ShareAction in the news
Survey of FTSE 100 Companies Finds Carbon Risk in Pensions
12 February 2019
Green knowledge is not at efficient market
12 February 2019
Why have bond holders taken a vow of silence?
31 January 2019
Bondholders remain tongue-tied as climate risks worsen
31 January 2019
The Next Financial Crisis Could Be Caused by Climate Change
28 January 2019
Catherine Howarth: Give the new stewardship code a truly human purpose
26 January 2019
Barclays on wrong side of history with climate policy, says Greenpeace
14 January 2019
Larry Fink urged to make BlackRock tougher on climate change
14 January 2019
Fund groups accused of being ‘too cosy’ with company bosses
15 December 2018
COP24 investor statement on climate policy
10 December 2018
City investors call on listed companies to pay living wage
10 December 2018
It’s Your Money, episode 5: ‘How to be moral with your cash without sacrificing your savings’
7 December 2018
Anne-Marie Williams appears on the Telegraph Money’s podcast.
Shell to tie executive pay to climate goals
3 December 2018
Big Oil spent 1 percent on green energy in 2018
12 November 2018
Pension funds fail to insulate against climate-change risks
4 November 2018
City scrambles to act on climate change as window to limit risks is ‘finite and closing’
15 October 2018
ShareAction adds to vote protests as Unilever plans its Dutch HQ move
3 October 2018
Ethical investment campaign group ShareAction on Wednesday joined the voices raising concerns about Unilever’s plan to relocate its HQ to the Netherlands.
The group said “institutional investors are right to be speaking up” ahead of a vote this month by shareholders in Marmite maker Unilever’s Dutch and UK entities.
The FTSE-100 firm wants to move its legal headquarters to Rotterdam and switch from two classes of shares to one, to simplify its corporate structure.
Some shareholders are worried that exiting the blue chip index will mean the stock is less likely to be included in UK managers’ portfolios. Several large shareholders have objected to the move, and trade body Pimfa, which represents financial advisers, has raised concerns.
Shareholder Royal London Asset Management hit out at Unilever’s plans today. The fund manager’s head of sustainable investments, Mike Fox, said: “Should the motion succeed, we would be forced to sell our holdings in Unilever across a number of our funds, something we do not believe would be in the interests of our clients.”
ShareAction is also concerned that retail investors could be barred from having a say because they hold shares through third parties.
“Those third parties famously do not go through the trouble of facilitating voting due to administrative burden,” a spokesman said.
A spokesman for Unilever said: “We would encourage all shareholders to vote on our simplification proposals, which we believe bring clear benefits for Unilever and its shareholders by giving the company greater strategic flexibility and further strengthening our governance.”
Standard Chartered to Stop Financing New Coal Power Plants
25 September 2018
Standard Chartered Plc said it will stop financing new coal-fired power plants anywhere in the world as part of its commitment to supporting the Paris Agreement on climate change.
The move follows “detailed consultation with a range of stakeholders,” according to a statement Tuesday from the London-based bank. Environmental degradation, extreme weather and rising seas are among the climate change legacies left by burning coal, it read.
Standard Chartered said its existing commitments were excluded from its new policy on coal energy. It currently has 14 project financing facilities in seven markets, which fund coal-power stations. A spokesman for the bank declined to say how much money it currently held in coal projects.
“Other banks will hopefully use this as an impetus to follow suit: HSBC published an improved policy on coal earlier in the year, but so far it still falls short of excluding project finance for coal-fired power plants globally,” said Sonia Hierzig, senior projects manager at ShareAction.
Church of England to keep Amazon shares despite Welby criticism
16 September 2018
ShareAction’s chief executive Catherine Howarth speaks to Radio 4 about the importance of shareholder engagement on social issues. Tune in at 5.20.
The Financial Sector Can Do More To Tackle Climate Change. It’s Time To Step Up
12 September 2018
Meanwhile, the Asset Owners Disclosure Project, which rates and ranks the world’s largest institutional investors and assesses their response to climate-related risks and opportunities – and crucially, makes those ratings public, providing transparency for beneficiaries, clients, investors and stakeholders, has just released its latest report, looking at the performance of public pension funds on tackling climate risks.
The report shows that more than 60% of the world’s largest public pension funds have little or no strategy on climate change, which could put them in danger of breaching their legal duties. Fewer than 1% of assets of the world’s largest 100 pension funds are invested in low-carbon solutions, and only 10% of assessed pension funds have a policy to exclude coal from their investment portfolio, it adds.
“A handful of public pension funds, mostly based in Europe, are showing true leadership on climate change, demonstrating robust approaches to aligning their investments with the low-carbon transition,” the report says. Five funds in each of Sweden and the Netherlands achieved a leading rating, with California- and New York-based funds leading U.S. pension funds, in spite of weak national climate regulation.
The top-ranked pension funds were Sweden’s AP4, Fonds de Réserve pour les Retraites (FRR) of France, the New York State Common Retirement Fund (NYSCRF), and the Dutch fund ABP. The three largest UK funds lag relative to the rest of Europe.
AODP says that pension funds, which accounts for one third of all asset owners’ investments globally, need to drive the transition to a low-carbon economy by moving away from fossil fuel investments and stepping up investment in low-carbon fields such as renewable energy and electric vehicle technology.
However, the group calculates that the world’s 100 largest public pension funds are investing just $90 billion in low-carbon technology, representing less than 1% of their combined assets and dramatically shy of the IPCC’s recommended annual investment of $1.1trillion per year. These lacklustre investment figures are exacerbated by the fact that only 10% of assessed pension funds have introduced policies to exclude coal from their investment portfolio, despite it being the most polluting fossil fuel.
Felix Nagrawala, AODP Analyst, said: “AODP is turning up the heat on public pension funds who fail to address climate change in their investments. Our comprehensive review of the climate-competence of the industry exposes those funds who are all talk and no action, and those showing real climate innovation. Pension funds have a duty to serve the long-term interest of their members, which isn’t being met if the money they invest is depleted along with the health of the planet. It’s high time the industry takes action.”
New York State Comptroller Thomas P. DiNapoli, trustee of the New York State Common Retirement Fund, said: “Climate risk poses a major threat to long-term value, but mitigating that risk presents investment opportunities and is key to our decision-making and our engagement with portfolio companies.”
Chris Fox, Senior Director, International Investor Engagement at Ceres, says: “AODP’s research clearly highlights the need for deeper action towards aligning pension investments with the <2C goal. We hope the ranking will be a wake-up call, alerting funds not just to the risks associated with climate change but also the far-reaching opportunities associated with the low-carbon economy.”
Public pension funds slow to move on climate change risk
10 August 2018
Most of the world’s largest public pension funds are providing little or no information about how climate change will affect the value of their assets, a report by the Asset Owners Disclosure Project (AODP) shows.
The AODP, part of investor pressure group ShareAction, tracked funds with combined assets of more than $11 trillion and found that 63 percent of them were at risk of breaching their duty to savers.
The report is the first to assess the funds against the recommendations put forward by the Task Force on Climate Related Disclosures, set up by the Group of 20 Nations’ Financial Stability Board in 2015.
Launching a global ranking to show how funds were performing against the task force’s framework, the AODP said that a number of European schemes scored highly, including Fourth Swedish National Pension Fund (AP4), which manages assets worth about $40 billion.
“As large investors, pension funds own substantial parts of the global economy and have a stake in maintaining its long-term health and stability,” he said.
Six projects that drive quality and assurance in ESG
5 August 2018
The article lists six ESG initiatives grabbing fund managers’ attention, including the SDGs, TCFD, and ShareAction’s Workforce Disclosure Initiative.
Shareholders are denied a voice
21 July 2018
Millions of shareholders in companies such as BT and Unilever who want to vote against sky-high executive pay find they can’t because they hold their shares in nominee accounts.
This will be the case for most investors who hold their money in fund supermarkets (or platforms), Isas or self-invested personal pensions (Sipps), and many private investors who buy shares through stockbrokers.
If they want to vote at a company’s annual general meeting (AGM), they have to ask the financial group holding their money if it is prepared to arrange it. In theory, the operators of nominee accounts are supposed to agree reasonable requests for participation, but campaigners say that it doesn’t always happen.
Beau O’Sullivan of ShareAction, which campaigns for responsible investment, says: “Many nominee companies do not go out of their way to advertise the fact that investors who hold shares with them may be able to obtain voting rights.
“They may also drag their feet when responding to requests and if they do finally permit these shareholders to vote, they may charge them for the privilege.”
