In view of the increased complexity of media issues in the digital age it was decided that a specific policy on pornography should be produced, while the Media Policy, first published in 2001, has also been amended to reflect this.
The new Policy Statement sets out our ethical criteria relating to print, broadcast and digital pornographic media. We will avoid companies a major part of whose business is the production or distribution of pornography, and also those operating licensed premises for live shows. Particular scrutiny will be applied to the controls in place within the telecommunications industry, whilst engagement will be a focus for companies involved in the display or sale of inappropriate material.
We continue to liaise with other global investors regarding trafficking ahead of the London Olympics. In the UK we are engaging with companies through CIG, and during the quarter we met with both Whitbread and InterContinental Hotels Group to discuss their approaches to managing the risks associated with trafficking in the hospitality industry. Whitbread’s adoption of the Statement issued by the International Tourism Partnership outlining best practice is welcome. The importance of this engagement was emphasised by our membership of the panel at a public event hosted by ECCR on vulnerable women, trafficking and prostitution, which included presentations from experts such as the Metropolitan Police.
As responsible investors we need to be able to assess the sustainability risks and performance of our portfolios. We attended the launch of the 2011 CDP survey results which is now supported by 551 investors with combined assets of US$71trillion, and we engage regularly with companies that have either failed or declined to participate in the CDP. We will analyse the 2011 results over the coming weeks with a view to developing further our engagement strategy with those companies that present the most material risk from climate change and which have not engaged with the CDP process.
We continue to monitor the progress of the Living Wage Initiative, noting that Barclays and AstraZenica have signed up. Tesco has not yet done so, arguing that its benefit and pension package is at least equivalent to the Living Wage. However, we are encouraging the company to become a signatory.
Our annual meetings with Nestlé are an important part of our stewardship engagement with the company. In October we discussed several company initiatives on cocoa, coffee, fair trade and sustainable sourcing. The last mentioned is of particular importance given the potential for deforestation and loss of livelihoods from plantation development. Nestlé is also on track to meet its sustainable sourcing of palm oil target by 2015. The meeting also covered developments in breast milk substitutes, and we noted that Nestlé has entered the FTSE4Good Index as the only producer of these products to meet FTSE4Good’s criteria. An additional meeting was held to discuss concerns regarding child labour in cocoa plantations, and we were reassured by the steps Nestlé is taking to try and regulate this.
Questions were raised with Veolia regarding bus services operating in the Occupied Territories. The company has been helpful in responding to our enquiries.
House builders are well placed to apply cutting edge energy and water saving technologies within the residential sector. Results of sustainability benchmarking in the house building sector in 2011 showed that several of our holdings and in particular Berkeley Group and Taylor Wimpey, scored well.
The fourth quarter was very quiet for proxy voting, with only 13 meetings voted on. Our voting record is available here.
We continue to take action where remuneration is deemed to be excessive or rewards average and poor performance. During the quarter, we opposed remuneration at BHP Billiton, Go Ahead Group, Wolseley, and Associated British Foods.
We also opposed the re-election of James Murdoch as Chairman of BSkyB in light of the phone-hacking scandal at News International. We also opposed the remuneration report and all non-executives seeking re-election who were members of the Remuneration Committee. We viewed remuneration as both excessive and poorly structured to deliver shareholder value.
Sustainability issues were discussed with several companies including Rio Tinto, J Sainsbury and Tesco. We received a safety and operational update from BP, and a briefing on developments in the Niger Delta from Shell. We also attended seminar briefings on the first anniversary of the Stewardship Code and a briefing on responsible investment and animal welfare.
