Last month in Paris we were delighted to take part in the first global meeting of church investors where we examined the challenges faced as faith based investors in seeking to integrate ethics into investment management. We were able to share our different approaches to responsible investing and explore ways to co-operate in company engagement. The outcome was agreement to find ways of working together in order to provide a global voice for the Church when engaging with the business community.
Since publishing our Media Policy in 2001, digital and electronic media have transformed the way pornography is viewed and disseminated in society. Consequently, we are now developing a specific policy in relation to pornography. Our engagement with WH Smith, which was successful in encouraging the company to revise its policy on the display of ‘lads mags’, demonstrated the complexity of responding to pornography. The new policy will complement a revised and strengthened Media Policy and will emphasise our approach to companies caught engaging in illegal or unethical activity.
We were appalled by the News International phone hacking scandal. Along with other responsible investors we take a robust attitude to such behaviour. Whilst having no direct investment exposure, we followed developments closely. As News Corp, the parent, is a US company, it was a coalition of faith and other US investors that led the lobby for a full and frank investigation in the run up to the AGM, but pressure was also applied by the churches in the UK where the problems occurred and in Australia, where the company originated.
In response to a client who raised concerns about UK banks providing loan finance to manufacturers of cluster munitions, we contacted the main UK banks to understand their policies. A particularly strong response was received from HSBC, which confirmed that it does not provide any loan finance to the defence industry. Barclays, RBS and LloydsTSB, all confirmed that although they may provide finance to conventional defence companies, they do not lend to companies that manufacture munitions outlawed by international treaty, such as land mines and cluster bombs.
We produced a detailed analysis of the public disclosures of six companies that have so far declined to participate in the CDP process. This suggested that the most serious question related to Cookson, which has a material exposure to climate change risk, but discloses little information on how it manages the situation. We will now escalate engagement via the CIG, as recommended by JACEI. Halfords and Taylor Wimpey were both found to have moderate direct impacts, but both showed evidence of improving disclosure and along with the other three no further action will be taken for now.
There is increasing investor recognition that human trafficking is an issue for the hotel industry. Good practice based on The Tourism Code has been adopted by some hotel groups. The UN Global Compact includes some of the same principles and although InterContinental Hotels Group is a signatory it is yet to report full compliance, whilst Whitbread appears to be a signatory of neither. We are now seeking to meet with these companies as the churches address the issue of trafficking on a global basis as the London Olympics approaches.
We hosted a meeting for faith investors with GlaxoSmithKline that provided an update on the company’s corporate responsibility strategy, particularly its commendable ‘access to medicines’ programme whereby drugs are provided at reduced price to developing economies. We also discussed stem cell research concerns, clinical trial conduct, US sales and marketing practices and further progress on the ambitious target to become carbon neutral by 2050.
We have continued to engage with Veolia in response to enquiries about its operations in Israel. Veolia confirmed it operates two express bus routes that connect Jerusalem with two Israeli settlements as well as Palestinian villages. However, it has been confirmed that the routes provide non-discriminatory travel for both populations and that it did not operate any other services in the Occupied Territories. It has also sold a waste disposal site that it previously managed and operated in a settlement district.
The end of the 2011 proxy voting season coincided with more evidence that executive pay in the UK is rising faster than average pay. We continue to take a strong line on excessive director pay, and during the quarter opposed many remuneration reports including Sainsbury, BT Group, M&S, Vodafone and Burberry.
We were delighted that our work in ethical investment has been recognised by the outside world as we have been nominated for the award of Financial News SRI/Sustainable Investment Manager of the year.