Investors Demand 500 Companies Disclose More Data on Employees
5 July 2018
LONDON — A group of international investors managing more than $12 trillion has written to 500 of the world’s top companies calling for more information about the treatment of their employees.
More than 100 institutional investors from 11 countries signed a letter sent by the Workforce Disclosure Initiative (WDI) seeking better data on issues such as diversity, workers’ rights and health and safety in their supply chains.
The investors, among them Schroders, UBS, Amundi, HSBC Asset Management, Axa Investment Managers, Legal and General IM, Nordea, Rockefeller & Co, and AustralianSuper, gave the companies a deadline of Oct. 22 to respond.
Coordinated by UK-based pressure group ShareAction, the WDI aims to improve the quality of jobs in the operations and supply chains of multinational companies and is funded by UK Aid from the Department for International Development.
“As companies have been reinforcing their disclosures on environmental topics over recent years, we wish to see a similar effort with social factors,” Matt Christensen, Global Head of Responsible Investment, AXA IM, said in a statement.
“Companies should disclose data that is material, consistent and comparable enough to truly understand their approach to workforce management in their annual reports.”
The letter marks a scaling up of the WDI’s efforts after a pilot year during which it engaged with a smaller group of companies.
“Based on the quality of data collected and currently being reported, companies need to move away from only reporting on their policy intentions and good news stories,” said Vaidehee Sachdev, senior research officer at ShareAction.
“Investors and civil society want to see evidence that companies are proactively improving workforce practices for the betterment of business, workers and wider society.”
Oil Majors’ Big Legal Fear Is Averted—for Now
27 June 2018
Oil companies have for now managed to avoid the legal liability of paying potentially billions of dollars for protection against the impact of climate change. But the fight could only just be beginning.
A judge this week dismissed lawsuits from the cities of San Francisco and Oakland, California, against Exxon Mobil Corp., Royal Dutch Shell Plc, BP Plc and other oil majors, saying it was unfair to lay all the blame for climate change at the feet of companies that helped create “historic progress” in the world.
The victory is significant for Big Oil, but it could need many more as activist groups and investors turn on the pressure. The demand for the companies to play their part in tackling climate change is growing louder. While they argue they care deeply about the environment and are acting to cut emissions and build renewable energy sources, some shareholders, governments and environment groups want more.
“Litigation’s always a risk, but I think when you have a specific ruling that is such a seeming rebuke to the plaintiffs, that certainly makes you feel a little bit better,” said Jason Gammel, an analyst at Jefferies LLC. “But there’s other courts that it could play out in.”
Lawsuits are ongoing in New York City and King County, Washington. Separately, a group of U.K. investors, which together oversee about $10 trillion of funds and include Standard Life Aberdeen Plc and Legal & General Group Plc, last month urged companies to take tougher actions on emissions.
Environmental organizations are also turning the screws. In preparation for the annual general meetings of BP, Shell and others, a group called ShareAction earlier this year trained activists to apply pressure to board members, hoping to extract commitments on climate.
“Shareholder activism in the form of resolutions and AGM interventions, by investors and ordinary citizens, has only just started to show its true potential,” said Jeanne Martin, ShareAction’s senior campaigns officer. “ShareAction will make sure oil executives continue to feel the heat.”
Tobacco: activist investors pressure £20bn companies over child labour
25 June 2018
The world’s biggest tobacco companies are coming under mounting pressure over child labour and working conditions in fields globally, from Zimbabwe to North Carolina.
The firms are facing intense scrutiny from unions, NGOs and academics.
While all have child labour policies in place and have formed organisations such as the Eliminating Child Labour in Tobacco Growing Foundation (recognised by the UN), their actions have brought little change and are largely cosmetic, claims Marty Otañez, associate professor at the University of Colorado Denver. He has been working on the subject for 20 years and has done research in Malawi, Bolivia, Argentina, Tanzania, India and Kenya.
At BAT’s annual general meeting (AGM) in London in April, the company’s board was grilled over its record on child labour. Sunniva Gautvik from the UK responsible-investment charity ShareAction said the two studies “show a gap between BAT’s policy commitments and continued, severe impacts on children in tobacco cultivation communities”.
The BAT chairman, Richard Burrows, said the board was “very sympathetic” to the issues raised. But, he added, “you will find BAT has not got any questions to answer in respect of these issues”. He insisted: “Human rights is something we take very seriously as a company and as a board.”
Gautvik asked BAT to publish more detailed information on how the situation was being monitored. Burrows said the company was meeting all the objectives set out by ShareAction, but the charity told the Guardian this was not the case.
UK pension funds get green light to dump fossil fuel investments
18 June 2018
Managers of the £1.5tn invested in Britain’sworkplace pension schemes are to be given new powers to dump shares in oil, gas and coal companies in favour of long-term investment in green and “social impact” opportunities.
Government proposals published on Monday are designed to give pension fund trustees more confidence to divest from environmentally damaging fossil fuels and put their cash in green alternatives if it meets their members’ wishes. Until now many pension trustees have been hamstrung by fiduciary duties that they feel requires them to seek the best returns irrespective of the threat of climate change.
The new rules, though couched in opaque legalese, are a coded go-ahead for pension funds to sell shares in fossil fuel companies if they believe that they could turn into “stranded assets”. The term refers to companies’ coal, oil and gas deposits that may not ever be monetised as the world transitions to a low-carbon economy.
In the paper published on Monday, Clarifying and Strengthening Trustees’ Investment Duties, the Department for Work and Pensions (DWP) said: “Our proposed regulations are intended to reassure trustees that they can (and indeed should) take account of financially material risks, whether these stem from investee firms’ traditional financial reporting, or from broader risks covered in non-financial reporting or elsewhere.”
Environmental campaigners reckon that investments amounting to trillions of dollars in fossil fuels – coal mines, oil wells, power stations, conventional vehicles – will lose their value when the world moves decisively to a low-carbon economy.
They believe that fossil fuel reserves and production facilities will become stranded assets, having absorbed capital but are unable to be used to make a profit. This carbon bubble has been estimated at between $1tn (£753m) and $4tn, a large chunk of the global economy’s balance sheet.
But the DWP warned that the new rules do not give carte blanche for activist groups to bully pension funds into selling out of fossil fuels. “These proposals are not intended to give any support to activist groups for boycotts or divestment from certain assets,” the DWP paper said. “Trustees have primacy in investment decisions and, whilst they should not necessarily rule out the ability to take account of members’ views, they are never obliged to, and the prime focus is to deliver a return to members.”
Unison, the public sector union, launched a campaign in January to encourage local government pension funds – which have invested £16bn in the fossil fuel industry – to divest from carbon.
The new rules, subject to a consultation period, have been brought forward by secretary of state for work and pensions, Esther McVey.
“As we see the younger generation care more about where their money is going, they are also increasingly questioning that their pensions are invested in a way that aligns with their values,” she said. “This money can now be used to build a more sustainable, fairer and equal society for future generations.”
Climate change campaigners said they were delighted at the proposals. Bethan Livesey, head of policy at ShareAction, said: “ShareAction has been pushing for changes to these regulations for years.
“For too long, many pension schemes have disclosed little more than vague, high-level statements on their approach to ESG [Environmental, Social and Governance] factors, and it is unclear what, if anything, is being done behind the scenes.
“Pension schemes seem to fall into three camps: those who understand the financial value of taking ESG factors seriously and do so, those who say they understand but do very little and those who have no clue. These changes to the regulations should at the very least enlighten the third group.”
A growing number of UK and European insurance companies have started selling holdings in coal companies and refusing to insure their operations. More than £15bn has been divested by insurers including Allianz, Aviva, Axa, Legal & General, Swiss Re and Zurich in the past two years, according to Unfriend Coal Network, a global coalition of NGOs and campaigners including 350.org and Greenpeace.
Last week Legal & General said it would exclude China Construction Bank, Russia’s Rosneft, the Japanese carmaker Subaru and five other companies that have failed to act on climate change from its Future World Fund.
The Rockefeller Family Fund, a charitable fund of the Rockefeller family, which made its fortune from Standard Oil, has started divesting from fossil fuel holdings.
However, Cambridge University has just ruled out divesting from oil and gas in its £6.3bn endowment fund – despite public pressure from hundreds of academics and a hunger strike by three undergraduates. Cambridge said it had no direct investment in fossil fuel companies and wanted to avoid any direct investment in coal and tar sands, while keeping indirect investment to a minimum.
Two thirds of top auto-enrolment pensions providers have no policy against chemical weapons investments
9 June 2018
Six out of nine of the UK’s largest auto-enrolment pension providers have no policy to exclude investments in firms that profit from chemical and biological weapons, new research has found.
