Ethical Investment Review March 2021

Climate Emergency

In March, Climate Action 100+, (we are investor participants) launched its benchmark of the largest corporate emitters. The benchmark assesses individual company performance against the initiative’s three high-level commitment goals: reducing greenhouse gas emissions, improving governance, and strengthening climate-related financial disclosures. While there is progress being made across sectors to make ambitious climate commitments, the benchmark shows there is still a long way to go in delivering on these pledges. We continue to engage with Anglo American as part of CA100+.

During the quarter, Royal Dutch Shell released its new strategy ‘Powering Progress’ which outlines its strategy to transition its business. As part of this strategy, Shell committed to become a net-zero emissions energy business by 2050, in step with society and its customers. The strategy and associated strategy day provided an opportunity for Royal Dutch Shell to outline the concrete steps in a transformation that would see it continue to be consistent with the Paris Accord. In this regard, the strategy proved to be a disappointment.


In January, the CFB & Epworth participated in an online event on the 2nd anniversary of the Brumadinho tailing dam disaster. As a reminder, this disaster happened when the tailings dam at the Córrego do Feijão iron ore mine failed, killing 270 people. The event recognised the progresses made of the past two years, but also that much was still to be done. Future steps for the collaboration include developing a 2030 Investor Agenda for the mining sector, which will cover issues including tailings waste, child labour, climate change as well as others.

Food parcels

The CFB & Epworth signed a joint letter to the Chief Executive of Compass Group to answer critical questions regarding the food parcels that families may receive in lieu of free school meals that had been provided by Compass Group subsidiary Chartwells. After social media and news coverage noted the inconsistent, meagre food portions, investors mobilised to seek reassurance that changes were being implemented at the company. Chartwells issued an apology and outlined steps it would be taking to rectify the situation.


The CFB & Epworth and representatives from the Joint Public Issues Team met with Nestlé to discuss breast milk substitutes (BMS) and other material sustainability issues. Following the Call to Action from the United Nations agencies and eight civil society organisations to all manufacturers of BMS, Nestlé has released its response, noting it will unilaterally stop promotion of infant formula for babies ages 0-6 months in all countries, with particular relevance to the USA, Canada, and Japan, where no regulations currently exist. We have a longstanding history in engaging with Nestlé in relation to BMS and is pleased to see the fruits of this engagement. The meeting provided the opportunity to discuss internal training at Nestlé on BMS, as well as the process for accreditation through ATNI and FTSE4Good. Also discussed in the meeting were Nestlé’s climate targets, farm animal welfare, and Fairtrade.

Access to Nutrition Index

In July 2020, the CFB became signatories to the ATNI’s Investor Expectations on Diets, Nutrition and Health. The report outlines four expectations related to corporate governance, strategy, lobbying, and transparency for food and beverage manufacturers and retailers. The CFB & Epworth co-filed a shareholder resolution at Tesco, calling for targets to increase the proportion of healthy products in its sales. Using Access to Nutrition Initiative research, it was found that Tesco lags its peers on reporting and encouraging healthy diets. Tesco has a 27% market share in the UK grocery market, and therefore has a key role to play in shaping the nation’s diet.

Access to Medicine

Recognising the critical nature of the COVID-19 vaccine in the fight against COVID-19, the CFB supported the call for an effect, fair and equitable global response to the roll out of the vaccine which was organised by the Access to Medicine Foundation. The response recognised that if the tools to fight COVID-19 were not distributed fairly, and the virus continues to spread in low- and middle-income countries, the additional impacts could be nearly twice as many deaths, and USD9.2 trillion in global economic losses.

Fair Tax Mark

The CFB & Epworth undertook a round of engagement with companies held in its UK portfolios to highlight the Fair Tax Mark, and to encourage companies to become accredited. Some of the corporate responses to this engagement highlighted the complexity and cost of attaining the Fair Tax Mark accreditation, particularly in the difficult environment of the COVID pandemic. Some were more positive, and we hope that some of our holdings will become accredited in the coming months as a result. Following our engagement with Ten Entertainment, a listed ten-pin bowling company, the company now publishes its tax policy online. The CFB & Epworth has also raised this with a number of other companies that it has met during 2020 and tax justice will continue to be on the agenda for company meetings in 2021.

Corporate Governance

During the quarter, the CFB, as part of the Church Investors Group (CIG), wrote to the leaders of FTSE 350 companies to inform them that it will be using its votes to push large companies to increase board diversity during the upcoming AGM season. The CIG believes that diverse teams are both fairer and better for investors. Following the recommendations of Hampton-Alexander Review on gender diversity and the Parker Review on ethnic diversity the CIG has broadened its expectations on board diversity. For the 2021 voting season, the voting policy has extended its diversity considerations to include ethnic diversity at board level and has increased its minimum expectations for gender diversity. The voting policy already holds companies to high standards on executive pay, climate change, and tax justice.

Ethical Investment Review December 2020

Climate emergency

During the quarter, we have continued to update our assessment of oil and gas companies in response to the 2018 Notice of Motion at Methodist Conference, and in light of the 2020 Methodist Conference and Council outcome. Climate strategy updates for Equinor and Repsol were released in November, with Equinor announcing its ambition to become a net-zero energy company by 2050, as well as its plans to achieving carbon neutral global operations by 2030 and reducing absolute greenhouse gas emissions in Norway to near zero by 2050. Repsol released its strategic plan for 2021-2025, which notes, among other climate related announcements, the planned expansion of its low carbon generation business, which will have a generation capacity of 7.5 gigawatts by 2025 and 15 gigawatts by 2030.

We continue to engage with companies as part of Climate Action 100+. In December 2020, CA100+ released a progress report outlining company progress across the 160 companies covered. These companies represent over 80% of global industrial emissions. The report shows that while some companies are taking steps to decarbonisation in line with a net-zero emissions by 2050 trajectory, there is a long way to go. Nearly half (43%) of companies have set a net zero by 2050 target or ambition in some form, however only 10% of focus companies have net-zero targets that explicitly cover the companies’ most material scope 3 emissions.

