preserve our antibiotics for the future we need a fundamental shift towards a less intensive more health-oriented system of rearing animals”.

Debbie Hewitt, Chairman of The Restaurant Group said:

I am pleased to announce the steps that The Restaurant Group will be taking to reduce and refine antibiotic use in our meat supply chains. Rising concern from consumers and the investment community must be met with concerted efforts from all stakeholders to tackle the antibiotic resistance crisis. The foodservice sector must now play its part and act to protect public health.”

Abigail Herron, Head of Engagement, Aviva Investors said:

From the farm to pharma, from livestock to life sciences, complacency in the administration of our invaluable antibiotics has led to dangerously high levels of antimicrobial resistance that risks wiping $100 trillion off potential global output by 2050. Against this backdrop The Restaurant Group’s announcement identifies it as a leader in this arena and is very welcome.”

Emma Rose, Campaigns, Lobbying and Communications Specialist at Alliance to Save Our Antibiotics said:

“Food businesses and retailers can play a huge role in driving progress on antibiotic use within their supply chains. Investors, in turn, must play their part and send a clear signal to these companies – that failure to act on farm antibiotics is no longer an option. I’m pleased to see positive steps from The Restaurant Group – other food businesses must now follow suit. ”


The Superbugs and Super Risks briefing released today warns:

  • There are at least 700,000 deaths globally due to antibiotic resistant infections each year, which if not addressed could rise to 10 million deaths by 2050.
  • Levels of drug-resistant infections could cost the world $100 trillion in lost output between now and 2050, more than the entire value of the current global economy. The World Health Organization estimates that in the EU alone, the issue is already costing more than $1.5 billion in healthcare expenses and productivity losses.
  • A changing regulatory landscape poses a major risk to investors. For example, European legislative reviews to the Veterinary Medicinal Products and Medicated Feed Regulations may lead to a ban of the routine prophylactic administration of antibiotics to groups of animals. Some bans on antibiotic use are already in place in Denmark and it is estimated that a similar ban in the US would cost pig producers more than $700 million.

Notes to editors

For more information or for exclusive interviews with the FAIRR team, please contact:

  • Since the launch of the investor engagement, seven new investors have joined the coalition bringing the total number of participants to 61 investors with over US$1.3 trillion of assets under management. New signatories for the investor engagement include Hermes EOS, Raiffeissen Capital Management and the Joseph Rowntree Charitable Trust. They join investors such as Aviva Investors, Natixis Asset Management, ACTIAM, Mirova, Coller Capital and Strathclyde Pension Fund. The engagement has been brought together by the FAIRR Initiative and responsible investment charity ShareAction.
  • Companies that are the focus of the investor engagement on antibiotics: Brinker International, Domino’s Pizza Group, McDonald’s Corporation, Mitchells and Butlers, Restaurant Brands International, The Restaurant Group, Wendy’s, JD Wetherspoon, Yum! Brands.

The FAIRR Initiative is a collaborative investor network. It aims to raise awareness of the material impacts factory farming and poor animal welfare can have on investment portfolios, and works to help investors share knowledge and form collaborative engagements on issues related to factory farming.

About Aviva Investors

Aviva Investors is a global asset manager with expertise in real estate, fixed income, equity, multi-asset and alternative investments.

About Alliance to Save our Antibiotics

The Alliance to Save Our Antibiotics is an alliance of health, medical, civil society and animal welfare groups campaigning to stop the overuse of antibiotics in animal farming. It was founded by Compassion in World Farmingthe Soil Association and Sustain in 2009, and is supported by the Jeremy Coller Foundation. Our vision is a world in which human and animal health and well-being are protected by food and farming systems that do not rely on routine antibiotic use.

About ShareAction

ShareAction is a UK charity that aims to improve corporate behaviour on environmental, social and governance issues through responsible investment by pension funds and other institutional investors.

Oil firms announce $1bn climate fund to clean up gas

November 4, 2016

A $1bn fund for cutting the climate change impact of oil and gas has been announced by 10 of the world’s biggest oil companies, aimed at keeping the firms in business and cutting the burning of coal.

Global action to cut carbon emissions threaten the future of the oil industry and the fund was revealed on the day the global Paris climate change agreement came into force. But analysts called the sum a “drop in the ocean” which showed the companies were not serious in tackling global warming.

Sustainable investment and climate change campaigners dismissed the initiative as ‘greenwash’, noting that, with the fund to be deployed over the next decade, the $100m annual investment represents just 0.1% of the companies’ current level of yearly capital expenditure.

Juliet Philips, at sustainable investment NGO ShareAction, said: “Until initiatives like those announced by the OGCI are backed up by long-term corporate strategies that are consistent with achieving the Paris treaty, scepticism of their sincerity is inevitable.” Managers of investments totalling more than $2.6tn have already committed to pulling out of fossil fuel companies.”

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Sky shareholders revolt against James Murdoch’s appointment as chairman

October 13, 2016

More than 50% of Sky’s independent shareholders have voted against James Murdoch’s reappointment as chairman.

The head of the pan-European broadcaster had to rely on the support of Sky’s largest shareholder, 21st Century Fox, to win approval for his return to Sky after a four-year hiatus. Murdoch is chief executive of 21st Century Fox, the centre of his father Rupert Murdoch’s film, media and TV empire.

Sky said it noted the “significant vote” against the resolution and would engage with shareholders who opposed Murdoch’s appointment. It said the Sky board’s decision to reappoint James as chairman “was unanimous and recognised that he is a highly experienced executive with extensive knowledge of the international media industry and has been a strong contributor to Sky since he joined the board in 2003”.

Catherine Howarth, chief executive of ShareAction, said the vote of independent shareholders against Murdoch as chairman was a significant moment that drew parallels with the recent corporate governance controversy at Sports Direct.

She said: “It’s a major embarrassment for the board of Sky that they couldn’t get a majority of independent shareholders to support their candidate for chair. This is a highly significant vote. James Murdoch will have to work very hard indeed to win back the confidence of shareholders. The Sports Direct debacle has demonstrated the financial risk of rotten corporate governance and of losing the confidence of your shareholders.”

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Theresa May’s executive pay plans meet further scepticism

October 9, 2016

Governments around the world have been giving more support to so-called say-on-pay shareholder rights in recent years. But while such policies are popular, many of the people and institutions that receive additional powers are doubtful about how effective these policies can be.

The merits of one of Mrs May’s proposals on tackling high pay — publishing the difference between what bosses and average workers earn — have also been questioned. A company that outsources much of its lowest-paid work, for example, might end up looking better than a supermarket, which does not.

The UK was the first country to bring in say-on-pay legislation in 2002, giving shareholders advisory votes on remuneration reports, meaning they could express displeasure with a company’s pay policy, though the company did not have to act on the result. Sweden and Australia brought in similar shareholder rights soon after, while the Netherlands introduced much more powerful binding votes, which force directors to act on the outcome of the vote.

However, the average pay of FTSE 100 chief executives continued to rise and led to the first widespread revolts in the UK’s first shareholder spring in 2012. The UK government responded by amending the legislation, giving investors a binding vote on company pay policies every three years.

But some shareholder-rights advocates believe that tinkering with say on pay is just ignoring bigger problems.

“It’s getting stuck in the minutiae,” says Catherine Howarth, chief executive of ShareAction, an ethical investment campaign group.

She says pension fund trustees often get worked up over corporate executive pay, but ask few questions about the size of pay packets at the asset managers they hire.

“Pension funds need to be much more active about how much they pay their asset managers,” she adds. “The corporate sector is relatively healthy compared to that. It’s a cesspit of conflicts of interest.”