One of the companies, Aegon, has no policy to prevent investment in any controversial weapons, including anti-personnel mines or cluster munitions, according to research by the responsible investment watchdog, ShareAction.
In their default funds, Aviva, The People’s Pension, Royal London, Scottish Widows, Aegon, and Standard Life do not screen out firms that produce toxic components of harmful weapons.
The nine providers surveyed manage the pension savings of 9 million people under auto-enrolment, a system brought in to ensure people put aside more for their retirement.
The findings reveal a startling disconnect between the attitudes of the UK population and the policies of the fund managers investing on their behalf.
Nine in 10 people in the UK say they view tax avoidance as morally wrong but just two of the nine providers – NEST and Royal London – have policies on how they encourage responsible tax conduct at companies they invest in, the report found.
NEST came out on top of the rankings, which looked at a number of policies on responsible investment as well as engagement with savers. The provider was significantly ahead of its nearest competitor and demonstrated “particularly commendable” performance in its approach to climate-change related financial risks.
It was the only provider to have a measurable and time-bound target to reduce the portfolio’s exposure to climate risks, ShareAction said.
Frank Field, chair of the Commons Work and Pensions Committee, wrote in the foreword to the report that it was important to assess how responsible investment has been incorporated into auto-enrolment.
“This new generation of savers is especially well placed to take the long view and realise the benefits of a retirement plan that is truly sustainable for them personally, but also for their fellow citizens and the planet,” he said.
Providers need to make big improvements on how well they engage with savers or risk losing them as they opt out of making retirement contributions altogether, the report suggests.
Workers will see larger amounts come out of their paychecks for pensions from March next year as contributions rise from 5 per cent to 8 per cent.
This makes it more important to step up engagement efforts or more savers could opt out, the report said.
It follows research published by ShareAction in March that found the pensions industry could be jeopardising millennials’ willingness to save properly for retirement.
It found that a lack of digital innovation and uninspiring saver engagement efforts risked switching younger people off.
Paul Britton, research officer at ShareAction and report’s author, said: “The strong incorporation of responsible investment principles is good for our savings and good for society.
“The lacklustre performance across member communications and engagement by all providers is no real surprise. Of course, auto-enrolment pension providers cannot be solely blamed for Britain’s retirement cliff-edge, but they do need to act on their key position to engage the 9 million new workers with their pension savings.
“Hoping members don’t opt-out as the minimum contributes rates rise is not enough – people need compelling reasons to save.”
Insurers Will Be Hard-Hit By Climate Change But They’re Not Investing In The Low-Carbon Economy
31 May 2018
The insurance sector is on the front line of the battle against climate change – it is having to pay out more to policyholders as extreme weather events such as flooding, droughts, storms and heatwaves become more frequent and more severe.
At the same time, as some of the biggest investors in the world, insurance companies also face significant losses as climate change hits the companies they invest in. “Climate change poses risks for insurance companies, so do responses to it by markets, businesses, consumers and governments,” says Dave Jones, California’s Insurance Commissioner, in a new report by the Asset Owners Disclosure Project (AODP), which sees itself as the world’s benchmark of climate leadership in the investment system.
“The impacts of climate-related risks are a growing reality for the insurance sector. This reality has key implications for that sector’s valuation,” the report adds. “Weather-related financial losses, regulatory and technological changes, liability risks, and health impacts related to climate change have implications for the business operations, underwriting, and financial reserving of insurance companies.”
Insurers know this – one of their key functions is to price risk so they know how much to charge in premiums to insure their customers. As a result, they devote significant resources to assessing various risks, and they have a better idea than most of the financial impacts of climate change.
And yet the sector is not aligning itself with the emissions reduction targets set out by the Paris Agreement, to limit average temperature rises to “well below 2°C”, according to AODP’s report, Got it Covered? Insurance in a Changing Climate.
The report examines 80 of the world’s largest insurers, with $15 trillion Assets Under Management, on their management of material climate risk.
“Less than 0.5% of assets invested by the world’s 80 largest insurers are in low-carbon investments that provide solutions to climate change, despite the insurance sector being highly exposed to its financial risks,” the report says, and nine out of ten investment strategies in the sector make the Paris Agreement goals currently unattainable.
In addition, progress is very uneven across different regions. “A handful of insurance firms in Europe are showing true leadership on climate change and are actively managing the financial risks it poses in capital markets,” the report says. The four top performers in AODP’s ranking – AXA, Aviva, Allianz and Legal & General – are all European, while all but three US insurance firms surveyed have no plans in place to decarbonise their portfolios or address climate-related financial risks .
Some companies are taking steps to improve their disclosure in line with the recommendations of the Task Force on Climate-related Financial Disclosure, with AAA-rated Legal & General moving up eight bands from last year. Japanese insurers have made significant progress in disclosing their climate risks and have overtaken US firms in their efforts to address climate risks in their portfolios. Tokio Marine, which was rated D in 2017, is now rated six bands higher at BBB.
This may be a knock-on impact of the move by the Government Pension Investment Fund, the world’s largest pension fund, to integrate environmental, social and governance factors into its investment strategy.
In contrast, all but three US insurers were rated D or X, the two worst ratings, including giants Prudential, AIG and New York Life, even though SEC disclosure rules have been in place since 2010, much earlier than in Europe.
AODP drew on both publicly available information and private survey responses. Only 24 of the 80 insurers surveyed responded, but this was up from just three last year, suggesting that the industry is starting to recognise the importance of climate risks. This perception is backed up by the fact that more than a third of the sector saw their ranking improve from last year.
Jones recently published the results of a stress test of the insurance sector that showed that many firms were heavy investors in coal, “with portfolios consistent with a trajectory of six degrees of global warming.
While European insurers’ higher rankings are consistent with the greater focus on climate disclosure in the region, campaigners say that they are not immune to risks. The average allocation of funds to low-carbon investments even in Europe is just 0.79% of total assets.
“Global campaigners, such as Unfriend Coal, point out that even top-rated insurers in AODP’s leader category do not always exercise their power as shareholders and underwriters but instead continue supporting high carbon businesses whose activities are inconsistent with the globally agreed two-degree goal,” the report says.
Pavel Kirjanas, report author, says: “This year, AODP has put the insurance industry in the spotlight. We applaud the leading and innovative approaches taken by the sector’s leaders. Unfortunately, there is no time to celebrate. While the world is being shaken by climate-induced catastrophes, the world’s largest insurers keep pressing the snooze button. US insurance companies seem complacent about portfolios that put us on a disastrous six-degrees pathway.”
The report recommends that regulators strengthen regulatory frameworks and mandatory requirements for climate-related disclosure and that investors prioritise engaging with the US insurance sector to promote better disclosure and management of climate-related risks and opportunities.
RBS pulls support for coal power ahead of AGM
29 May 2018
Royal Bank of Scotland has joined the rush of finance firms pulling funding for dirty industries, ahead of its annual general meeting in Edinburgh tomorrow.
The state-controlled bank said it would no longer fund new coal-fired power stations, as well as projects to extract oil from tar sands or the Arctic.
HSBC made a similar commitment ahead of its own investor meeting last month, following a path set by rival European lenders ING, BNP Paribas and BBVA.
Financial institutions are under growing pressure to play their part in honouring the Paris Climate Accord, which set out a path for a global shift towards low carbon power.
Bank of England Governor Mark Carney has also urged City firms to protect themselves from environmental risk, warning that climate change could destabilise financial systems.
RBS’s commitment comes as speculation intensifies that the Government could begin selling its remaining 71pc stake in the bank as early as this week, following the resolution of a long-standing $4.9bn (£3.6bn) fine for past misconduct in the US this month that had been a roadblock to a sale. All parties declined to comment.
RBS’s updated green policy could reduce the chances of its AGM being disrupted by climate protesters.
Barclays’ investor meeting in London earlier this month was disrupted by protesters who took to the stage calling for an end to “climate violence”. They were forcibly removed by event security.
Barclays bosses told shareholders at the meeting that they were reviewing their climate policies and would publish an update in due course.
RBS chief executive Ross McEwan and chairman Sir Howard Davies are still expected to face a rough ride at the AGM tomorrow. Investors are likely to pressure them on plans for deep branch closures and on their handling of revelations regarding past mistreatment of struggling small companies.
The bank also faces a shareholder vote on setting up an investors’ committee to scrutinise management decisions.
RBS said the climate policy changes were part of its wider strategy to “become a simpler, safer bank”.