Through IIGCC, and along with other investors, we wrote to the Audit Committee Chair of 36 European companies calling for Paris-aligned Accounts. The paper accompanying the letter which outlines Paris-aligned Accounts noted five steps for directors to take, including an affirmation that the goals of the Paris Agreement have been considered in drawing up the financial statements. It also outlines expectations for auditors to highlight where accounts are ignoring material climate risks and making it clear they should say when accounts are not ‘Paris-aligned’. The companies written to were companies that could face material headwinds from a move onto a 2050 net zero pathway, including oil and gas, and mining companies, transportation companies, and materials companies such as CRH.


We wrote to Rio Tinto regarding the incident at Juukan Gorge, Western Australia where an aboriginal site was blasted. Although Rio Tinto had obtained the legal permissions and engaged with the Puutu Kunit Kurrama and Pinikura (PKKU) peoples throughout a multi-year process, new information on the heritage of the site, which came to light prior to the blast, did not result in the blast being halted or postponed. Rio Tinto has apologised for this failure, and the CEO and other senior executives have stepped down. This engagement aimed to understand the long term changes taken place at Rio Tinto to ensure an incident of this nature does not happen again, and to learn more about the cultural heritage management and relations with the Traditional Owners.

We received a comprehensive response, which noted the creation of a new role of chief advisor, Indigenous Affairs, who has a direct reporting line to the Chief Executive. This role is to be filled by a senior Indigenous leader. There is also ongoing consultation about a proposal to establish an Indigenous Advisory Group to help the company better incorporate Traditional Owners’ views and concerns into its operations. The company has also committed, among other things, to reassess any activity that has the potential to impact heritage sites, with an immediate focus on locations that could be impacted over the next 18-24 months.

Along with other investors, we also wrote to mining companies including Anglo American and BHP Group regarding the incident at the Juukan Gorge, asking for: assurance of their policies and procedures on their approach to relationships with Traditional Owners; information regarding the governance frameworks and Board oversight of the issues; specific action or actions that company has taken to identify and manage the risks across its business; and how the company intends to disclose in relation to issues. We look forward to hearing back from these companies in due course.

COVID-19 and food producers

Following on from news articles and previous engagement, we wrote to five food producing companies, asking about their policies and processes when responding to any possible outbreak of COVID-19 in food manufacturing plants, as well as in regard to sick leave and pay for staff who have to self-isolate due to the Coronavirus. So far, we have heard back from three (Hilton Food Group, Cranswick, and AB Foods) out of the five, and will continue to engage with these companies. We were particularly impressed with the response from Hilton Food Group.

Fair Tax Mark

We wrote to a number of companies including Softcat and Howden Joinery to highlight the Fair Tax Mark, and to encourage companies to become accredited. The Fair Tax Mark recognises businesses which transparently pay the appropriate amount of tax, in the appropriate place, at the appropriate time. We believe this is a vital component of a fair and equal society, where business supports the upkeep of the economic and social environment in which it operates. We know that this isn’t a quick process for companies to complete, and therefore expect this engagement to be over the longer term. Encouragingly, we have heard back from one company already, noting the steps it is taking to prepare for a potential application.

Executive remuneration

We have engaged with Brooks Macdonald and MJ Gleeson on remuneration, giving feedback where we have voted against the remuneration report in line with our policy. We inform companies of our voting policy at the start of every voting season, and encourage dialogue with companies on it.

Corporate governance and voting

It was a quiet quarter for voting. We voted against the majority of remuneration reports at UK meetings. We voted against the entire Remuneration Committee at Ferguson as the remuneration report breaches multiple principles in our template. We supported shareholder resolutions at two Australian banks which called for climate emergency transition planning disclosure.

Ethical Investment Review September 2020

Climate emergency

The climate emergency continues to be our focus. We are working with other investors to encourage companies to provide the data needed to judge progress towards a net zero emissions world. We continue to review the oil and gas sector, tracking new company announcements and reconsidering our analysis of the sector. We expect to publish a further report on the sector in Q2 next year. There was no change in the quarter to our oil and gas ethical exclusions, despite BP (an excluded company) announcing demanding targets to reduce its absolute emissions and invest further in renewables.

At its climate change related day BHP Group presented on its new climate commitments. The company set out actions to reduce operational emissions by at least 30% by 2030, from adjusted 2020 levels. It has also strengthened the linking of executive remuneration to the delivery of its climate plan. The update also included insight into the performance of BHP’s portfolio in a transition to a 1.5°C scenario, which showed increased demand for most products in the next 30 years compared to the previous 30 years, barring oil, and energy coal.

Meat producers

We met with Hilton Food Group (virtually) in Q3 and discussed its approach to sustainability and followed up on the issue of supply chain emissions. Hilton Food Group package meat, as well as fish and alternative proteins, for supermarkets across Europe and Asia Pacific. The company is considering innovations in feed and farming that can reduce emissions in the supply chain, particularly methane from cattle. The company has set an objective of carbon intensity reduction of 15% in emissions of cattle by 2025. This is aligned with the environment target of the European Roundtable for Beef Sustainability.

Mining – Rio Tinto

On 24 May 2020, Rio Tinto detonated an area in Western Australia which was deemed to have high significance to the native people of the region. The area of interest was land belonging to the Puutu Kunti, Kurrama and Pinikura People (PKKP) within the Juukan Gorge. Although Rio Tinto had obtained the legal permissions and engaged with the PKKU peoples throughout a multi-year process, new information on the heritage of the site, which came to light prior to the blast, did not cause the blast to be halted or postponed. Rio Tinto has apologised for this failure, which appears systemic in nature, and the CEO and other senior executives have stepped down. We have followed this closely since May and we are looking for the company to refresh its culture and reform its procedures.