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BP and Shell investors urged to reward bosses for backing green energy

September 29, 2016

Shell and BP’s pay plans encourage their bosses to dig for oil instead of investing in low-carbon energy and should be overhauled by shareholders, according to the campaign group ShareAction.

Investors in the oil companies should use binding votes on pay policies next year to scrap short-term targets and reward chief executives for working towards thetarget set in Paris last December to limit global temperature increases to 2C or less, the responsible investment group says in a report.

ShareAction said international pressure to reduce the impact of climate change was an existential threat to companies whose business depends on extracting fossil fuels. Persisting with pay plans that reward old measures of success risk Shell and BP becoming obsolete and ultimately going bust, the report says.

Catherine Howarth, ShareAction’s chief executive, said: “Responsible investors who are serious about climate risk have a crucial opportunity to ‘walk the talk’ at BP and Shell next year by pushing for remuneration policies designed make these companies commercially resilient in a low carbon world – and voting down policies which fail that test.”

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It’s not just the carbon bubble you need to worry about, are investors headed for a meat bubble?

September 28, 2016

In September last year, Bank of England governor Mark Carney warned a room of insurance executives they could be faced with “huge” exposure to assets risks if efforts to tackle climate change leave fossil fuel assets looking massively overvalued.

Analysis since then of this so-called ‘carbon bubble’ risk has deepened, with a recent Carbon Tracker report concluding that planning for the phase out of fossil fuels in coming years would allow listed oil and gas companies to boost their valuations, and a warning from leading economist Lord Stern that firms which fail to plan for how they will operate in a low-carbon economy risk decline or even bankruptcy.

However, now a group of investors are looking beyond the “carbon bubble theory” and highlighting how a similar environment-related material risk could be posed to investors through the reliance of companies on animal production – a sector now responsible for a staggering 14.5 per cent of global emissions, making it a greater contributor to climate change than global transport.

The coalition of 40 institutional investors, which together account for $1.25tr of assets and include Swedish state pension funds AP2, AP3 and AP4, Aviva Investors and Nordea, this week launched an “engagement” with 16 multinational food companies to warn of the risks associated with an overreliance on unsustainable factory farming of livestock.

Brought together by the Farm Animal Investment Risk & Return (FAIRR) Initiative and responsible investment organisation ShareAction, the investors are calling on firms, including Nestle, Unilever, Tesco and Walmart, to identify how they plan to respond to risks to their supply chains such as antibiotic resistance and climate change, as well as rising regulatory risks and changing consumer preferences.

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AP funds, Nordea, Folksam take aim at food companies on meat risk

September 26, 2016

A group of 39 institutional investors including Swedish buffer pension funds AP2, AP3 and AP4, along with Nordic banking group and Swedish pensions and insurance provider Folksam, has linked up to urge 16 multinational food companies to say how they plan to deal with the risks of industrial animal production.

The coalition of investors, whose members manage some $1.25trn (€1.11trn) in assets, has been brought together by Farm Animal Investment Risk & Return initiative (FAIRR) and responsible investment organisation ShareAction.

The investors are writing to the companies, urging them to identify their plans to respond to “the material risks posed by industrial animal production”, in particular by encouraging them to set strategies to diversify into plant-based protein sources.

Other investors signing the letters include Australian Ethical, Aviva Investors, Impax Asset Management, Robeco Asset Management and Walden Asset Management.

The companies being targeted by the investors include Kraft Heinz, Nestlé, Unilever, Sainsbury’s, Tesco, Walmart and General Mills.

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Investors urge food companies to shift from meat to plants

September 26, 2016

A group of 40 investors managing $1.25 trillion in assets have launched a campaign to encourage 16 global food companies to change the way they source protein for their products to help to reduce environmental and health risks.

The investors, which include the fund arm of insurer Aviva and several Swedish state pension funds, wrote to the food companies on Sept. 23 urging them to respond to the “material” risks of industrial farming and to diversify into plant-based sources of protein.

“The world’s over reliance on factory farmed livestock to feed the growing global demand for protein is a recipe for a financial, social and environmental crisis,” said Jeremy Coller, founder of the FAIRR initiative and chief investment officer at private equity company Coller Capital.

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A living wage for low-paid workers, courtesy of pension funds

September 4, 2016

ShareAction’s Catherine Howarth says retirement schemes can protect the economically vulnerable:

“It seems right to ask, in an era of mass participation in the private pension system, if schemes should take account of their members’ lives and needs in the here and now. So argues a new report by ShareAction, supported by the Joseph Rowntree Foundation, the charity.

The report sets out how pension funds and other institutional investors can use stewardship strategies to protect the economic interests of low-paid beneficiaries on the long road to retirement. This approach could support a shift away from chronic in-work poverty, zero-hours contracts and other features of precarious employment.

While high pay has been the red flag of corporate governance, a range of UK institutional investors have also signalled support for corporate pay policies that deliver adequate incomes for low-paid workers.

This approach fulfils the primary purpose of institutional investment — to create strong, stable returns for beneficiaries. It contributes to the creation of strong, stable employment and living standards at the same time. Perhaps above all, it signals that the UK’s pension and investor sector acknowledges a fiduciary responsibility to the growing segment of its client base the economy seems to have left behind. The true test will be in the sector’s willingness to act to fulfil that responsibility in the decades to come.”

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Bonus culture in asset management ‘out of control’

September 4, 2016

The chief executives of the world’s largest asset management companies received bonuses that were on average 15 times larger than their salaries last year, raising concerns about inappropriate pay structures in the fund market.

According to FTfm analysis of executive pay at the 20 largest listed fund companies in Europe and the US, Larry Fink, the chief executive of BlackRock, and T Rowe Price’s James Kennedy had the highest level of variable pay compared with their salaries last year.

Camilla de Ste Croix, senior policy officer at ShareAction, a charity that campaigns for responsible investment, said the figures demonstrated bonus culture in asset management was “out of control”.

She added: “Following the financial crisis, a lot of new EU legislation and reforms were directed at the banking sector. The asset management sector has not faced the same level of scrutiny. Measures to curb excessive pay and risk taking should be comparable across investment banking and asset management.”

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Are fund managers risking your money in pursuit of their bonuses?

August 26, 2016

Star fund manager Neil Woodford has scrapped all bonuses for staff at his eponymous investment firm, claiming the performance-linked payments drive damaging short-term thinking.

But do investors actually benefit if fund managers are paid a flat salary?

Catherine Howarth, chief executive of responsible investment charity ShareAction, said ordinary investors have overlooked the issue up to now.

“They get cross about executive pay but asset managers earn similar amounts to FTSE 100 bosses”, she said.

“Fund manager remuneration gets far too little attention compared to executive pay and the relationship between the two is very interesting.

“Bonus payments in assets management have a problematic effect in the whole short-termism issue in capital markets. It becomes logical for fund managers to focus on short-term performance, it is as simple as that.”

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Industry calls for scrapping of asset manager bonuses

August 23, 2016

Industry officials have called for asset manager reward systems to be axed in favour of higher flat salaries, in order to discourage short-termism.

ShareAction chief executive Catherine Howarth said reward systems often led to behaviour out of line with members’ interests.

She hoped Woodford’s action would be a catalyst for trustees questioning the performance of their asset managers.

“Short-term bonuses privilege short-term strategies,” she said. “Getting rid of them will refocus asset managers on the long-term gain, which is important to pension fund members.

“Neil Woodford’s decision is both a really important signal in terms of social justice, but also in terms of alignment and driving the right behaviours in asset management.

“I hope this will act as a spur to fiduciaries asking more searching questions about how well-aligned asset management pay is with the interests of fund members.