The bank said it had already been reducing its exposure to fossil fuel industries in recent years and funding more renewable energy projects.
The high street lender also said it would tighten restrictions in general lending to companies involved in coal, including pulling finance from mining companies generating more than 40pc of revenues from thermal coal and from power companies generating more than 40pc of electricity from coal. This was down from a threshold of 65pc in both cases.
Kirsty Britz, director of sustainable banking at RBS, said: “We want to help build a cleaner, more sustainable economy for the future.”
Sonia Hierzig at ShareAction said the commitments gave RBS the “strongest energy sector policies out of the top five UK banks”. However she noted that it still lagged behind some competitors in continental Europe.
The UK has pledged to end all coal-fired power generation by 2025, while last month Britain set a new record by powering the national grid without any coal-fired power for two days, the first 48-hour stretch since the industrial revolution.
Investment In Fossil Fuels And Tobacco By MPs’ Pension Fund Soars
27 May 2018
Eco-campaigners have reacted with fury after it emerged fossil fuel and tobacco company investments by MPs’ pension funds have skyrocketed.
The Parliamentary Contributory Pension Fund’s (PCPF’s) cash with BP, Shell and Rio Tinto rose by £51.2m in 2017 – an increase of 41%.
Money invested with British American Tobacco also climbed, by £17.4m (31%), over the same period.
The news comes after 160 MPs, including Green MP Caroline Lucas, Labour leader Jeremy Corbyn and Tory MP Zac Goldsmith, demanded fund managers “show leadership on climate action” by turning their backs on fossil fuel and tobacco firms.
The cash invested has also risen as a proportion of the overall fund, from 29% to 34%, despite the fund agreeing to include “environmental risks” in its investment strategy.
PCPF began including the top 20 investments in its annual report after years of campaigning by a cross-party group of MPs, led by Green Party co-leader Caroline Lucas.
She said: “The prehistoric attitudes of the pension fund managers/trustees have meant the amount of money invested in fossil fuels has gone up, exactly when it should be shrinking.
“It really is rank hypocrisy for them to include environmental risks in their investment strategy, yet pour more money into the very firms who are paving the way for global climate breakdown.
“Parliament should be leading the fight on tackling climate change – yet our very own pension scheme is stuck in the dark ages and lagging behind the many funds who are ditching fossil fuels and seeking out alternatives. We need answers from our fund on this issue – and we need to see a clear plan from our fund to how it will phase out fossil fuel investments over the coming years.”
Environment Secretary Michael Gove, who did not sign the Divest Parliament pledge, has been pushing forward a green agenda in Government, which includes a clean air strategy and a bid to eradicate single-use plastics.
A spokesman for the fund said that “in common with most large diversified investors” it had investments with “a very large number of companies and sectors”.
But campaigners said it was not good enough for the MPs’ fund to simply fall in line with others.
Tytus Murphy, of Divest Parliament, which ran the campaign to get MPs’ support on the issue, said: “People look to Parliament to lead the way on issues like climate change – yet we’re seeing the management of MPs’ pensions lagging well behind the leaders on this issue.
“If MPs are serious about protecting our planet they’ll be getting onto their pension fund this week demanding a change in direction, and urging them to stop fuelling the fire of climate change by investing in fossil fuel forms.”
Beau O’Sullivan from the ShareAction campaign added: “Not only is this move morally questionable, it’s also nonsensical from a financial perspective.
“Pension savings, which are long-term investments, are highly vulnerable to the long-term financial risks of climate change.”
A spokesperson for the PCPF said: “In common with most large diversified investors, the PCPF currently has financial exposure to a very large number of companies and sectors.
“The decision to hold an individual share or bond in a company is made by the investment managers engaged by the PCPF.”
Investors press Shell for tougher carbon emissions cuts
4 May 2018
Investors with £28bn of assets under management, including pension funds of the Church of England and the UK Environment Agency, have declared support for a shareholder resolution that would force Royal Dutch Shell to adopt tougher targets for reducing carbon emissions.
Shell’s board has urged shareholders to reject the resolution, which would compel the group to align its business with the goal of the Paris climate agreement to limit global temperature rises to well below 2 degrees above pre-industrial levels.
Another group of UK investors, including asset manager Sarasin & Partners, the Church in Wales, and the local authority pension funds of the London boroughs of Ealing, Islington and Lewisham, also declared support for the resolution on Friday.
“The lead being shown by these investors shows they are serious about managing the financial risks of climate change and discharging their fiduciary duties,” said Jeanne Martin, senior campaigns officer at ShareAction, a campaign group. “Clear targets are needed and will help the company navigate a challenging and uncertain energy future.”
Companies ignore calls for greater disclosure on labour practices
1 May 2018
More than 40 large companies including BAE Systems, Tesco and Walmart have ignored calls to disclose more information on their labour practices despite being called to do so by a coalition of institutional investors with more than $10tn under management.
Many companies also fail to match their official policies in areas including ensuring fairer pay and greater diversity with concrete plans and systems to monitor their progress, according to a survey of 76 companies conducted by the Workforce Disclosure Initiative. The WDI wants companies to provide greater disclosure on workplace practices, including supply chains, employee contracts and whether board members have oversight of the workforce. A group of 96 asset managers including Amundi, Legal and General Investment Management and Schroders are part of the WDI.
Investors are paying increasing attention to companies’ labour practices in a bid to mitigate risk and as part of a broader push for improvements in areas such as gender diversity. However, 55 per cent of the companies the WDI contacted did not disclose the information requested.
“Human capital is a key component of corporate success but disclosure is limited,” said Stephanie Maier, director of responsible investment at HSBC Global Asset Management.
WDI’s report said workforce data were available but “often not packaged and presented in a suitable format for institutional investors”. Companies that did disclose information in the survey included Associated British Foods, HSBC, Inditex and Microsoft.
“Disclosure regarding the management of environmental risks and their governance practices is well-established,” said Liza McDonald, head of responsible investment with First State Super, the Australian pension fund. “However, there is little disclosure on how companies are managing their workforce and supply chains.”
A Tesco spokesperson said the supermarket group is “committed to being open and transparent” about efforts to support its workforce and workers in its supply chain and that it is discussing the issue with ShareAction. BAE Systems declined to comment. Walmart did not respond to a request for comment.
The WDI was set up by ShareAction, the responsible investment organisation.
Fifty of the companies that received the first questionnaire are based in the UK and were selected for having the biggest market capitalisations in their particular sector. The remainder were spread across North America, Europe and Australia.
ShareAction plans to send the second annual survey to several hundred listed companies this June.
Although many of the companies that reported were able to state their official policies in areas such as diversity and pay, fewer were able to spell out the concrete steps they took to enforce and monitor these, the WDI said. Only three could demonstrate how discussions with suppliers had led to increased wages for workers yet the majority of companies that responded had indicated a desire to do more in this area.
Persimmon shareholders revolt over chief executive’s ‘grossly excessive’ £75m bonus
25 April 2018
Campaign group ShareAction attended Persimmon’s AGM in York to hand a petition to Mr Fairburn and interrogate the board on pay inequality.
The organisation pointed out that, despite the ballooning executive bonuses, many Persimmon staff do not receive the living wage.
Clem McCulloch, an AGM activist at ShareAction, said Mr Fairburn’s bonus could pay 4,100 full-time Persimmon staff at the Living Wage rate for outside of London, a level of inequality he described as “indefensible”.
“Persimmon relies on the hard work of its builders and yet it’s the executives who profit. It’s positive news to see the company’s investors speaking out for fair pay across the board,” he said.
Richard Keery, investment manager at Strathclyde Pension Fund, which manages £21bn, said: “It is fundamental that companies within the FTSE100 are able to demonstrate responsible business practice and the fair treatment of staff.
“Particularly in light of recent developments, and with a now compelling investment case behind the long term benefits of the Living Wage, it would be reassuring to see Persimmon show positive leadership in working to accredit as a Living Wage employer.”
Green investors urge Morrisons to join global warming fight
16 April 2018
Activist investors are turning the heat on supermarkets chain Morrisons to ramp up its climate goals before its annual general meeting.
The grocer should cut its greenhouse gas via so-called science-based targets, investor action group ShareAction said on Monday.
The likes of Tesco, Marks & Spencer and Asda’s owner Walmart have already signed up to an initiative to limit global warming to below 2°C.
The group urged Morrisons to source more renewable energy and ramp up the use of electric vehicles. The grocer said it is planning to introduce the science-based targets.
A similar letter was sent to Sainsbury’s in February by ShareAction, the responsible investment charity, which speaks for investors managing over $1 trillion, including asset manager Aegon.