Mining – tailings

In August, the Global Industry Standard on Tailings Management was launched, establishing a global standard on tailings management for existing and future tailings facilities. The Standard has been developed through the Global Tailings Review, which was co-convened in March 2019 by the United Nations Environment Programme (UNEP), Principles for Responsible Investment (PRI), and International Council on Mining and Metals (ICMM). The Standard has been established in response to the disaster at the Córrego do Feijão iron ore mine in Brumandinho, Brazil in January 2019. The tailings dam suffered catastrophic failure which killed 270 people, with 11 missing persons. We participate in the Investor Mining and Tailings Safety Initiative which called for the Standard to be established.

Principles for Responsible Investment

CFB/Epworth once again received an A+ score from PRI for our Strategy and Governance, which we have attained for the last few years. We also received an A or higher across the Listed Equity and Bond modules. The Principles for Responsible Investment (PRI) runs an annual survey for investment firms and asset owners to outline their responsible investment activities.

Healthy markets

In our March report, we highlighted our participation in the Healthy Markets Initiative coordinated by ShareAction. Having participated in several webinars and briefings provided by ShareAction, we engaged with two supermarkets on the topic of childhood obesity, requesting further information about their promotions, strategy and targets. Both Tesco and Ocado responded to our engagement, outlining the steps they are taking to respond to the issue. Tesco noted its reformulation strategy of own brand products, and its commitment to increasing positive nutrients such as fibre, fruit, and vegetables, alongside reducing nutrients of concern e.g. fat, salt, and sugar.

Modern slavery

We continue to work as part of the Find It, Fix It, Prevent It programme with others to tackle Modern Slavery. This engagement asks companies “Have you found modern slavery in your operations or supply chain this year?”. We continue the dialogue from that point. We are engaging with two companies on this issue in the hospitality sector at present: Compass Group and InterContinental Hotels Group.

Fair Tax Mark

Epworth Investment Management has become the first fund manager in the UK to be accredited by the Fair Tax Mark. The Fair Tax Mark certification scheme was launched in February 2014 and seeks to encourage and recognise organisations that pay the right amount of corporation tax at the right time and in the right place. We promote the Fair Tax Mark when we engage with companies.

We engaged with MJ Gleeson, a UK housebuilder held in our portfolios to encourage them to become accredited and it has become the first company in its sector to do so.

Corporate governance and voting

Q3 is a quieter quarter for voting. In the quarter, we voted against 67% of remuneration reports in the UK Equity Fund and 57% in the Global Equity Fund. In addition, we opposed or abstained on the election of 19% of directors in the UK Equity Fund – this is normally as a result of poor practices relating to either remuneration or diversity.

Unilever had a special vote regarding the unification of its dual structure, which passed with 99% of the vote.

Ethical Investment Review June 2020

Climate emergency – assessment of fossil fuel companies

The latest stage of our work on oil and gas companies and the climate emergency was finalised during the quarter. The Joint Advisory Committee on the Ethics of Investment (JACEI) reported its findings and an update on recent developments to Methodist Conference. It was responding to a request by the 2017 Conference to review the fossil fuel sector. Its report reflected the culmination of three years of work we undertook, establishing and implementing a methodology for assessing oil and gas companies in the context of projections going forward decades, together with extensive engagement with many of those companies.

We assessed 15 companies across five different categories using up to 25 metrics. As a result, the funds we manage exited three holdings – BP, Total and ARC Resources, and we excluded a further ten (including Exxon, Chevron and ConocoPhillips) based on this work. JACEI advised that there was no ethical bar to investment in Royal Dutch Shell, Equinor, ENI and Repsol. These companies have all made commitments that lead JACEI to believe they are aligned, or are close to being aligned, with the Paris Agreement to keep the average temperature rise “well below 2°C”. We will continue to engage with these companies to press for more detail on their commitments and for further action.

Royal Dutch Shell

Royal Dutch Shell announced new ambitions for transitioning to a lower carbon world. It now aims to reduce carbon intensity to be line with global warming of 1.5°C rather than 2°C by 2050. Shell continues to talk about long-term ambitions at the pace that society transitions to a lower carbon world, rather than firm targets. It is focused on reducing emissions intensity rather than absolute emissions targets. Nevertheless, the announcement set a new standard for the industry.

Anglo American

We co-lead on engagement with Anglo American on behalf of the Climate Action 100+ investor coalition. At its most recent AGM, Anglo American announced it was working towards a possible demerger of its thermal coal business in the next two or three years. It announced a commitment to be carbon neutral across its operations (Scopes 1 & 2) before 2040. The company also released Scope 3 estimates and outlined its approach to these emissions, which it cannot control. It was responding to our questions. These are welcome commitments by the company and we will continue to engage on the issue.

Epworth Climate Stewardship Fund

Epworth Investment Management Ltd launched the Epworth Climate Stewardship Fund for Charities in late May. The Fund applies all of our existing ethical policies and also excludes companies that derive more than 10% of revenues or profits from fossil fuel extraction. It also looks to invest in companies that positively contribute to the transition to a low carbon economy, and is designed for those of our customer who want to disinvest from fossil fuels. More information on this fund is available on the Epworth website.


We co-filed a resolution at Barclays’s AGM, as part of a coalition co-ordinated by ShareAction. This attracted the support of 24% of shareholders. The board proposed an alternative resolution with a net-zero ambition and a commitment to align its activities with the Paris Accord, but which did not have a timeline to phase out lending to fossil fuel companies.