“To see this replicated across the industry would be great news for members.”

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McDonald’s urged to stop serving meat and milk from animals treated with antibiotics

August 12, 2016

A new online campaign has urged fast food giant McDonald’s to impose a global ban on meat and dairy products from animals treated with antibiotics, a factor in the emergence of drug-resistant superbugs such as MRSA.

ShareAction, the charity which initiated the campaign, is looking to fight the rise of dangerous, drug-resistant bacteria.

Scientists believe that treating livestock with antibiotics contributes to the rise of antibiotic-resistant “superbug” infections, which kill at least 23,000 Americans each year and pose a significant threat to global health.

With its online campaign the charity is putting pressure on Steve Easterbrook, McDonald’s chief executive, to prohibit the use of chicken, beef, pork and dairy products that have been given antibiotics in all of its 30,000 stores globally.

ShareAction called on consumers to email Easterbrook and raise their concerns.

McDonald’s, the world’s biggest fast food chain, has already stopped using poultry treated with antibiotics last week but only at its restaurants in the US.

Catherine Howarth, ShareAction chief executive, said she hopes the action will encourage McDonald’s to supersise their ambition.

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McDonald’s pressured to serve up global antibiotics ban

August 12, 2016

A new online campaign is putting pressure on fast food giant McDonald’s to impose a global ban on products from animals treated with antibiotics.

Scientists warn that treating livestock with antibiotics is leading to a rise in drug-resistant superbugs.

The charity ShareAction has called on consumers to email McDonald’s chief executive Steve Easterbrook.

Last week, the fast food chain stopped using poultry treated with antibiotics – but only in its US restaurants.

ShareAction has called on McDonald’s – the world’s biggest fast food chain – to stop using chicken, beef, pork and dairy products that have been given antibiotics in all of its 30,000 stores globally.

“We hope this action will encourage McDonald’s to supersize their ambition,” said ShareAction chief executive Catherine Howarth.

McDonald’s told the Reuters news agency that it was too early to set a timeline for phasing out the use of all meat and milk products from animals treated with antibiotics.

The company cited varying practices and regulations around the world as one of the difficulties, but added that it “continues to regularly review this issue”.

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Concerned investors silenced over share value fears

August 2, 2016

Investors are put off lobbying fund managers over corporate culture issues over concerns it would destroy the value of their investment, according to an organisation representing shareholders.

The comments follow a report from the Financial Reporting Council calling on investors to put pressure on fund managers to address culture problems in the companies they own shares in, rather than just selling out of the fund.

It noted some shareholders are not convinced they have the power or the ability to change culture.

Catherine Howarth, chief executive at ShareAction, agreed investors often choose to mitigate the risk of value destruction by selling shares in a company, rather than engaging with management to improve long-term performance.

She suggested investors give asset managers clear guidance on how they would like their votes cast where there are concerns over governance.

“Too often executives are incentivised to chase short-term profits over building the long-term wealth-creating potential of their companies.

“They already have plenty of tools, and may soon have even more if Theresa May’s proposal for an annual binding vote on executive pay becomes law,” she said. “The field of responsible investment is growing and we’re cautiously optimistic that more investors are using their rights as shareholders to actively steward investee companies.

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Asset managers push back against activist pension funds

July 31, 2016

Asset managers are resisting attempts to improve standards at listed UK companies, pushing back against pension fund trustees’ moves to strengthen corporate governance.

Theresa May, prime minister, shone a spotlight on corporate governance earlier this month, promising sweeping changes to boards and pay in an attempt to encourage responsible capitalism.

Pension funds, however, say that asset managers are thwarting an initiative launched last year by the Association of Member Nominated Trustees, the trade body of pension fund representatives, to influence the companies they invest in.

Jonathan Hoare from ShareAction, a charity that campaigns for responsible investing, said it was “troubling” that asset managers were pushing back against the red lines programme.

“Government policy should enable and encourage active voting by investors, particularly by trustees and retail investors,” he said. “The whole investment system would function more effectively if this was the case.”

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Eight things you need to know about the new DC Code

July 28, 2016

The Pensions Regulator (TPR) has today released its updated defined contribution (DC) code of practice, as well as six guides on complying with legal obligations.

What are the key messages in the new code?

ShareAction policy officer Rachel Howarth welcomes the new code for providing stronger guidance on environmental, social and governance (ESG) issues.

She says: “TPR’s decision to include this guidance for trustees is extremely encouraging. The guidance for trustees is clear: they have a mandate to consider all risks that could affect the financial performance of their funds, and this includes ESG risks.”

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TPR’s new DC code ‘a huge boost’ for responsible investment

July 28, 2016

The UK’s pension regulator (TPR) has released a revised code of practice, and supporting guides, for trustees of defined contribution (DC) pension schemes, with its guidance on the consideration of environmental, social and governance (ESG) factors one of the aspects welcomed.

Responsible investment organisations welcomed TPR’s comments on how ESG factors should be taken into account as part of investment governance.

ESG campaign organisation ShareAction said the code and supporting guides improved guidance for trustees on ESG, while the UK Sustainable Investment and Finance Association (UKSIF) said TPR’s important clarification was a “huge boost for responsible investment in the UK”.

In the code itself, TPR states that, “when setting investment strategies, we expect trustee boards to take account of risks affecting the long-term financial sustainability of the investments”.

Rachel Howarth, policy officer at ShareAction, said TPR’s decision to include the guidance was “extremely encouraging”.

“The guidance for pension trustees is clear,” she added. “They have a mandate to consider all risks that could affect the financial performance of their funds, and this includes ESG risks.”

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‘Devil in detail’ of new UK prime minister’s corporate governance reforms.

July 12, 2016

The UK’s responsible investment community has welcomed comments by the country’s incoming prime minister, Theresa May, indicating she would introduce a number of sweeping corporate governance reforms, including a more regular binding vote on pay.

May, confirmed as the next prime minister after her competitor to succeed David Cameron withdrew from the race on 11 July, pledged during her first, and now last, major campaign speech that she would tackle “corporate irresponsibility”.

In addition to pledging to make votes on remuneration packages binding, May also argued in favour of greater corporate transparency, saying companies should publish pay ratios.

Jonathan Hoare, director of policy at ShareAction, said the organisation was “heartened” by the outgoing home secretary’s comments.

“There’s a theme running through the speech of long-termism, of custodianship, of stewardship of assets and institutions important to wider society,” he said.

Hoare further held out hope the new UK Cabinet would reform fiduciary duty, a matter championed by the organisation even before the UK Law Commission published proposals for change in 2014.

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Has the Law Commission’s fiduciary duty review been successful?

July 12, 2016

It has been two years since the Law Commission revealed the findings of its major review into the fiduciary duties of investment intermediaries.

Its conclusion in July 2014 that trustees should take into account environmental, social and governance (ESG) factors that are financially material to investment performance was a big step forward. Trustees can also consider non-financial factors including ESG in investment decisions but only if most members agree and it does not give rise to significant financial detriment.

“It’s disappointing the government didn’t amend the investment regulations as that would have had impact by focusing minds more. Now we’re left with regulations using outdated terminology,” said David Hertzell, former law commissioner who led the review.

This view was echoed by ShareAction chief executive Catherine Howarth, who heavily lobbied for the regulatory changes. But she said there is still a chance DWP could review its decision to clear up the confusion.

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Altmann: UK likely to adopt IORP Directive given Brexit timeline

July 6, 2016

The newly agreed revised IORP Directive will have to become UK law despite the vote to leave the European Union, given the overlap between the timetable for transposition of the directive and that for the UK’s remaining an EU member, pensions minister Ros Altmann has suggested.