Pensions changes: Why your wages might go down this month
6 April 2018
Check your wages this month and you might notice you’ve taken home a little less than usual.
It’s because automatic pensions contributions have risen.
If you’re over the age of 22, you’ll be getting at least 3% of your wages put aside for when you retire – up from 1%.
If money’s tight, or you don’t like the sound of it, you can opt out by speaking to your employer. Confused? Read on for some answers to some of the questions you might still have.
How do pensions work?
From 6 April 2018 the amount of money that automatically comes out of your wages and goes into your pension pot is going up.
It’s rising from at least 1% to 3%.
So if for example you earn £1,000 a month, £30 of that will be put in your pension as opposed to £10.
The amount your employer has to contribute to your pot is going up too.
That’s rising from 1% to 2%.
Money is tight, do I have a choice?
You can opt out, but the government doesn’t think you should.
“We’re all expected to live a lot longer,” says minister Guy Opperman.
“If a girl were born today she’d be expected to live until she was 94.
“So we need to save for the longer term and we want to get people saving so they actually have something to get by on as they get older.”
Are there any other options?
Lauren Peacock, a pensions campaigner from Share Action thinks that in most cases sticking with the pension provider that your employer has chosen is the best option.
“You get employer contributions and tax relief,” she says.
There is the option to invest in a personal pension, or a lifetime ISA, but Lauren thinks these should be in addition to pension savings, rather than an alternative.
“If people do choose a different pension provider to invest in they can ask their employer to contribute to that pot, but employers are not legally bound to do so, which makes it likely that they won’t.”
What if I’m on a zero-hour contract?
If you earn over £10,000 a year and are over 22 then you will be automatically enrolled onto a workplace pension.
What if I have more than one job?
You’ll have a separate pension for each job and will therefore be paying into them all.
That also means each of your employers will be paying into your pension too.
“You can amalgamate those pots,” says Guy Opperman.
“It’s not difficult. It’s your pot of money. It’s not the government’s.
“Going forward you’ll be able to access all the pots of money and look at your savings through your phone.”
What if I’ve started my own business?
There’s no getting away from it, you’ll have to contribute more to your employees’ pension pots.
You can’t opt out.
“We are naming, shaming and prosecuting those that aren’t,” says Guy Opperman.
“We will be on them like a tonne of bricks.”
But if you’re a new start-up there is a bit of leeway.
The government can postpone the time you have to get your staff onto auto-enrolment for three months.
The official government guide for employees on automatic enrolment and workplace pensions can be found here.
Pension companies are told to reach out on Twitter
17 March 2018
Pension providers are being urged to use digital and social media to make saving more attractive or risk millennials leaving their schemes as they are forced to put in more money.
ShareAction, an investment education charity, suggests that the pensions industry is missing a trick by not talking to young savers about the social impact of their investments.
Catherine Howarth, the chief executive of ShareAction, says: “For young people it’s essential to make the case that their pension is already making a positive difference to their lives. It’s not all about waiting until retirement.”
The charity recommends that “auto-enrolment providers engage scheme members by communicating about the beneficial impact of investments they know to be of interest”. Surveys have shown that more than half of millennials want their investments to reflect their social and environmental views.
ShareAction says: “All auto-enrolment providers should have an app and an active digital presence which seeks to make pension saving engaging for members.”
It says that only two of the nine largest UK pension providers have an app, and that these have low user ratings. The charity also discovered that other than a welcome pack and annual statement, most pension companies do not actively communicate with members until five or ten years before their retirement date.
“All the providers we examined refer to their online platforms as the primary source of information for members about retirement planning, investment choice and scheme governance. It is troubling, therefore, that we also found only a small minority of members are registered to use those websites: active registrations for auto-enrolment pension providers’ platforms are typically under 10 per cent,” Share Action says.
The charity is campaigning for pension companies to produce annual reports on the active users of their online platforms and to ask members’ views on how their money is invested. They also called for a review by the Department for Work and Pensions on the role of employers in engagement.
From next month the minimum employee contribution under auto-enrolment will rise from 1 per cent of salary (plus 1 per cent from the employer) to 3 per cent (plus 2 per cent). Share Action says that the increased contribution may put young people off unless the industry “radically rethinks its outdated communications”.
People power pushes sustainable investment up the global agenda
8 March 2018
By Catherine Howarth, chief executive, ShareAction
BlackRock, the world’s largest fund manager, surprised many last week by moving swiftly on the hot topic of gun control.
Its public statement on engagement with manufacturers and retailers of firearms provides an unusual if welcome level of detail about the specific questions which directors of these firms must now answer to BlackRock’s satisfaction.
The move lends credibility to the bold claims in chairman Larry Fink’s letter to the CEOs of companies in which it invests that “to prosper over time, every company must not only deliver financial performance, but also show how it makes a positive contribution to society”.
BBVA to pledge $100bn of finance into green energy projects
28 February 2018
Spanish bank BBVA will on Thursday respond to criticism of its response to climate change by promising to direct $100bn of finance into green energy projects and other sustainable development areas by 2025.
ShareAction, the campaign group, said the move by BBVA was a “huge step forward in a short space of time” but added there was still more to do, such as cutting its financing of coal mines and power stations, ultra deepwater drilling for oil and gas and liquefied natural gas.
ShareAction said the bank’s new policies meant it would have been positioned seventh in the ranking of Europe’s top 15 banks by their responses to climate change that it published last year. BBVA was stung by its initial ranking of 12th when the report was released.
Workplace pension committees are ineffective, says study
17 February 2018
Committees charged with safeguarding the interests of millions of UK workplace pension savers are failing to perform their core responsibilities, according to wide-ranging new research.
The independent governance committees for BlackRock and Old Mutual Wealth were jointly ranked bottom in the research conducted by ShareAction, an investment pressure group.
The eco guide to pensions
7 January 2018
I have great hopes for earth defending activism this year. And one of the most exciting opportunities involves pensions. Huh? OK, pension schemes and auto enrolment do not immediately shout “riveting”, but it is time to follow the money.
Consider this: £87bn per year is paid into Britain’s pension schemes (a figure predicted to increase sixfold over the next two decades). Crucially, research shows that investors (ie us) by and large want that money to create a so-called impact economy, supporting social and environmental good.
At the moment the opposite is true. The lion’s share of that giant pot flows in the direction of oil and gas companies which – according to recent analysis by ShareAction – are dragging their feet on climate action.
Your pension money is, therefore, likely to be working against the Paris Agreement and propping up fossil fuel instead. Furthermore, investment regulations have – until now – reinforced this sorry situation.
Given that pensions are all about providing a secure future, investing in catastrophic ruin is obviously beyond dumb. Thankfully new investment regulations are due to come into effect in the UK later this year obliging schemes to take account of broader, long-term financial risks, such as climate change. In short, the industry will no longer be hamstrung by its own out of date regulation and pension savers will be able to put their money where their mouth is.
In particular I hope this gives a much needed boost to baby boomers, who are now reaching pensionable age. Many people in this demographic despair about change. My message to them is that this is not the time to retire from eco activism, because it’s just getting interesting.
Boost for fossil fuel divestment as UK eases pension rules
18 December 2017
The government is to allow Britain’s £2tn workplace pension schemes to dump their shares in oil, gas and coal companies more easily, empowering them to take investment decisions to fight climate change.
Until now, pension schemes have been hamstrung by “fiduciary duties” that effectively require schemes to seek the best returns irrespective of the threat of climate change. Many have rebuffed calls by members for fossil fuel divestment, citing legal obligations.
But in what has been hailed as a major victory for campaigners against fossil fuels, the government is to introduce new investment regulations that will allow pension schemes to “mirror members’ ethical concerns” and “address environmental problems”.
Guy Opperman, the minister for pensions and financial inclusion, said: “Putting social value at the heart of our pensions system is something that is deeply important to Theresa May’s government. Thanks to these new regulations, savers will finally have the clear opportunity to have their say on where their money is invested and can reflect what is personally important to them, whilst delivering mutual benefits.”
About £87bn a year pours into Britain’s pension schemes, with a significant proportion of it automatically invested into gas and oil companies such as BP and Shell. But a growing body of academic and investment research suggests that reserves of fossil fuels could become “stranded assets” and virtually worthless as countries battle climate change.
“We are committed to making it easier for people to invest in ways that reflect their values and have a positive impact on the issues they care about,” said Tracey Crouch, the minister for sport and civil society.