Coronavirus & mental health

According to the NHS, one in four people in the world will be affected by mental or neurological disorders at some point in their lives. The impact of social isolation, uncertain employment, or bereavement due to coronavirus, could have mental health consequences for many. We co-signed a letter to FTSE 100 constituent companies encouraging them to protect the mental health of their workforces during this extraordinary time. We called for an action plan specific to mental health during COVID-19 to be introduced at each workplace, which may include training for managers on how to spot warning signs and clear provision of details on how to access support. So far, comprehensive responses have been received from companies including AB Foods, Experian and Halma.

Modern slavery

In its most recent Modern Slavery statement, Tesco noted instances of Modern Slavery in its supply chain in Thailand and Malaysia. We recognise that there is Modern Slavery in most, if not all supply chains, and, while we work collectively to eradicate Modern Slavery in society, that cannot be done without first uncovering it. This transparency from Tesco is welcome, along with its further investigation and action plans for the sites involved. We have previously engaged with Tesco on Modern Slavery. We are also part of the Find it, Fix it, Prevent it engagement on this matter with companies in the hospitality sector.

Gender diversity

In 2016, the Hampton-Alexander review set recommendations for FTSE 350 companies to improve the representation of women at the board level and in senior management. It set a minimum 33% target to be reached by the end of 2020. In February 2020, FTSE 100 companies in aggregate reached this goal. However, the FTSE 250 had not. With less than six months to go, we continue to vote on gender diversity by voting against the re-election of the Chair of the Nominations committee at FTSE 350 companies where the Board composition is not at least 33% women. We are looking at how other aspects of diversity can be considered effectively.

Corporate governance and voting

Q2 contains much of the AGM season, when companies with December year ends report to their shareholders. This year has seen an increase in the number of climate change resolutions (see Barclays above), and a number of ‘revolts’ where substantial minorities of shareholders voted against remuneration reports or executive pay schemes. These included Intertek, Lloyds Banking Group and Ten Entertainment Group among our holdings – we voted against remuneration policy in all three cases. Overall, during Q2 we voted against 63% of remuneration reports in the UK Equity Fund and 62% in the Epworth Global Equity Fund.

Ethical Investment Review March 2020


The developing COVID-19 pandemic and the response to it has dominated events this quarter, and also impacted our ethical work. Many companies are receiving government, ultimately taxpayer, subsidies in the form of grants, including to maintain jobs, and guaranteed loans. Companies’ priorities have been ensuring their survival and the well-being of their employees. We recognise that and so we will not for the time being be voting against the re-election of board chairs and executive directors at AGMs, unless there has been particularly poor performance responding to climate change. This temporary policy will be reviewed at the end of Q2.

Looking further out, there will be greater expectations for companies which receive government support, whether direct or indirect, to be good corporate citizens. This includes paying a fair rate of tax, preventing excessive executive pay, and paying the Living Wage.

Climate change – oil & gas companies

We have completed our review of 15 oil and gas companies, examining the extent of the alignment of their business models and investment plans with the Paris Agreement. We assessed climate change scenarios and looked at 25 metrics for each company. The Paris Agreement targets an average temperature rise of ‘well below 2°C’ but we were also mindful of growing calls for a 1.5°C target. A new development was the inclusion of companies’ Scope 3 emissions targets and ambitions in our assessment.

Our assessment was reviewed by the Joint Advisory Committee on the Ethics of Investment. Both our assessment and JACEI’s deliberations have concluded that further oil and gas companies should be excluded from investment on ethical grounds. We will make a further announcement about this soon. We have also committed to further engagement with other oil and gas companies. The Committee’s report will be published in Q2.

During the quarter there were further positive developments in companies’ responses to climate change. The most significant was from BP, with its new CEO announcing an ambition of zero net Scope 3 emissions from upstream operations by 2050. This represents a major step by the company. However, it has yet to provide any details on how it will achieve this aim and it does not currently rank amongst the leading oil and gas companies in our analysis. In the current quarter, Royal Dutch Shell has announced a new ambition for Scope 3 emissions intensity based on a 1.5°C scenario rather than 2°C.

Meat producers

Following the results of the CFB carbon footprint analysis, and in line with our 2009 policy, we have engaged with both Cranswick and Hilton Food Group. These companies were found to have higher than average carbon footprints by Trucost, due to Scope 3 emissions from the meat supply chain. We asked what actions the companies were implementing to reduce supply chain emissions, as well as what measures they were taking to reduce those Scope 1 and 2 emissions within their control. We were encouraged by Cranswick’s response: looking at the impact of animal feed of the animals, steps to reduce waste, and a commitment that all of its owned farms will be carbon neutral by 2030. We look forward to hearing back from Hilton Food Group in due course.


Barclays responded to the shareholder resolution we co-filed through ShareAction by proposing a resolution of its own. The Barclays resolution includes a net zero emissions by 2050 ambition along with a commitment to transition its activities to align with the Paris Agreement. While the management commitment is a welcome step, it does not commit to any targets to phase out lending to fossil fuel industries. We are, therefore, continuing to co-file the shareholder resolution. The AGM is in early May.

Tax justice

In line with our engagement policy on tax justice, we engaged with two of our holdings in the quarter. We spoke to both MJ Gleeson and The Renewables Infrastructure Group about the Fair Tax Mark and encouraged them to seek accreditation. Both companies are considering the Fair Tax Mark and the implications of accreditation further as a result. We look forward to their responses. Separately, our voting policy responds to poor disclosure of management action on tax.

Healthy markets

As part of the Healthy Markets initiative, which we support through ShareAction and Access to Nutrition, we attended a briefing on Supermarkets and the role that they play in tackling obesity. We are looking at new ways we can engage on this topic.

Living wage

We engaged with Segro and DS Smith on the Real Living Wage. ShareAction had contacted both companies previously but they had not become accredited. We asked the companies about barriers to accreditation. Segro told us it paid at least the Real Living Wage to its employees, but to be accredited would also need its supply chain to be Real Living Wage compliant. We look forward to hearing back from DS Smith.