Speaking at an event to mark the passing of two years since the Law Commission released its report on the fiduciary duties of investment intermediaries, Altmann said she was “really proud of work the UK has done within Europe to get the IORP to the place where it has ended up”.

She added: “We have protected the UK pensions industry to a large degree. It could have been a pretty big disaster in some ways.”

Qualifying her answer to a question about the UK decision on IORP II by saying that “I can’t tell you what is going to happen because, as we all know, nobody knows”, Altmann then said she would expect that, as “we are still in the EU, and we are going to be in the EU for at least another two years, by then, the IORP will have started […] we will have to adopt it anyway”.

She added: “I would hope we might want to adopt it because, if we want to stay part of a united Europe, that’s an area that makes sense to align ourselves with.

“I can’t tell you exactly what’s going to happen, but that would be my best answer for you.”

Altmann’s comments were in response to a question from Catherine Howarth, chief executive of ShareAction, a responsible investment campaign organisation that was also co-host of the event.

Citing provisions in the IORP II compromise text relating to ESG factors and climate risk, Howarth had asked Altmann to comment on whether the UK government – “whatever happens on the Brexit question” – will ensure that UK pension savers “have the same level protection as other pension savers in the EU”, whether this be through the transposition of the IORP Directive or a new law.

The IORP II Directive has still to be passed by the European Parliament, but this is largely seen as a formality, given the agreement reached on a final compromise text.

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ShareAction welcomes IORP II focus on ESG risks, stranded assets

June 29, 2016

The UK’s ShareAction has welcomed the revised IORP Directive’s mention of stranded assets and its broad focus on environmental, social and governance (ESG) risk, calling their acceptance a litmus test for future focus on such matters.

The NGO’s comments came as the Dutch government, which holds the rotating presidency of the Council of the EU, released the likely final text of IORP II, following calls from its parliamentarians that they debate the law.

A spokesman for the Dutch Ministry of Social Affairs told IPE the draft was the preliminary agreement between the European Parliament, the Council of the EU and the European Commission.

Camilla de Ste Croix, senior policy officer at ShareAction, said she was “delighted” the finalised IORP II text included mention of social and governance matters rather than only the Commission’s initial focus on environmental concerns.

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Tesco boss forced to defend bank chief’s taxi bill before shareholders

June 23, 2016

The boss of Tesco has been forced to defend the taxi habit of its bank chief, Benny Higgins, at a stormy shareholder meeting that highlighted the disparity between executive and shopfloor pay.

In May the Guardian revealed that Higgins spent more than £18,000 on London taxis in just eight months last year being driven to upmarket restaurants, private members’ clubs and the supermarket’s various head offices.

Shareholder Danny Gazzi said he was pleased staff and executives had received bonuses for returning the company to profit, but added: “It is notable however that while [CEO] Dave Lewis is being awarded a 250% bonus, staff are receiving 5%.” Lewis was paid £4.6m including a £3m bonus last year.

“The £18,000 claimed just on taxi expenses in eight months by Benny Higgins as chief executive of Tesco Bank is a troubling contrast with the salaries of those on the shop floor,” added Gazzi who is also a supporter of ShareAction, which campaigns for the wider adoption of the voluntary UK living wage, as advocated by the Living Wage Foundation.

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B&Q to face pressure from campaign groups over pay practices

June 14, 2016

Kingfisher, the owner of B&Q, will face further pressure over pay and conditions for staff at its annual shareholder meeting on Wednesday when campaigners will ask the DIY retailer to reverse cuts made this year.

Siobhain McDonagh, Labour MP for Mitcham and Morden, will ask the board to pay the independently verified living wage, in the latest move of a campaign backed by ShareAction and Citizens UK.

Retailers including Marks & Spencer and Tesco are also expected to be targeted in a continuation of last year’s action, in which campaigners went to a number of companies’ annual shareholder meetings to demand better pay for staff.

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ShareAction chief Catherine Howarth on the battle for transparency

June 10, 2016

Catherine Howarth is passionate about reconnecting the public to the investment world. The chief executive of ShareAction, the charity that promotes responsible investment, has made it her personal mission to bring people closer to the institutions they are invested in.

She says: “We are trying to bring people at pension funds face-to-face with clients. This is an organisation that is going to have an influence. I am interested in what firms are doing and what decisions they are making on people’s behalf. People sometimes don’t know that side of things but when they come together there is some magic about it.”

Her battle for more transparency and accountability in the investment world stems from one key issue.

 “A very tiny elite of the economy is making decisions on my and many other people’s behalf without having any sense of what our real lives are at all. An industry that is this important – that looks after our money – should be better connected to people’s lives and realities, and we should be able to see what they are really up to.”

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European civil society groups join forces for responsible investment activism

June 9, 2016

The European Responsible Investment Network (ERIN) launches today (June 9) at ShareAction’s European conference in Berlin. The network comprises 25 organisations from Belgium, Denmark, France, Germany, Italy, the Netherlands, Norway, Switzerland and the UK. They range from Dutch sustainable investment associations and Italian ethical banking groups to NGOs that address Norway’s sovereign wealth fund’s investment practices.

Catherine Howarth, chief executive of ShareAction, said: “The Responsible Investment landscape has changed dramatically in the last ten years, but much remains to be done to embed sustainable thinking and practice in the strategies of European pension funds and other large investors. Civil society has a critical role to play in driving progress. We are both proud and excited to be playing a role in uniting civil society to advance responsible investment in Europe. Together these groups have the potential to make Europe a global leader in the field.”

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David Pitt-Watson: By working together, NGOs and investors can secure positive change

June 9, 2016

ShareAction, the UK charity which exists to promote responsible investment, has worked hard to bring together communities of individuals and organisations, from fund managers and pension trustees to NGOs, policymakers and individual savers, who are committed to using responsible investment as a force for good. This vibrant movement of people, working inside and outside the investment industry, is taking action in lots of different ways both to transform the industry as it stands, and use it as a vehicle for change.

The European investment industry is a powerful force in the global economy, and one into which the savings of hundreds of millions of European citizens are invested. European pensions and insurance companies alone hold €13 trillion of assets. So I am delighted that ShareAction’s European Responsible Investment Network (ERIN), launching today (June 9) in Berlin, aims to harness the potential of those assets, as well as to encourage savers across Europe to have a voice in decisions about the investment of their money.

That’s not to say there won’t be challenges. Civil society organisations often exist to hold corporations, and their shareholders, to account. Europe, like the rest of the world, has a long way to go before responsible investment and sustainable capitalism can truly be considered the norm. Until then, citizens, civil society groups and investors can be part of the movement linking global finance to changes we want to see, a world where what they do with our money pays our pensions and has the lasting, positive impact that we would be proud to support.

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ESG roundup: ShareAction, ERIN, CDP, cement industry, carbon emissions

June 9, 2016

UK campaign organisation ShareAction today launched a civil society organisation that aims to promote responsible investment in Europe.

The European Responsible Investment Network (ERIN) is made up of 25 organisations – including think tanks, campaign groups, NGOs, trade unions and faith groups – from nine European countries.

ShareAction has led the creation of the network, which Friederike Hanisch has been building over the past year in her capacity as European outreach officer at the UK campaign organisation.

“We have a range of projects lined up,” she said, “and we are looking forward to using this collaborative approach to secure change in investment practices across Europe, and at a policy level.”

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WPP pay: third of investors fail to back Sorrell’s £70m deal

June 8, 2016

One third of WPP investors have failed to back Sir Martin Sorrell’s £70m pay deal at the advertising firm’s annual general meeting.