Once mocked by the conventional asset management industry, divestment from fossil fuels has moved beyond charity and religious groups into the investment mainstream. In November, the managers of the world’s biggest wealth fund, Norway’s sovereign $1tn fund, recommended divesting from existing oil and gas shares – it holds $5.4bn of Shell shares and $3bn in Exxon – as well as ruling out future investments.
ShareAction, which campaigns for responsible investment, said the new UK rules would empower pension savers to use their investments to fight climate change.
The charity’s chief executive, Catherine Howarth, said: “ShareAction has been campaigning for change in this area for years. The [Department for Work and Pensions’] decision to propose these reforms is a welcome breakthrough.
“We urge pension savers in the UK who care about how their money is invested to let the DWP know they fully support this much-needed change in the law. As powerful investors, it is essential our pension funds focus on long-term risks and opportunities such as those connected with climate change and social inequality.”
But Howarth called on the Financial Conduct Authority to speed up its response to the Law Commission’s proposals, claiming the city regulator “is still sitting on its hands”.
Across the world more than 800 institutions, with total investments valued at $6tn, have committed to divest from fossil fuels.
Local authority pension schemes, which hold £16bn worth of oil and gas company shares in their investment portfolios on behalf of 5.3 million workers in England and Wales, are likely to be the earliest to implement the rules in the UK.
The Environment Agency and Southwark council in London have been among the first major schemes to divest, and as once independently run council schemes begin a pooling process, divestment is likely to spread to more authorities.
Aon, one of the biggest advisers to pension schemes around the world, said the divestment campaign was “real and much higher up the agenda” but said many schemes would want to engage with energy companies to encourage renewable alternatives rather than selling their holdings.
John Belgrove, a senior partner at Aon, said: “In the past, aspects around fiduciary duty and best returns have got in the way of pension trustees [wanting to divest] … and the subject has been easily kicked into the long grass. These new regulations from the DWP are another step in a series of steps we have seen in this area. But exclusion is still pretty rare. If one looks at the big picture on fossil fuels, the biggest renewable energy developments are coming from the very same firms that extract fossil fuels.”
Shock in City as Persimmon chairman quits on pay row
15 December 2017
The row over a bonus in excess of £100 million for Persimmon boss Jeff Fairburn, on Friday claimed its first victims, with the shock resignation of its chairman and a senior director.
The FTSE 100 housebuilder’s chairman Nicholas Wrigley plans to leave, and Jonathan Davie, senior independent director and chairman of the remuneration committee has abruptly quit.
The departures come after the property firm came under fire for its long-term share awards plan which grants bosses huge sums.
Fairburn will receive £50 million in shares this month, the first payout in a scheme which could net him around £126 million by late next year.
The resignations could reduce the pressure on Fairburn after his pay was dubbed “outrageous” by investor rights group ShareAction earlier this year.
In total, payouts for 140 senior staff could reach an estimated £600 million, depending on profits and housebuilding targets, as part of a long-term incentive plan (L-Tip) launched five years ago.
Persimmon said Wrigley and Davie recognise the plan “could have included a cap”. It added: “In recognition of this omission, they have tendered their resignations.”
Wrigley, chairman since 2011, will remain in place indefinitely to “allow an orderly process while the board seeks a successor”. Nigel Mills has been appointed senior independent director, and non-executive Marion Sears is replacing Davie as chairman of the remuneration committee.
The shares, up 57% over this year, fell 21p to 2631p on the news.
Stefan Stern, director of the High Pay Centre think-tank, which tracks chief executive pay, welcomed the resignations and said it is “good to see people acknowledging faults”. But, he added: “It is unfortunate… that potential payout considerations weren’t explored earlier on. L-Tips are a flawed instrument and we shouldn’t be using them.” Stern called for more “realistic approaches to performance pay”.
Anthony Codling, equity analyst at Jefferies, said: “I’m surprised at the resignations. Shareholders were aware of the mechanics of the pay scheme when they signed off on it in 2012.”
A growing number of firms are acknowledging widespread ire over excessive City pay. In April it emerged that WPP boss Sir Martin Sorrell took a £22 million pay cut as the advertising giant sought to appease shareholders. In the consumer goods sector, Reckitt Benckiser attempted to stave off an investor revolt by slashing the pay of boss Rakesh Kapoor by more than a third to £14.6 million last year.
Persimmon said that since the award scheme was launched, it has made “substantial cash returns to shareholders at the same time as… delivering significant value”.
The firm said it had ramped up housebuilding and invested £2.9 billion in new land since 2012.
Lloyds, Unicredit get low rankings on climate-change response
7 December 2017
Lloyds Banking Group and UniCredit have been placed at the bottom of a new table ranking Europe’s top banks by their responses to climate change.
ShareAction, the responsible investment campaign group, classed the UK and Italian banks as “bystanders” on the issue of climate change, judging them to have done the least to prepare for the challenges and opportunities of switching to a low-carbon economy.
European pension funds ramp up responsible investments
27 November 2017
European pension funds are waking up to the risks posed by investment in fossil fuels and poorly run companies, a new report has revealed, as asset owners demand fund houses pay closer attention to the pitfalls of investing in carbon-intensive industries.
In a ranking of asset managers by ShareAction, the responsible investment campaign group, a quarter of the companies examined scored 20 or less out of a possible 90 on sustainability. Just over 82 per cent of asset managers made a basic mention of sustainability on their websites or in their reports, but only 5 per cent of managers provided detailed information on the impact of investments, according to the ranking.
“Other hallmarks of leading asset managers include actively promoting responsible investment with policymakers and using ESG integration as part of the key performance indicators used to incentivise fund managers,” said Anne-Marie Williams, ShareAction’s investor engagement manager.
For Sale: $20 Billion of Unwanted Big-Oil Shares Seek New Owner
16 November 2017
Big Oil is under pressure, unloved and on sale.
Energy giants from Exxon Mobil Corp. to Royal Dutch Shell Plc are struggling back to their feet after a three-year oil slump, while also fighting to prove they can survive for decades to come amid an accelerating shift to clean energy. So getting dumped by the world’s biggest investment fund wouldn’t be welcome news.
Norway’s $1 trillion sovereign wealth fund said on Thursday that it wants to sell about $35 billion of shares in oil and gas companies to make the nation “less vulnerable” to a drop in crude prices. Global energy giants favored by long-term investors including Italy’s Eni SpA, PetroChina Ltd. and Russia’s Gazprom PJSC account for more than $20 billion of that total.
“This would be hugely impactful, depending on how they do it, especially when many people aren’t comfortable with energy just yet anyway,” said Elvis Pellumbi, London-based chief investment officer at CF Opportunity Fund. “They would also lose a lot of money doing it, unless spread over a number of years.”
Norges Bank Investment Management is among the top 10 shareholders in each of Europe’s biggest oil companies. Its largest stake is 2.3 percent of Shell, followed by 1.7 percent of Eni. If the sale is approved by Norway’s Finance Ministry, it could bring millions of shares to the market and test the appetite of other investors for companies that are striving to show they’ve seen off the worst of crude oil’s slump.
“It’s a big sale,” but the market will be able to absorb it, said John Roe, head of multi-asset funds at Legal and General Investment Management. “There are reasonable fundamentals behind energy companies. Many are already focusing on how to cope with future changes in the energy mix, including reducing investment.”
Oil industry shares have gained in recent months, with the 88-member MSCI World Energy Sector Index adding more than 9 percent from this year’s trough in August. Oil prices have increased as OPEC production cuts help to shrink global inventories and demand strengthened. Major oil companies have also started to demonstrate they can live with prices at $50 to $60 a barrel by cutting spending.
Still, the index is the worst performing sector in the overall MSCI World Index. The industry’s future is being questioned like never before as electric vehicles and the fight against climate change prompt some forecasters to predict that within a decade demand could peak for gasoline and diesel — the backbone of the industry in the past century.
“Norway has taken action to protect its sovereign wealth fund assets from the consequences of the coming peak in oil demand,” said Catherine Howarth, Chief Executive of ShareAction, an activist group. “We would expect pension funds and other long term investors to follow suit.”
Oil and gas equities reacted negatively to the announcement. Shell’s B shares led the declines, dropping 2.4 percent, while Eni dropped 1 percent and BP lost 0.8 percent.
The Norwegian fund’s decision to sell is “further reason to be cautious for oils relative to broader markets over coming one to three years,” said Jason Kenney, an Edinburgh-based analyst at Banco Santander SA.
Some investors saw Norges Bank’s proposal as a chance for profit.