Corporate governance

During the quarter we refreshed our voting policy, working alongside the Church Investors Group, in time for the 2020 voting season. This already holds companies to high standards on executive pay, boardroom gender diversity, climate change, and tax justice. We regularly vote against executive remuneration schemes and against the reappointment of directors when pay schemes are particularly egregious. This year, new measures extend expectations on diversity and hold directors to account on Modern Slavery. Mining companies face additional scrutiny on the issue of the management of tailings dams following the Brumadinho disaster that killed 270 people last year.

During Q1 we voted against 64% of remuneration reports in the UK Equity Fund and 86% in the Epworth Global Equity Fund. Our voting policy also led to the Funds voting against a number of directors.

Ethical Investment Review December 2019

Climate change – evaluation of companies

We are nearing the completion of our project to assess the extent to which fossil fuel companies are aligned with the Paris Agreement. The baseline assessment of our portfolio holdings has been completed. We are now engaging with companies and conducting further research. We intend to meet with the largest oil and gas holdings well ahead of Methodist Conference later this year. So far we have had fruitful engagements. We are also encouraged by news that more fossil fuel companies are setting zero emissions targets and moving to publish estimates of Scope 3 emissions. A report will be sent to the Conference outlining the conclusions of the work, which are likely to include recommendations to exclude more oil and gas companies.

Climate change – company engagements

Meanwhile, our engagement work on climate change continues to be extensive. We have co-filed a shareholder resolution at Barclays. This resolution is the first at a UK bank regarding climate change and calls for Barclays to set and disclose targets to phase out financial services to those parts of the energy sector which are not aligned with the Paris climate goals. This includes lending to specific fossil fuel projects, as well as to companies themselves. This resolution was organised by ShareAction, and will be voted on at the Barclays AGM in May 2020.

We have engaged with successfully engaged with Anglo American on its lobby activities, on behalf of the Climate Action 100+, and in collaboration with the Church of England Pensions Board. Anglo American had previously released an independent audit of its lobbying activities in 2018, however there was a feeling amongst investors that there was further for the company to go to assure that it is has robust governance and oversight procedures to monitor its trade associations. Following meetings with the company, a statement was released by Anglo American outlining its response.

It has committed to ensure that there are no fundamental misalignments between industry associations’ policy positions and the Paris Agreement. It will also publish a full list of membership of industry associations including any fees paid and the rational for the membership.

Climate change – policy engagements

We were signatories to a letter sent to all EU heads of state and governments on the 2050 net-zero emissions target, noting our support for a net-zero emissions target for the EU and the alignment of all relevant EU legislations to the temperature reduction goals set out in the Paris Agreement. This was coordinated by IIGCC and noted the urgent “need to act” in the face of the climate emergency and how “the costs of inaction will be catastrophic”.

Without greater action, projected losses from a 4°C global temperature rise are €21 trillion over the next 80 years. Greater action on climate change could deliver €23 trillion in global economic benefit to 2030. The estimated benefits of adopting the target include an estimated two percent boost to GDP across the EU through to 2050 and the creation of 2 million new jobs. Importantly, this does not include the additional benefit of avoided climate change and adaptation related costs.

Access to Medicine

We participated in a conference call with GlaxoSmithKline as part of the Access to Medicine initiative. The Access to Medicine Foundation ranks, stimulates and guides pharmaceutical companies to do more for the people living in low- and middle-income countries without access to medicine. GlaxoSmithKline is scored as the top company in the 2018 ranking of the index; however, as with all of the companies in the index, there is room for improvement. A good discussion was had between investors and GSK representatives around the opportunities and complexities the company faces.

Modern slavery

We participated in the Church Investors Group conference in November, where work done on our behalf on modern salvery was discussed. A report on the topic has been published outlining the engagement work that has been undertaken over the last 2 years. The report outlines the engagement that began in 2016 on behalf of all members of the Group. Letters have been written to a total of 265 companies to encourage greater awareness and action around ending modern slavery.

The engagements encouraged companies to develop better policies, processes and procedures for identifying and then addressing modern slavery. One of the main causes of modern slavery is debt bondage, and companies were pressed to adopt the ‘Employer Pays Principle’. This is a provision which prohibits employers from charging recruitment fees. In addition, there were attempts to increase awareness of modern slavery amongst stakeholders and call for increased global legislation and regulation aimed specifically at tackling modern slavery.

Corporate governance and voting

In the UK, we voted at 13 AGMs in the quarter. We opposed 75% of remuneration votes, including those for ABFoods, BHP Group and Ferguson. The Epworth Global Equity Fund voted at 22 AGMs, opposing 82% of remuneration votes.

We voted in favour of the shareholder resolution at BHP Group to approve the suspension of memberships of industry associations that are involved in lobbying inconsistent with the goals of the Paris Agreement. This gained 22% of votes, despite being opposed by the board, and we anticipate a response by the company in due course. Full voting reports are available on request and a summary is published on our website.

Ethical Investment Review September 2019

Climate change

Our project to examine the extent to which fossil fuel companies are aligned with the Paris Agreement has made further progress. Following a review of the indicators we are using, we have analysed more companies. We have also extended our work from oil and gas to mining companies. We remain on track to make judgments on oil and gas, and coal, companies in the first half of next year. We are assessing these companies in the round and over time because a snapshot of current information does not reveal which companies appear committed to change in practice. It is clear considerable further change is required in this sector.

We analysed Fortis, a Canadian utility company according to our electricity generation policy. We decided to exclude it because it had a high exposure to power generation from coal.

We supported a shareholder resolution at the BHP Billiton AGMs, calling for membership of lobbying groups to more clearly reflect the need to support transition to a low carbon economy. This followed the news that the company remained a member of the Minerals Council of Australia which has spent significant sums on pro-coal lobbying and advertising.