The chief executive’s 2015 pay package is one of the biggest in UK corporate history.

Asset manager Hermes, a WPP shareholder, said before the vote that it would not support the remuneration package, in part because of “historic concerns about board composition and the remuneration committee’s apparent lack of vigour and stress-testing”.

This week Campaign group ShareAction said it objected to Sorrell’s pay and last week advisory firm PIRC asked WPP shareholders to oppose it.

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EU policymakers face major test of ambition to enable sustainable investment

June 6, 2016

International cooperation at the end of 2015, illustrated by the COP21 agreement and the adoption of the SDGs, was the first major milestone. But now effective implementation has to be the priority and the EU’s pensions and investment sector will have a crucial role to play, writes Camilla de Ste Croix.

The Paris climate agreement reached by 195 countries at the COP21 last December, combined with the launch of the Sustainable Development Goals (SDGs), made the end of 2015 an unusually hopeful time in international politics.

The European Commission described the Paris agreement as ‘a lifeline, a last chance to hand over to future generations a world that is more sustainable, a healthier planet, fairer societies and more prosperous economies.’ Few of us would argue with that.

Now comes the hard part – implementation. The International Energy Agency estimates that full implementation of the Paris agreement will require $13.5 trillion of investment in energy efficiency and low carbon.

The UN Environment Programme Finance Initiative (UNEP FI) estimates that $5-7 trillion of investment per year is needed to achieve the SDGs, including investment in infrastructure, clean energy, water and sanitation and agriculture. With such staggering sums required to achieve these two global agreements, private finance clearly has a role to play.

With assets of around €12 trillion, the EU pensions and insurance sectors will be crucial in delivering the sustainable, long-term economic growth needed, as the Commission itself acknowledged in its Capital Markets Union Green Paper.

The revision of the Institutions for Occupational Retirement Provision (IORPs) directive presents a perfect opportunity to make sure that investments held via pensions can play their part. The directive covers the European occupational pensions market, which invests over €3.2 trillion on behalf of some 75 million Europeans.

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Swiss schemes have ‘long way to go’ on responsible investment

May 26, 2016

Most of the 20 largest Swiss pension funds do not systematically consider sustainability criteria in their investment decisions, instead seeming to see responsible investment as an add-on rather than integral part of the investment process, according to ShareAction and WWF Switzerland.

The conclusions are based on a survey of the 20 largest* pension funds in Switzerland, representing CHF281bn (€253bn) in assets, or around 36% of all Swiss occupational pension funds.

Sonia Hierzig, research officer at ShareAction and author of the survey report, said: “The results demonstrate that, whilst the 20 funds we looked at do consider responsible investment, there’s a long way to go to adopt international best practice, particularly when it comes to transparency and climate risk management.”

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Sustainable Investment Guide 2016: what does good look like in the pensions industry?

May 25, 2016

[p. 33]

At ShareAction we want to put savers and their needs at the centre of the pensions system. Since we began campaigning for responsible investment ten years ago, a lot has changed for the better. We’ve supported savers to meet with the people managing their savings. Some pension funds have begun hosting annual member meetings, where savers can express their concerns and vote on key issues relating to the fund. And some schemes are leading the way when it comes to accountability to members.

But the industry as a whole is still falling well short of the standard that savers deserve. Reclaiming Ownership, our recent ranking of the nine largest automatic enrolment (auto-enrolment) providers by transparency, governance and Responsible Investment performance found that none of the providers were able to reach an overall score of 50%. Whilst there are examples of good practice across the different themes that we looked at, there’s still much to be done. Not a single one of the providers that we looked at had chosen to put a member with assets on the scheme in its board. Many of the schemes that we looked at delegate virtually all responsibility for how money is actually invested to their asset managers, and some have a worrying lack of oversight into those investment strategies.

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Daniel Godfrey in talks with investment charity on tackling fund manager pay

May 19, 2016

ShareAction chief executive Catherine Howarth and former Investment Association boss Daniel Godfrey are in talks over how to tackle incentives structures in the asset management industry.

Among other topics the duo will research the underlying design of pay schemes and how remuneration structures work.

This will include compiling evidence on agreements between pension funds and asset managers as well as establishing how the payments are made between firms.

Howarth says: “In addition to the overall fees and charges [story] we need much greater clarity and insight into incentives structures in asset management.

“There is more work still needed around exploring what people are incentivised to do [with their pay] and see if that is good for customers.”

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How to plan for your charity’s pension auto-enrolment

May 16, 2016

By 2018 every employee in the UK aged between 22 and pension age, earning £10,000 or more per year, will be automatically enrolled into a workplace pension. It’s part of the government’s auto-enrolment policy, that is being implemented in stages since October 2012.

ShareAction, set up as a charity to encourage more ethical investing, opted for Nest as its provider, which is at number five on its chart. “Aviva are indeed doing very strongly, particularly on climate change,” says Grace Hetherington, spokesperson for the charity. But the team decided to go with Nest, as the not-for-profit, more cost-effective option, she says. “We were impressed with their strong member communications, robust responsible investment policy and transparency of voting practices.”

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Can you really know if that pizza is antibiotic-free?

May 3, 2016

Some of the world’s biggest restaurant chains have taken major steps to voluntarily limit the use of antibiotics in their supply chains. Customers trying to understand these new policies might need to acquire a taste for trust.

McDonald’s announced plans for changes in its chicken supply a year ago in the United States and Europe. Subway pledged to serve only meat and poultry raised without antibiotics by 2025 in its U.S. restaurants. Panera Bread, which has served chicken raised without antibiotics since 2004, and Chipotle Mexican Grill, which stepped back from its original “no antibiotics ever” after encountering pork-supply shortfalls, have been chain-restaurant trendsetters. The moves come in response to a public-health problem—antibiotic-resistant illness in humans has been declared a global crisis by the World Health Organization—as well as increasingly vocal calls from consumers to get antibiotics out of supply chains.

“How companies are managing these risks are very pertinent information for investors,” said Grace Hetherington of ShareAction, which coordinated a recent investor campaign against overuse of antibiotics alongside Farm Animal Investment Risk & Return, a nonprofit group. “What’s the point of having that policy,” she asked, “if you can’t prove how you’re implementing it?”

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Firm helping participants get answers

May 2, 2016

Concerned about the impact of climate change on your pension fund? Legal help is at hand.

ClientEarth, a firm of activist lawyers committed to securing a healthy planet, has teamed up with charity ShareAction on a project to help participants in U.K. pension funds who are concerned about how their pension funds are responding to climate-change risks and opportunities.

Supported by ClientEarth and ShareAction, more than 50 participants have written to their pension funds to ask how they measure and manage exposure to climate risks within investment portfolios.

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Sovereign funds ignore climate risk

May 1, 2016

The world’s largest government-backed investment funds have been accused of ignoring the risks climate change poses to their portfolios despite warnings it could hurt returns and make high-carbon investments worthless.

Research from the Asset Owners Disclosure Project, a non-profit organisation, has found no evidence that the sovereign wealth funds in Abu Dhabi, Kuwait, China, Saudi Arabia and Hong Kong have taken any action to factor climate change risks into their investment decisions.

Some pension fund members have demanded information from their plans on how their money is being protected against climate risks, under a campaign launched by ClientEarth, a non-profit, and ShareAction, a charity that campaigns for responsible investing.

Jamie Audsley, head of education at ShareAction, said: “Funds have a fiduciary duty to consider the impact that climate change might have on their portfolios.

“The global transition to a low-carbon economy presents both risks and opportunities for investments.”