The sell-off prompted by Thursday’s announcement “is a great opportunity to buy Shell stocks again,” said Danilo Onorino, fund manager at Dogma Capital SA in Lugano, Switzerland, who owns stock in several European oil majors. “This announcement is extremely bad for Norges. Not only will they be selling at minimal levels,” but they will also give up very high dividend yields, he said.
Others saw a different opportunity.
“From a financial point of view this makes perfect sense” because Norway’s economy already has considerable exposure to oil and gas, said Jan Erik Saugestad, Chief Executive Officer of Storebrand Asset Management, Norway’s largest private pension fund with $80 billion under management. “This also represents an opportunity for the oil fund to invest more in renewable industries and infrastructure.”
Norway’s $1 trillion oil fund may turn its back on oil
16 November 2017
The world’s largest sovereign wealth fund may turn its back on the oil and gas investments in and attempt to cut its exposure to what it thinks may be a permanent decline in commodity prices.
The Norge Bank was set up to manage the profits that Norway made from its huge oil resources. However, it has now made a recommendation to the government that it should call time on investments in global oil and gas companies totalling almost £28bn .
In a letter to Norway’s ministry of finance the bank said its planned oil purge “will make the government’s wealth less vulnerable to a permanent drop in oil and gas prices”.
The Norges fund said it represents a far bigger proportion of the country’s overall wealth than in the past. It is worried that its holdings in the state oil company Statoil combined with investments in global oil companies means it is twice as exposed to the oil industry as a typical broad equity index.
“This exposure is increased several-fold when the government’s future oil and gas revenues are also taken into account,” the bank said.
Oil prices of over $100 a barrel were typical before the price crash in late 2014 resulted in oil falling to twelve year lows of $27.50 in early 2016. Since then the price has recovered to above $60 a barrel but oil companies have warned that they are preparing for a future of low prices as other energy sources gain traction.
It had a 2.3pc stake in Royal Dutch Shell, a 1.7pc stake in BP and 0.9pc and 0.8pc stakes in Chevron and Exxon Mobil respectively as of the end of last year, the most recent data available.
The share prices of all four fell falling the announcement, which analysts confirmed was partly a result of divestment fears.
Norges also owns between 2pc and 4pc of UK oil companies including North Sea producer Premier Oil, services group Lamprell and onshore drillers IGas. However, their share price held up thanks to thin trading volumes.
Liz Dhillon, an equity analyst at Quilter Cheviot, said any knee-jerk market reaction is unlikely to have a significant impact on the industry.
“Nothing is imminent and even if the advice is fully implemented we believe this will have limited impact on the oil and gas producers, as the holdings of Norges Bank are relatively small and no doubt will be disposed of over an extended time frame,” she said.
However, ethical investment experts hailed Norges’ retreat from fossil fuels.
Paul Fisher, former deputy head of the Bank of England’s Prudential Regulation Authority, said: “It is not surprising that we see the world’s largest sovereign wealth fund managers no longer prepared to take the increasing risk associated with oil and gas assets, which do not have a long-term future.”
“Institutional investors are withdrawing their capital from oil and gas companies on the grounds that quicker-than-expected growth in clean energy and associated regulation is making oil and gas business models highly vulnerable,” she said.
BP and Shell planning for catastrophic 5°C global warming despite publicly backing Paris climate agreement
27 October 2017
Companies are trying to ‘have their oil and drink it’ by committing to 2°C in public while planning for much higher temperature rises, says shareholder campaign group, ShareAction
Oil giants Shell and BP are planning for global temperatures to rise as much as 5°C by the middle of the century. The level is more than double the upper limit committed to by most countries in the world under the Paris Climate Agreement, which both companies publicly support.
The discrepancy demonstrates that the companies are keeping shareholders in the dark about the risks posed to their businesses by climate change, according to two new reports published by investment campaign group Share Action. Many climate scientists say that a temperature rise of 5°C would be catastrophic for the planet.
ShareAction claims that the companies’ actions put the value of millions of people’s pensions at risk. Two years after BP and Shell shareholders voted resoundingly in favour of forcing the companies to make detailed disclosures about climate risks, the companies have made unconvincing steps forward, according to the reports.
ShareAction said that Shell and BP are meeting their legal requirements, but are putting shareholders’ capital at risk because of numerous failings in their plans for the future.
Neither company sets targets to reduce emissions and BP’s total investment in renewable and clean technologies has actually shrunk since 2005, the reports said. That’s despite the company’s public-facing image of being “beyond petroleum”.
BP invests just 1.3 per cent of its total capital expenditure in low-carbon projects while Shell has pledged to invest 3 per cent of its annual spend on low-carbon by 2020.
Both companies assess the resilience of their businesses against climate models in which temperatures warm by between 3°C and 5°C.
A maximum warming of 2°C beyond pre-industrial levels is the central aim of the landmark Paris climate agreement, which both firms say they support. It is widely believed that any warming beyond 2°C could cause serious and potentially irreversible changes to the climate.
Shell reaffirmed its commitment to the Paris Agreement in a statement publicising its most recent AGM. “Shell has a clear strategy, resilient in a 2°C world,” the company said, but its change modelling document states that “the emissions pathways until the middle of the century overshoots the trajectory of a 2°C goal”.
ShareAction’s report also found that top executives at both Shell and BP are still given incentives to pursue strategies centred on oil and gas and are paid bonuses over three to six years for fossil fuel projects that could have damaging effects for shareholders decades later.
Michael Chaitow, senior campaigns officer at ShareAction, said the report revealed an “uncomfortable discrepancy” between Shell and BP’s public support for a low-carbon economy and their actual business planning.
“Shell and BP want to have their oil and drink it too, by advocating for the landmark Paris Agreement to limit global temperature rises to below 2°C degrees, while planning for scenarios that would violate it,” he said.
The group called on Shell and BP shareholders, which include powerful institutional investors, to demand that the two oil companies do more to tackle climate change.
UK pension schemes told to give more detail on investments, costs
26 October 2017
UK pension schemes should give more information to members about their investments and how much asset managers are charging them to run members’ money, the government said on Thursday.
The move is the latest attempt by the authorities to increase transparency in the market for pensions and investments.
The Department of Work and Pensions (DWP) said a failure to provide the information could see occupational workplace pension scheme trustees fined up to 50,000 pounds from April, 2018, under the proposed new rules.
An annual benefit statement should be given to scheme members detailing the costs and charges associated with their investments and schemes should show how the expenses affect the size of the individual’s retirement savings pot.
The scheme should also give more detail about the investments made on behalf of members, the DWP said. It will now consult with trustees and fund managers until Dec. 6 on the proposals.
“Well-run schemes should have nothing to fear from greater transparency on costs and charges,” said former pensions minister Steve Webb, now director of policy at insurer and pensions provider Royal London.
“Trustees and governance committees will welcome additional information which will help them to ensure that their members’ money is invested in a way which delivers maximum value-for-money.”
Rachel Haworth, policy officer at ShareAction, an investor action group, said it supported the proposed changes, particularly those around better disclosure of the main investments being made on behalf of a scheme’s members.
”It is right that these savers should be able to find out where and how their money is invested, since they bear the risks and costs of investment.
“We regularly support pension savers to ask their schemes how their money is being invested, but they often hit a brick wall in trying to get this information.”
Mark Rylance among actors to press Equity over fossil fuels
22 October 2017
Oscar winner Mark Rylance and Olivier recipient Zoë Wanamaker are among a number of British film and television stars who have demanded their £110m pension fund stop investing in fossil fuels.
The British performers, writers and actors, who are being supported by responsible investment charity ShareAction, have been passing motions at local Equity union branches in order to build support for their campaign against fossil fuel investments.
Top investment groups push for action on climate risks
2 October 2017
Large investment groups including BlackRock and Vanguard have stepped up pressure on US energy companies to address the risks associated with climate change, despite the Trump administration’s lack of action to address the threat.
An analysis of shareholder votes at this year’s annual meetings showed investors have taken a more active role in pushing for information on climate risks, often voting for improved disclosure against company board recommendations.
In votes at seven of the largest US energy companies this year, the 30 largest investors switched their votes to support disclosure on climate risk a total of 38 times, having opposed similar resolutions in 2016, according to ShareAction, a campaign group.
Investors including Aviva, Jupiter and Royal London demand banks release more information on climate change
14 September 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.
Ethical funds show that doing good CAN be profitable as they beat rivals by backing firms loved by millennials
23 July 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.’
Investors attack FCA plans to pave the way for Saudi Aramco float in London
13 July 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.
See full article here
M&S should pay Living Wage and change negative narrative surrounding the business
11 July 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.
Investors push companies for greater workforce disclosures
3 July 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.
“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.