Our work on low carbon transition across portfolios continues, including in collaboration with other investors. We have joined the IIGCC Paris Aligned Investment Initiative, focusing on listed equity and corporate bond assets.

Beyond fossil fuels

Over the summer months we have been engaging with some of our investors around the issue of investments in fossil fuels. It is clear that some of our investors would like to proceed more quickly and disinvest from oil and gas producers now. Following those discussions we held a successful client conference, Beyond fossil fuels, to discuss how a new fund avoiding oil and gas producers would look.

This discussed the investment focus of a new fund, the investment implications of disinvesting from oil & gas and whether investors were comfortable remaining invested in heavily polluting industries such as airlines or cement. Following the conference we have consulted further and we are now engaging in detailed fund design.

Carbon footprint

We are committed to managing portfolios with carbon footprints that are relatively low and measurably declining. We commission Trucost to analyse our portfolios annually. The emissions allocated to each company include Scope I & II emissions (direct and energy) and the supply chain elements of Scope III, though not the customer use elements of Scope III. In particular, the emissions released by burning fossil fuels are not allocated to the fossil fuel companies.

The data for 28 February shows the carbon footprint of the UK equity portfolios rose over the year and is above the market. One reason for this is that our ethical approach excludes the relatively lower carbon intense tobacco sector and is therefore more likely to have a higher weighting in utility companies. In addition, much of the difference between the portfolios and the market can be explained by the fact that the portfolios hold Cranswick and Hilton Food Group. These are food production companies involved in the meat industry. Trucost attributes to their footprint the carbon emissions from the animals in their supply chains.

This result raises some interesting issues. Animals do release greenhouse gasses yet we have not taken the view that meat consumption is unethical. It highlights that there are trade offs for society. We are reviewing the result nevertheless. It should also be noted that there is no consensus about how a portfolio carbon footprint should be calculated and other methodologies produce different results.


Alongside other investors, we are engaging with the Marine Stewardship Council to encourage it to reference ‘ghost gear’ in its sustainable fisheries standard. ‘Ghost gear’ is old fishing gear that can be lost or abandoned in the ocean, significantly contributing to the level of plastic pollution.

Modern slavery

We supported an investor response to a UK government consultation, entitled Transparency in the supply chain. The response called for mandatory reporting to be expanded from the private to the public sector, noting that Modern Slavery is a risk in all organisations. It recommended improved reporting on the outcomes of actions companies take. Separately, we engaged with Watkins Jones and The Renewables Infrastructure Group about their policies and approach towards combatting Modern Slavery.

Access to medicine

We are participating in the Access to Medicines engagement programme, which will be engaging with 19 listed pharmaceutical companies on both access to medicine and the third Sustainable Development Goal, which focuses on healthy lives and promoting wellbeing for all ages. The purpose is to encourage companies to continue their efforts to improve access to medicines in low and middle income countries.

Child obesity

Healthy and adequate nutrition has long been an ethical investment concern of ours. Our policies on children’s issues and on the food industry highlight it as an area for engagement, noting both the challenges of childhood obesity and malnutrition. We have joined with an initiative run by ShareAction which aims to engage with companies about childhood obesity. ShareAction is working with Access to Nutrition, an initiative with which we are already involved. We are likely to sign a supportive investor statement later in the autumn.

Corporate governance

The quarter marks the end of the main voting season. We voted at 14 UK AGMs, opposing 67% of remuneration votes, including those for Berkeley Group, BT Group, Burberry, Cranswick, Experian, SSE and Vodafone. Insufficient boardroom gender diversity prompted votes against Nomination Committee chairs at BT Group, DS Smith, National Grid and SSE. The Epworth Global Equity Fund for Charities voted at 10 AGMs, opposing all three remuneration votes.
Full voting reports are available on request and a summary is published on our website.

Ethical Investment Review June 2019

Climate change

Climate change continues to be one of the main areas of our ethical work. We co-filed a shareholder resolution at BP’s AGM, calling on the company to explain how it will align with the Paris Agreement. The resolution secured the BP board’s backing and was passed with 99.47% of votes. We also supported a resolution organised by the activist group ‘Follow This’ calling on BP to go further, including publishing Scope 3 emissions targets; unfortunately, this only secured the backing of 8.35% of investors.

We attended the Anglo American AGM, where we made a statement on behalf of the Climate 100+ investor coalition; we co-lead on engagement with Anglo American. This is part of an ongoing dialogue being lead by the CFB and Hermes in regard to Anglo American’s transition to a low carbon economy. This involves biannual meetings with the company to raise issues related to climate change, including climate linked remuneration, scope 3 emissions, and the reduction of coal mining. We look forward to the next meeting with Anglo American.

We continue to work on our project to evaluate the consistency fossil fuel companies’ business models with the Paris Agreement. We remain on track to draw final conclusions in 2020. With the launch of the new Global Equity Fund for Charities, we had to undertake an interim judgement on a number of global oil companies and decided that some would be highly unlikely to meet the criteria and so excluded Chevron, ConocoPhillips and ExxonMobil from investment.

We have already excluded several other fossil fuel producers under our existing policies and it is likely we will exclude further companies in future. However, we are aware that some clients want to move faster so we are consulting on the potential for launching a fund which excludes all companies with significant involvement in fossil fuel extraction.

The approach banks have been taking with their lending policies and climate change has been another area of focus. We have engaged directly with the Canadian banks to which we have exposure with respect to their lending to companies involved in tar sands projects, and found their responses to be disappointing. We are reflecting on the next steps. We have also joined other investors in writing letters to Barclays and Unicredit regarding their lending to fossil fuel projects.


The tailings dam disaster near Brumadinho in Brazil earlier this year remains very much in the minds of investors. We are part of an investor coalition organised by the Church of England which engages with mining companies on their tailing dams. This initiative has seen letters sent to 651 listed mining companies, in order to create a global register of tailings storage facilities. This is designed to raise awareness of the tailings facilities that the company owns or operates in order to see which company has responsibility for the facilities, and the scale of the risks that it faces.  As of 5 July 2019, 31% of companies contacted have responded, and we were pleased to see that included 34 of the top 50 mining companies. We continue to be active in this coalition.