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Time for shareholders to stand up for their rights

April 30, 2016

The system of shareholders holding companies to account is not working, says Colin McLean, of SVM Asset Management: “Despite the potential for shareholders to register dissent, only the largest institutional shareholders can hope to affect the remuneration-setting process. The problem may even be the composition of boards; many non-executive directors come from a culture of high pay.”

ShareAction, the charity, has completed a study of nine of the UK’s biggest providers of workplace pensions through automatic enrolment, which look after £1.9 trillion of the £3 trillion life and pension funds market in the UK. It found that:
● None of the nine companies studied had put an ordinary pension saver on the board.
● Several are delegating virtually all responsibility for the stewardship of pension savings to fund managers, rather than developing their own policies to protect people’s savings.
● Only four pension giants — Aviva, NEST, Standard Life and Legal & General — stated the need for companies’ remuneration policies to be linked to their longterm financial success. None expected companies they invested in to provide details of tax policy and the taxes they paid in different countries, even though corporate tax avoidance and executive remuneration are consistently ranked as the public’s biggest concerns about corporate behaviour.
● On climate change, only Aviva, Aegon and Legal & General say that they invest in companies or projects that support the transition to a low-carbon economy and emissions reduction.

The companies studied were ranked for transparency, corporate governance and responsible investment. Their scores, out of 80, were: Aviva 39, Standard Life 37, Aegon 32, NEST 27, Legal & General 23, NOW:Pensions 17, Royal London 16, Scottish Widows 13 and the People’s Pension 4.

ShareAction concluded: “Many of the pension companies do little or nothing to find out which issues their savers care most about.”

Catherine Howarth, the chief executive of ShareAction, says: “Ultimately, pension savers are shareholders too, and most of us want to know that our funds are not in companies paying out absurd executive bonuses, avoiding their taxes or exploiting people in miserable factories on the other side of the world.”

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Shareholders urged to push for cheaper pneumonia drugs

April 27, 2016

Shareholders are being urged to use the annual general meetings of Pfizer andGlaxoSmithKline to put pressure on the companies to lower the price of their life-saving pneumonia vaccines.

ShareAction, the responsible investment charity, issued the call ahead of Pfizer’s AGM in New York on Thursday, and GSK’s annual meeting in London next week.

Médecins Sans Frontières (MSF) has just delivered petitions to both companiesasking them to lower their vaccine prices to $5 (£3.43) for each child in developing countries, and plans to raise the issue at both AGMs.

Pneumonia is the single largest cause of death for children under five globally and kills almost 1 million children a year, it is estimated. The two pharmaceutical companies have dominated the market for the main pneumococcal vaccines for years.

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Called crooks by their own shareholders: A new humiliation for bosses at scandal-hit HSBC as shares continue to tank

April 25, 2016

Furious shareholders hurled abuse at HSBC bosses yesterday, accusing them of presiding over a string of scandals.

At a stormy public meeting, one campaigner produced a pair of handcuffs for chief executive Stuart Gulliver and branded him a crook.

Others demanded to know if they would ever see an improvement in the bank’s rock-bottom share price.

Jessica Hall of the Share Action investor group said the Panama revelations were ‘a clear step back’ at a time ‘when HSBC needs to regain trust’.

Flint replied: ‘We can’t, sadly, influence how people characterise our involvement in what you’ve described.’

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Taking Antibiotics Off The Menu

April 21, 2016

Since they were first discovered in 1928 antibiotics have revolutionized modern medicine and saved millions of lives around the world. Unfortunately less than 100 years on, we are on the verge of what the World Health Organization has called a,“post-antibiotic era” – due to the misuse and overuse of these important drugs in humans and in livestock.

That is why Boston Common and a $1 trillion coalition of 53 other investors are taking action by calling on ten of the world’s largest food companies to end the excessive use of antibiotics in their meat supply chains last week. These include companies such Domino’s Pizza Group which holds its AGM this week and where a question about the issue is expected to be raised with the Board. The coalition is brought together by the Farm Animal Risk and Return (FAIRR) initiative and NGO ShareAction.

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Institute of Directors weighs in on BP chief executive’s pay award

April 13, 2016

The Institute of Directors has made a rare intervention on executive pay, urgingBP shareholders to think twice before backing a decision to award $20m (£14m) to chief executive Bob Dudley in a year when the company ran up its worst-ever losses.

Simon Walker, the director general of the IoD, said the enormous remuneration deal for 2015 sent “the wrong message” to investors and other boards, given the $6.5bn annual loss and the decision to axe 7,000 jobs.

The responsible investment group ShareAction says the issue of high remuneration and what it believes is a high-risk project off southern Australia are linked. The country’s offshore oil and gas authority has already rejected BP’s original application to drill four exploration wells in the Great Australian Bight because of alleged inadequacies in its plans, but the oil company has since resubmitted new plans.

Catherine Howarth, chief executive of ShareAction, said: “BP should take heed of the groundswell of opposition on remuneration. Shareholders expect to see value for money and long-term strategic thinking in exchange for high pay packets – not the pursuit of high-risk, high-cost projects like the controversial Great Australian Bight proposal.

“Investors will be keen to know how BP can justify a 20% increase in Bob Dudley’s pay when the company appears to be gambling on a project with the potential to become a second Deepwater Horizon.”

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McDonald’s, JD Wetherspoon and Domino’s urged to crackdown on use of antibiotics in global meat and poultry supply chains

April 11, 2016

A coalition of 54 institutional investors, which manages funds totalling $1 trillion, has called on 10 UK and US restaurant chains including McDonald’s, JD Wetherspoon, Wendy’s and Domino’s Pizza Group to curb antibiotic use in their global meat and poultry supply chains.

The investors, which include Aviva Investors and Coller Capital, have written to ten companies asking them to set appropriate timelines to prohibit the use of all medically important antibiotics within their supply chains.

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Investors urge fast food and pub chains to act to reduce farm antibiotics

April 10, 2016

A group of powerful City investors who together control more than $1tn in assets have written to leading fast food, pub and restaurant chains urging them to take immediate action to reduce antibiotic use in their meat and poultry supply chains.

The financiers, including Aviva Investors, Strathclyde Pension Fund and Coller Capital, are particularly concerned about the use of antibiotics classified as “critically important” to human health and the routine use of drugs on factory farms to prevent disease.

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Exclusive: City firms issue major warning to high street food and pub chains over use of antibiotics on supplier farms

April 10, 2016

A group of powerful City investors who together control more than £700 billion have written to leading fast food, pub and restaurant chains urging them to take immediate action to reduce antibiotic use in their meat and poultry supply chains.

The financiers, including Aviva Investors, Strathclyde Pension Fund and Coller Capital, are particularly concerned about the use of antibiotics classified as “critically important” to human health and the “routine, preventative” use of drugs on factory farms.

Experts believe their use on farm animals is linked via the food chain to the spread of antibiotic-resistant infections in humans.

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BP to face flak over green targets and pay at AGM

April 10, 2016

Campaigners claim BP has failed to do enough on environmental pledges made at last year’s annual general meeting (AGM) and will hold bosses to account at the oil company’s shareholder gathering.

At last year’s AGM, BP worked with groups under the “Aiming for A” banner on a resolution committing it to greater openness about its impact on climate change. The resolution, supported by the board, received 98% shareholder approval and the company’s new environmental awareness won wide praise.

BP promised to reveal more about: the impact of carbon emission limits on the value of its oil and gas reserves; its investments in low-carbon technology; carbon dioxide emissions from its operations; linking executive pay to greenhouse gas reduction; and its lobbying on climate change.