Investors demand more information on labour practices
3 July 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.
Institutional investors are the ghosts at the AGM feast
15 May 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.
Theresa May promised to tackle greedy bosses – instead she’s helping them
2 May 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
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.
Food groups warned about overuse of antibiotics in supply chain
1 May 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.”
Shareholder spring and executive pay
27 April 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
27 March 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.
UK Group Expanding Campaign to Curb Antibiotics in Meat Production
21 March 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.
$2trn investor coalition calls on food giants to cut antibiotic use
20 March 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.”
Vast pay deals for tobacco and mining bosses: BAT and Anglo American chiefs awarded eye-watering salaries
13 March 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.
How ‘Responsible’ Are Europe’s Mega-Managers Investing $22.4 Trillion?
13 March 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.
Another shareholder spring? Execs, companies and institutional investors under pressure ahead of AGM season
12 March 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.
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.
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.”
MPs investing in cigarette companies, oil giants and ‘tax avoiders’ through their pension scheme
2 March 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
28 February 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
23 February 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
23 February 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.
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
21 February 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?
20 January 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.
Juliet Phillips – Climate Change & the power of the pay slip
13 January 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.
Church of England launches climate change ranking
11 January 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.”
Catherine Howarth – Schemes need to understand their members better
10 January 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.
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
Antibiotic resistance: The story that won’t go away
28 December 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.”
Politicians are worried that their pensions are destroying the planet. Is yours?
7 December 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.
USS members launch renewed assault on weapon investments
5 December 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.”
‘Trump trade’ threat to US responsible investment
3 December 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.”
UK’s USS to meet with members on controversial weapon petition
2 December 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.”
Stop investing in arms trade, university pension fund is told
1 December 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.
Fossil fuel battle heats up at the pension fund for British MPs
27 November 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.
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.”
European Parliament passes revised IORP Directive
24 November 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.
Resisting Resistance: Investors take action to manage risk of antibiotic overuse in farming
15 November 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 briefing – Superbugs 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:
- Caroline Barraclough, ESG Communications t: + 44 (0)7503 771694 | e: firstname.lastname@example.org
- Full copies of the report – Superbugs and Super Risks – available on FAIRR’s website.
- More about The Restaurant Group at: http://www.trgplc.com/csr/quality
- 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. www.fairr.org
About Aviva Investors
Aviva Investors is a global asset manager with expertise in real estate, fixed income, equity, multi-asset and alternative investments. https://uk.avivainvestors.com
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 Farming, the 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. www.saveourantibiotics.org
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. https://shareaction.org/
Oil firms announce $1bn climate fund to clean up gas
4 November 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.”
Sky shareholders revolt against James Murdoch’s appointment as chairman
13 October 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.”
Theresa May’s executive pay plans meet further scepticism
9 October 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.”
BP and Shell investors urged to reward bosses for backing green energy
29 September 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.”
It’s not just the carbon bubble you need to worry about, are investors headed for a meat bubble?
28 September 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.
AP funds, Nordea, Folksam take aim at food companies on meat risk
26 September 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.
Investors urge food companies to shift from meat to plants
26 September 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.
A living wage for low-paid workers, courtesy of pension funds
4 September 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.”
Bonus culture in asset management ‘out of control’
4 September 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.”
Are fund managers risking your money in pursuit of their bonuses?
26 August 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.”
Industry calls for scrapping of asset manager bonuses
23 August 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.”
McDonald’s urged to stop serving meat and milk from animals treated with antibiotics
12 August 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.
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.
McDonald’s pressured to serve up global antibiotics ban
12 August 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.
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”.
Concerned investors silenced over share value fears
2 August 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.
Asset managers push back against activist pension funds
31 July 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.”
Eight things you need to know about the new DC Code
28 July 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.”
TPR’s new DC code ‘a huge boost’ for responsible investment
28 July 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.”
‘Devil in detail’ of new UK prime minister’s corporate governance reforms.
12 July 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.
Has the Law Commission’s fiduciary duty review been successful?
12 July 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.
Altmann: UK likely to adopt IORP Directive given Brexit timeline
6 July 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.
ShareAction welcomes IORP II focus on ESG risks, stranded assets
29 June 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.
Tesco boss forced to defend bank chief’s taxi bill before shareholders
23 June 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.
B&Q to face pressure from campaign groups over pay practices
14 June 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.
ShareAction chief Catherine Howarth on the battle for transparency
10 June 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.
European civil society groups join forces for responsible investment activism
9 June 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.”
David Pitt-Watson: By working together, NGOs and investors can secure positive change
9 June 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.
ESG roundup: ShareAction, ERIN, CDP, cement industry, carbon emissions
9 June 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.”
WPP pay: third of investors fail to back Sorrell’s £70m deal
8 June 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.
EU policymakers face major test of ambition to enable sustainable investment
6 June 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.
Swiss schemes have ‘long way to go’ on responsible investment
26 May 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.”
Sustainable Investment Guide 2016: what does good look like in the pensions industry?
25 May 2016
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.
Daniel Godfrey in talks with investment charity on tackling fund manager pay
19 May 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.”
How to plan for your charity’s pension auto-enrolment
16 May 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.”
Can you really know if that pizza is antibiotic-free?
3 May 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?”
Firm helping participants get answers
2 May 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.
Sovereign funds ignore climate risk
1 May 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.”
Time for shareholders to stand up for their rights
30 April 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.”
Shareholders urged to push for cheaper pneumonia drugs
27 April 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.
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.
Called crooks by their own shareholders: A new humiliation for bosses at scandal-hit HSBC as shares continue to tank
25 April 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.’
Taking Antibiotics Off The Menu
21 April 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.
Institute of Directors weighs in on BP chief executive’s pay award
13 April 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.”
McDonald’s, JD Wetherspoon and Domino’s urged to crackdown on use of antibiotics in global meat and poultry supply chains
11 April 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.
Investors urge fast food and pub chains to act to reduce farm antibiotics
10 April 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.
Exclusive: City firms issue major warning to high street food and pub chains over use of antibiotics on supplier farms
10 April 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.
BP to face flak over green targets and pay at AGM
10 April 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.
Fund managers urged to follow Neil Woodford’s lead on fees
5 April 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.
ShareAction chief proposes partnership with PRI to promote UN Sustainable Development Goals
23 March 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.
Lack of data stifling action on UN development goals, investors say
22 March 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.
Warning over ‘very troubling’ auto-enrolment market
21 March 2016
ShareAction has branded the current state of the auto-enrolment market ‘troubling’ and ‘uninspiring’.
The report, which was the group’s inaugural work in the space, revealed Aviva took the top spot as best auto-enrolment provider.
This Trick For Saving More For Your Retirement Works. But There’s A Catch
17 March 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.
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.
Aviva tops ShareAction’s first AE report
16 March 2016
ShareAction has published an inaugural report ranking the UK’s top auto-enrolment workplace pension providers, with Aviva taking the top spot.
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.”
ShareAction reveals best (and worst) AE providers for ESG and governance
14 March 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.”
Advertising boss Sir Martin Sorrell’s $100million pay deal is ‘preposterous’, says activist group
14 March 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.”
Ed Miliband calls for law to make CO2 emissions target legally binding
6 March 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.
Factory farming divestment: what you need to know
3 March 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.
Should All London Businesses Pay The London Living Wage?
28 February 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.
Auto industry pushed £500bn road maintenance plan as ‘green’ initiative
16 February 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.”
VW scandal highlights ‘complacency’ in auto industry, claim investors
15 February 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.
Carmakers urged to clear the air on emissions lobbying
14 February 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.
ShareAction: responsible fiduciaries must grapple with ESG
12 February 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.
Investors can shine brighter light on executive pay
9 February 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.”
UK decision not to amend rules on fiduciary duty ‘extremely disappointing’
13 November 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?”
Investor group calls on NEST to meet savers
15 October 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.
Backlash over ousting of fund body chief Daniel Godfrey
7 October 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.”
Morrisons Follows Lidl With ‘Living Wage’ Promise
30 September 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.
ShareAction calls for more member representation and less regulation in pensions
14 July 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.
Funds ‘should be more open’ on voting
19 May 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.
ShareAction gets organised as AGM season kicks off
5 March 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.
How to ensure your charity’s investments match its mission
7 January 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.
How investors are holding companies to account
24 May 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.
Power struggle over Canada’s ‘dirty oil’ sands
6 May 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.
When ethics wins the pension fund debate
17 December 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.