The Mining and Faith Reflections Initiative (MFRI), of which we are part, organised a conference in the Vatican on Mining and the Common Good. Delegates included church, NGO, and local community representatives along with mining CEOs and other executives.

Tea & workers’ rights

We have been engaging with tea producers for some time, recognising the abuses that can take place within the sector. We wrote to Unilever to ask for greater transparency on the estates from which it sources tea and requesting this to be disclosed publically. We were pleased to receive a response from Unilever, which confirmed that the company will now publish the tea estates it sources its UK and Ireland tea from on its webpage.

Israel Palestine

We continue to monitor investment issues with respect to Israel Palestine, applying our dedicated policy. We had engaged for some time with Heidelberg Cement; however for unconnected reasons our funds no longer hold shares in this company.

Living Wage

As part of our work with ShareAction, we engaged with Reckitt Benckiser and Intercontinental Hotels Group in June to encourage both companies to become Living Wage accredited.  We look forward to hearing their responses in due course.


We have continued to engage with companies on the issue of plastic pollution. We contacted Ted Baker about the use of plastic micro fibres used in the clothing industry. These can end up in oceans. In its response, Ted Baker highlighted its commitment to using sustainable fibres where possible and it noted that natural fibres can also have negative impacts from the use of natural resources such as water. We co-signed a letter to 50 global consumer goods companies organised by As You Sow, an American NGO, encouraging them to complete a survey on plastic packaging, to allow an assessment of their approaches.

Principles for Responsible Investment

The PRI annually undertakes an assessment of its members’ approaches and activities with respect to responsible investment. We achieved A+ ratings for our overall ESG strategy and governance, A+ for our approach with indirect holdings, A+ for our incorporation of ethics into our management of our equity holdings, and As for active equity and corporate bond ownership.

Corporate governance

Q2 was a busy quarter for voting with many companies holding their AGMs. Our voting policies resulted in voting against three quarters of remuneration reports in the UK, in many cases because of excess levels of remuneration. We oppose the election of directors where policies or outcomes on remuneration, board diversity, tax transparency, climate change or corporate governance are particularly poor. This resulted in opposing 14% of directors in the quarter. Our voting policies are applied to all of our holdings in the new Global Equity Fund as well as our UK Funds.

Ethical Investment Review March 2019

Climate change

Our work evaluating fossil fuel companies’ alignment with the Paris Agreement has made considerable progress. We are assessing the extent to which the business plans of these companies are aligned with ‘well below 2C’. Our project looks at companies’ current asset mix, capital expenditure plans, climate strategy & governance, transition plan and direct emissions. We have developed methodologies for all five assessment areas and have begun to apply them to companies. Overall, we are examining 29 metrics on each company. Our next steps are to refine our approach and engage with the companies we are assessing.

We continue to be active in investor coalitions such as Climate 100+. This includes co-filing a shareholder resolution at the BP AGM later this year, calling on the company to outline how it will align with the Paris Agreement.


In January a tailings dam near Brumadinho, Minas Gerais, in Brazil, collapsed, almost certainly killing over 300 people. The mining company responsible for the dam was Vale, which had operated the Samarco dam which collapsed in November 2015. Our portfolios did not hold Vale but the disaster highlighted the risks associated with such tailings dams.

We are part of an investor coalition organised by the Church of England to put pressure on mining companies to reveal more information about their use of tailings dams and to adopt independent standards. We participated in an investor roundtable in March with investors and mining companies. We have been encouraged by the acknowledgement of some leading mining companies of the need for change and have been engaging on this issue with companies held in our portfolios. We are working to encourage disclosure from mining companies on their exposure to tailings dams as there is very little information available and the risks to life are considerable. We will be working as part of the coalition on engagement around the tailings issues.

We continue our work helping church and mining leaders discuss what mining for the common good means in practice, especially for communities directly affected. The Methodist Church, Church of England, and the Vatican continue to explore ways we can share perspectives and engage with mining companies.

Pooled investment funds

Investment in pooled investment funds, also known as collective investment schemes, raises some challenges for ethical investors. Pooled funds are used to provide access to specific asset classes, thematic investments or strategies that could not otherwise be accessed cost effectively or in the appropriate size without a heightened risk of liquidity becoming unbalanced. However, there can be a risk that owning stakes in such funds can indirectly expose portfolios to business activities and companies that would otherwise be excluded on ethical grounds. This is similar to owning shares in a large company with a small division involved in activities which would disqualify it from investment were it the main business.

On JACEI recommendation, we have published a policy on investment in pooled funds. The policy acknowledges the advantages of pooled funds when specialist expertise or geographical exposure is required. We will seek pooled funds with a similar ethical investment approach to our own where possible and we will engage with the fund managers. We will avoid pooled funds with significant exposure to companies in which we would avoid direct investment. The policy is available on our website.

Israel Palestine

Continuing the long running engagement that we have had with Heidelberg Cement regarding a quarry in the West Bank, the company has told us that the quarry is to be sold to a private party, and that production at the site has ceased.

Living Wage

We engaged with BT Group last year to encourage it to become Living Wage Accredited. We continued engagement through to February 2019, when it became clear that the company would not become accredited, which was disappointing. We will continue to monitor this situation, and will engage again in the future. The engagement was part of a larger effort, where we encouraged seven companies to become Living Wage accredited. We continue to work with ShareAction on this issue.

Worker rights

Our letter to the Chairman of Ted Baker, a clothing retailer, following allegations of inappropriate behaviour in the workplace, received some publicity. The CEO later voluntarily suspended himself from duties and in March the company announced that he had resigned.