But ShareAction, the responsible investment group, says in the year since the resolution was passed BP has fallen well short of the commitments it made. In particular the company has failed to make the shift needed to align itself with a target set in Paris in December to limit global temperature increases to 2C with an aspiration of 1.5C.

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Fund managers urged to follow Neil Woodford’s lead on fees

April 5, 2016

Neil Woodford’s decision to reveal the “hidden costs” of his popular equity fund has been applauded by investor groups, who are urging other fund management houses to follow the star manager’s lead.

“This is a very positive step which we would like to see others follow,” said Catherine Howarth, chief executive of investor rights group ShareAction.

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ShareAction chief proposes partnership with PRI to promote UN Sustainable Development Goals

March 23, 2016

ShareAction, the UK-based responsible investment campaign group, has proposed working with the Principles for Responsible Investment (PRI) on promoting the United Nations’ Sustainable Development Goals.

ShareAction Chief Executive Catherine Howarth proposed the partnership with the PRI and the World Economic Forum’s Young Global Leaders group “to help this thing take off”. The PRI said it would welcome the opportunity to work with ShareAction and other stakeholders on the initiative.

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Lack of data stifling action on UN development goals, investors say

March 22, 2016

Lack of data is preventing institutional investors from incorporating the UN’s Sustainable Development Goals (SDGs) into their investment process, a survey of investors worth $5.9trn (€5.3trn) across a dozen countries has found.

However, despite the problems arising from lack of data, the wide-ranging nature of the 17 SDGs and insufficient transparency on the part of investee companies, two-thirds of those responding to ShareAction’s survey said they were already taking action to contribute to three or more of the goals.

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Warning over ‘very troubling’ auto-enrolment market

March 21, 2016

ShareAction has branded the current state of the auto-enrolment market ‘troubling’ and ‘uninspiring’.

 Damning criticism from the group, which aims to improve corporate behaviour on environmental, social and governance issues, follows a report from the body in which it found not one auto-enrolement pension provider had managed to score half marks overall on its ranking system.

The report, which was the group’s inaugural work in the space, revealed Aviva took the top spot as best auto-enrolment provider.

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This Trick For Saving More For Your Retirement Works. But There’s A Catch

March 17, 2016

Automatically enrolling employees into retirement accounts is a small, initially almost unnoticeable change, but it’s proving successful in achieving its main goal of getting people to save.

The United Kingdom has phased in a law requiring companies to auto-enroll workers in retirement schemes, and 90 percent of employees keep their plan, rather than opt out.

A new report from investor watchdog Share Action shows that success has created a new challenge: ensuring there is proper oversight of how companies invest workers’ money. The charity found that the largest auto-enrollment retirement plan provided scored a dismal average of just 24 out of 80 on governance and responsible investing.

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Aviva tops ShareAction’s first AE report

March 16, 2016

ShareAction has published an inaugural report ranking the UK’s top auto-enrolment workplace pension providers, with Aviva taking the top spot.

‘Reclaiming Ownership’ covers nine pension providers with £1.9trn in assets under management, which the report said represents almost two thirds of the £3trn life insurance companies and pension funds in the market. Providers’ auto-enrolment funds were ranked on three criteria: transparency, governance and responsible investment performance.

Each provider had a possible total score of 80, but Aviva managed to secure the top spot with a score of just 39, less than half full marks.

Daniel Godfrey, former chief executive of the Investment Association, said that nobody has longer-term savings objectives than members of auto-enrolment pension savings arrangements.

“ShareAction’s report should encourage all investment managers to support companies that have long-term strategies. Real long term thinking requires serious approaches to human capital development, research and investment. “It also means supporting – and if necessary, requiring – companies to look after the environment, pay their fair share of taxes, lobby governments with integrity, and address pay inequality and diversity.”

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ShareAction reveals best (and worst) AE providers for ESG and governance

March 14, 2016

Action must be taken to tackle the increasingly large gap in performance of auto-enrolment (AE) providers, according to a report by ShareAction. The campaign group which rated the nine largest AE providers’ default funds on transparency, governance and responsible investment (RI) performance, found a “serious gulf” between the best and worst performers. The Reclaiming Ownership report examined providers’ policies on a range of topics known to be of interest to savers: executive pay, corporate tax transparency, climate change risk, investments in companies manufacturing controversial weapons, and human rights.

ShareAction chief executive Catherine Howarth said: “We’ve looked under the bonnet at the investment policies of the UK’s dominant players in auto-enrolment and found a serious gulf in performance between the best and worst when it comes to managing conflicts of interest, good governance and responsible stewardship of assets. These factors make a huge difference to pension savers over the long-term.”

Senior Policy Officer Camilla de Ste Croix added: “Although we found much room for improvement across the board, we also found that there is plenty of best practice that pension providers can draw on if they want to know how to improve.”

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Advertising boss Sir Martin Sorrell’s $100million pay deal is ‘preposterous’, says activist group

March 14, 2016

The world’s largest advertising agency group, WPP, has been criticized for awarding its chief executive Sir Martin Sorrell a “preposterous” pay package totaling as much as £70 million ($100.3 million) last year.

Catherine Howarth, chief executive of ShareAction, a lobby group which promotes responsible investment, told Business Insider: “Anyone can see that a pay packet likely to reach £70m for a year’s work cannot possibly offer good value for shareholders. Executive pay has reached preposterous levels at many FTSE companies, but this year WPP has gone way beyond the pale. Last year there was a shareholder revolt over Sir Martin’s pay packet; the fact that the company has ignored protests by a considerable number of investors suggests a worrying disregard for their views.”

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Ed Miliband calls for law to make CO2 emissions target legally binding

March 6, 2016

Ed Miliband has assembled a group of cross-party MPs and campaigners to demand parliament enacts a law to to make the carbon emissions target agreed at the Paris climate talks legally binding.

The former Labour leader – alongside Liberal Democrat leader, Tim Farron, Green MP Caroline Lucas and two Conservative MPs – has called for legislation that would significantly extend the present UK target of cutting emissions by 80% by 2050.

As well as Farron and Lucas, he is also supported by Tory MPs Dan Poulter and Graham Stuart, as well as the NGOs Christian Aid, ClientEarth, ShareAction, Sandbag and WWF.

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Factory farming divestment: what you need to know

March 3, 2016

Companies engaged in factory farming face many risks that could affect their future profits, suggests the campaign group ShareAction. It highlights the increased risk of disease outbreak in intensive farming enterprises; the potential for litigation, bans or fines in relation to water pollution; its reliance on feed inputs with volatile pricing; concerns around staff health and welfare; and the potential for future legislation on methane emissions or antibiotic use.

As standards and expectations from society and regulators continue to rise (seeEU legislation on animal welfare), the companies that fail to upgrade their facilities could find themselves stranded by the high cost of conversion. In the US, for example, it is estimated that the meat industry would face additional costs ofmore than $700m [pdf] if antibiotic rules similar to those in some parts of Europe were introduced.

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Should All London Businesses Pay The London Living Wage?

February 28, 2016

The Living Wage Foundation has a tough time trying to get big retailers like John Lewis and Tesco on board. However M&S is currently considering the living wage after pressure from the Craftivist Collective and ShareAction UK.

A common concern about the LLW is that prices will be passed on to the consumer. Not so, says Lisa Nathan from ShareAction UK, a charity which promotes responsible investment. She points to the example of Lidl, which has maintained competitive prices while raising wages.

For Nathan the new national living wage just doesn’t cut it. “Complying with what’s legally required isn’t quite the same as going above and beyond what it is to be a responsible business,” she says.