Farm animal welfare

In collaboration with FAIRR, we joined other investors engaging with Whitbread regarding antibiotic use in its supply chain. Although Whitbread has now sold its Costa Coffee division, it still owns other restaurants and food outlets. Questions were asked around the development of targets and a timeline for implementation to encourage suppliers to report the quantity and type of antibiotics used in different species of animal. There was also a detailed discussion around the audits that take place with regard to animal welfare. Whitbread was forthcoming on the subject and we look for progress during the year.

Stewardship Code

Our 2019 Stewardship Code Statement is now available. Our Statement continues to be rated Tier 1. In future the Code is expected to place more emphasis on environmental, social, and governance considerations.

Corporate governance

In association with other Church Investors Group members we revised our voting template in time for the 2019 voting season. The standards we expect on remuneration and boardroom gender diversity remain high and we made some small adjustments this year. We extended the boardroom diversity requirement beyond the UK where possible and we added an element on tax transparency.

There were relatively few company meetings this quarter. Full voting reports are available and a summary is published online.

Ethical Investment Review December 2018

Climate change

We have been engaging in considerable work to evaluate the extent to which the operations of fossil fuel producers are consistent with the Paris accord. This involves five pieces of analysis: companies’ current asset mix, capital expenditure plans, climate strategy & governance, transition plan and direct emissions. JACEI reviewed the first fruits of this work in December when it considered papers on Asset Mix Methodology and assessments of companies’ asset mix. Further work will be presented to JACEI in the spring.

The IPCC produced a report on limiting climate change to 1.5 °C and this will feed into our work, as will our involvement with IIGCC, TPI, Carbon Tracker and the CA100+ initiative during the quarter. Our Montréal Pledge disclosure for 2018 has been published online.

We signed a collaborative investor statement to support a Just Transition on Climate Change.

We wrote to the large Canadian banks to which we lend through our Deposit Fund: Bank of Montréal, Bank of Nova Scotia, Canadian Imperial Bank of Commerce, Royal Bank of Canada and Toronto Dominion. The engagement was as a result of analysis which showed that these banks lent substantial amounts to the tar sands industry. We have asked each company to join the TCFD initiative, and to explain how their tar sands finances is consistent with their climate change policies.

Extractive industries

We attended a sustainability day hosted by BHP Billiton led by senior personnel. The company is progressing compensation and resettlement following the Samarco disaster, and updates on climate change emissions targets and health & safety were discussed.

We wrote to Nutrien which sources phosphate from disputed Western Sahara, and has thus been excluded from investment. The company was able to provide assurances that following a review, the company would be self-sufficient in North American phosphate from early 2019, thereby ceasing to source from Western Sahara.


We contacted AB Foods, Tesco and Ted Baker regarding the presence of micro-fibres in clothing ranges. Tesco replied encouragingly, stating they are working with suppliers to understand the science and have part-funded a pan-industry initiative ‘Industry Action on Micro-fibres’ to drive a coordinated response. As part of our ongoing engagement with a range of companies on plastics, we are now focussing on the risks arising from micro-fibres and their long-term impact on the marine environment.

Living Wage

We engaged with Vodafone Group to encourage them to become an accredited Living Wage employer. We were disappointed that they declined, despite stating they are committed to paying all employees the Living Wage. Accreditation requires full time employees and third party contractors to be paid the voluntary enhanced rate, and Vodafone expressed an inability to ‘track’ third party reward structures. We are now working with Share Action and the Living Wage Foundation to re-engage Vodafone in discussion.

Worker rights

Ted Baker, a clothing retailer, faced allegations of inappropriate behaviour in the workplace. The company has appointed a committee of non-executive directors to review the allegations as well as an external law firm to lead an inquiry. We wrote to the Chairman to express our concern, ask when the inquiry was expected to be concluded, and to call for a commitment to implement any recommendations promptly.

Farm animal welfare

We are signatory supporters to the Business Benchmark on Farm Animal Welfare (BBFAW) which ranks food manufacturing and processing companies for welfare risk. Cranswick has been ranked as a Tier I leader, and we wrote to the company welcoming its strong stance on animal welfare and asking the company to support a new Global Coalition for Animal Welfare spearheaded by Nestlé and Unilever. A response is awaited.

Business ethics

We divested our shares in Danske Bank following the allegations that it allowed €200bn of potentially laundered money flow through its Estonian branch, and removed the bank from the list of banks to which we will lend through our Deposit Fund. The scandal resulted in both the Chair and Chief Executive being dismissed. We reviewed the currently available information about the scandal, its systemic nature and the alleged culpability of senior executives and decided to divest from the Bank as a shareholder and to cease its suitability as an approved lender.

Corporate governance & executive remuneration

The December quarter was very quiet. During the quarter we voted at four UK meetings opposing five resolutions; three against the re-election of directors and two against executive pay: MJ Gleeson and AB Foods. We wrote to Eco Animal Health regarding the company’s irregular governance arrangements and were pleased to learn at a subsequent meeting with the Executive Chair, that the Board had agreed moves to improve governance practice.

In Europe, we voted at seven meetings, and took action in 14% of cases. Re-election of directors and opposing the Financial Report & Accounts on climate change grounds were the main issues of contention.

In 2018 as a whole, we voted in total at 93 meetings in the UK comprising 1,537 resolutions, opposing or abstaining 17% of proposals. Remuneration accounted for 30% of all action taken in the UK and the re-election of directors 56%. Of 96 remuneration proposals (reports and policies) in 2018, we opposed or abstained 86%. In Europe we voted at 234 meetings comprising 3,785 resolutions. We opposed or abstained 21% of all proposals, with the re-election of directors accounting for 37% of action, and executive pay 42%. Just under 60% of all remuneration proposals in Europe were opposed.

Our full voting reports are available on request, whilst a summary is published online.