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Auto industry pushed £500bn road maintenance plan as ‘green’ initiative

February 16, 2016

In the aftermath of the VW scandal last October, investors with over €625bn of overall assets wrote to the major car companies asking for more information about their lobbying, and compliance with CO2 and efficiency standards.

Renault/Nissan, Peugeot Citroen and Ford did not respond to the missive which was organised by Shareaction, while VW, Daimler and Fiat Chrysler provided only limited answers.

“There is a transparency problem in the industry,” said Charlotta Dawidowski Sydstrand, a manager at the Swedish equity fund, AP7. “From a long term investor’s perspective this is bad news. AP7 wants to be reassured that carmakers’ political lobbying activities are contributing to a safe climate, in turn protecting the long term value of our portfolios.”

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VW scandal highlights ‘complacency’ in auto industry, claim investors

February 15, 2016

The 19 investors – who together control more than £600bn of assets and include giants such as AXA Investment Managers – asked the 10 biggest car companies for information in October.

The campaign was co-ordinated by ShareAction, a group promoting responsible investment, but it now says that the limited responses it got from many car makers highlights a “complacency” within the automotive industry.

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Carmakers urged to clear the air on emissions lobbying

February 14, 2016

Carmakers are not being sufficiently transparent about their lobbying efforts in the wake of the Volkswagen emissions scandal, a situation that leading investors claim poses potential risks for shareholders.

ShareAction, the non-governmental organisation that represents the investors, said several carmakers – including Renault-Nissan alliance – had “ignored” their concerns by failing to respond to their inquiries.

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ShareAction: responsible fiduciaries must grapple with ESG

February 12, 2016

Catherine Howarth, chief executive at ShareAction, says pension funds have no choice but to grapple with the issue of climate change

There can be one, and only one, consideration for those who make investment calls with others’ retirement savings: the best interests of the saver.

This requirement to secure savers’ best interests, which entails a strong though not exclusive focus on financial interests, is exactly why high-performing pension funds in the UK and across Europe have embraced responsible investment in recent years. The terminology of ‘environmental, social and governance’ (ESG) may be somewhat clumsy, but the wide variety of considerations that fall under that umbrella are demonstrably material to savers’ financial security and quality of life in retirement.

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Investors can shine brighter light on executive pay

February 9, 2016

Britain’s top bosses pocketed more in the first two working days of 2016 than the average worker will earn all year, leading critics to denounce “Fat Cat Tuesday” earlier this week.

But are fund managers – who invest our savings and pensions in big business – doing enough to challenge bloated bonuses?

Last year, research by ShareAction, an investor rights charity, claimed that several asset managers, includingBlackRock , Aberdeen and Schroders, backed controversial company proposals too frequently.

Catherine Howarth, chief executive of ShareAction, insisted that exposing those institutional investors who routinely side with management on pay votes has made them more accountable. “Although some still do not publish their voting records, we have seen big improvements in transparency on voting decisions by asset managers, and the data shows a clear connection between transparency and a willingness to vote down big pay deals.”

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UK decision not to amend rules on fiduciary duty ‘extremely disappointing’

November 13, 2015

The UK will not clarify the fiduciary duties of pension trustees by amending the law, a decision that has been criticised as extremely disappointing by parts of the responsible investment community.

ShareAction chief executive Catherine Howarth insisted that the government needed “robust” reasons to ignore the commission’s recommendations.

“Disagreement from respondents on the detail of changes to regulations falls well short of that standard,” she said. “Why has the government ignored the chance to bring interested stakeholders together to think this through, and instead taken six months to produce an old-school consultation response rejecting change?”

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Investor group calls on NEST to meet savers

October 15, 2015

Investor lobby group ShareAction delivered a letter to the pair at Nest’s London offices that commended Nests’s low charges and commitment to transparency and responsible investment. The letter acknowledged that these factors influenced ShareAction’s decision to select Nest as its pension scheme for auto-enrolment for its own staff.

However, the letter also called for “a commitment from the scheme to meet regularly with interested savers to discuss how it invests their money.”

Mark Fawcett, chief investment officer for Nest, said he would commit to a meeting with ShareAction, and invited ShareAction staff to present to its member panel on members’ views.

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Backlash over ousting of fund body chief Daniel Godfrey

October 7, 2015

Asset managers have been accused of ousting the head of their trade body because he pushed forward consumer-friendly initiatives such as disclosing costs and charges.

Catherine Howarth, chief executive of ShareAction, a responsible investment campaign group, said: “There will obviously be questions about whether Mr Godfrey was pushed out for his attempts to lead much-needed change.

“People would be forgiven for concluding that the industry is determined to put its own interests ahead of the savers whose money they are entrusted with.”

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Morrisons Follows Lidl With ‘Living Wage’ Promise

September 30, 2015

Morrisons will pay its staff a minimum of £8.20 per hour from March next year – up from its current minimum of £6.83 per hour.

The new wage is 35p more than the living wage Living Wage of £7.85 an hour – although still below the London living wage of £9.15 an hour.

Campaigners from Citizens UK and ShareAction raised the problem of low pay at Morrison’s AGM this year.

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ShareAction calls for more member representation and less regulation in pensions

July 14, 2015

Lobby group ShareAction has urged policymakers to stop imposing “heavy-handed” regulation after its research has found the UK pensions sector is “creaking”.

In a report published yesterday, the campaign group said improving business models and governance structures was the best way to stamp out bad practice in the industry.

It made seven proposals, including forcing small schemes to merge, increasing member representation, and making senior management join the same scheme as their workers.

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Funds ‘should be more open’ on voting

May 19, 2015

Many of the UK’s best known fund managers side too often with company managements when there are key votes on controversial topics at company annual general meetings (AGMs). That’s the view of Share Action, the watchdog that campaigns on behalf of small investors.

In its first study of this kind, ShareAction examined the voting records of the UK’s 33 biggest asset managers at company AGMs in 2014, paying special attention to votes where there was a dissenting minority of at least 30 per cent.

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ShareAction gets organised as AGM season kicks off

March 5, 2015

Company bosses beware. If a shareholder grabs a selfie at your annual meeting this year they may well be from activist group ShareAction.

The charity owns a share in every FTSE 100 company, enabling activists to turn up at AGMs and raise subjects from boardroom pay to climate change – and getting a shot with the chief executive is just one way of getting their protests noticed.

It is advice like this that ShareAction handed out at an activists’ bootcamp last month and with this year’s annual meeting season about to get underway, Catherine Howarth, chief executive of ShareAction, is running a series of sessions.

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How to ensure your charity’s investments match its mission

January 7, 2015

In recent years, as charity investments have come under increased scrutiny, many charities have begun divesting from companies whose work contradicts their mission. However, it can be difficult to find alternative companies to invest in.

One answer is to pursue a responsible investment strategy, which involves screening out the least compatible companies in your portfolio and engaging with the rest to get them to act in ways that support your charity’s mission.

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How investors are holding companies to account

May 24, 2010

FairPensions is a lobby group that aims to mobilise small savers – members of pensions schemes, Isa holders or fund investors – and help them directly influence their investments. It has played a huge role in the 2010 AGMs of both Shell and BP as it managed to garner enough support to table similar shareholder proposals at both meetings.

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Power struggle over Canada’s ‘dirty oil’ sands

May 6, 2010

The normally dull company AGM has become an unlikely battleground as green-minded pension fund members take on the energy giants exploiting the controversial tar sands of western Canada.

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When ethics wins the pension fund debate

December 17, 1999

The announcement was the result of a sustained two-year Ethics for USS campaign by university staff and the student campaign organisation, People & Planet. Its genesis lay with a handful of USS members outraged that their money was being used to finance activities they found morally unacceptable.

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