Tobacco

Preamble

The prevalence of smoking in the UK has declined rapidly over time as a result of comprehensive health education, prevention initiatives and marketing regulation. In 1948, eight in 10 adult males smoked, but with the start of Government health education programmes in the 1970s, this began to reduce steeply, but more recently has tailed off and begun to plateau (Fig 1). 1

The disparity in smoking by age and gender has also narrowed over time. According to Government estimates, 15.5% of adults in England over the age of 18 and 15.1% for the entire UK (male and female) were presumed to smoke regularly in 2016 compared to 46% of men in the early 1970s (41% for women). This equates to around 7.4m active smokers. Regional differences remain stubbornly acute, with the prevalence of active smoking remaining higher in Scotland (16.1%) and Northern Ireland (16.3%) than in other parts of the UK.

The Office For National Statistics paper, ‘Adult Smoking Habits in the UK, 2017’ notes a ‘significant’ one-year fall in the prevalence of smoking across all age groups, and in total from 15.8% of the adult population in 2016, to 15.1% in 2017. It is, however, too early to determine if this represents a new longer-term downward trend, although the UK and devolved Governments have all smoking reduction prevalence targets – 12% in England by 2022.

Active smoking is more prevalent in socio-economically deprived areas, with evidence that it underpins the socio-economic variation in incidence and mortality for a number of cancer types. The prevalence of smoking is also more marked in manual or low-paid occupations (25.9%), compared to professional and managerial occupations (10.2%). Evidence of this can be seen for example, between smoking prevalence in Blackpool – registering one of the highest, and Cheltenham, among the lowest (Fig 2).

Smoking declines with age. Whereas 17.8% of UK adult males (20% adult females) smoke between the ages of 18-24, the equivalent for the over 65 age group is 8.1%. Smoking appears to peak between the ages of 24-35 (19.7%) and then declines rapidly for both sexes.

Smoking is the leading cause of preventable mortality, with 81,000 deaths per year from tobacco related illness (see below). This does not include complications arising from passive smoking, nor conditions found in babies, of whom 10% are born to a mother who smokes.

The socio-economic cost of smoking is stark. Research by Oxford University put the cost to the NHS as exceeding £5.2bn per year, with approximately 485,000 (England) hospital admissions in 2016 linked primarily to tobacco related conditions (by way of comparison, there were 617,000 admissions linked to obesity and over 16m hospital admissions in England in total in 2016-17).

Vaping

Vaping is the inhalation of nicotine vapour produced from an electronic or e-cigarette. The device comprises battery, housing, vapour cartridge and atomizer. By generating heat in the atomizer, vapour liquid is transformed into gas for inhalation. Modern vaping originated in China in 2003; exponential growth in the UK has seen the number of users increase from 700,000 in 2012 to over 6 million by 2015.

Public Health England has concluded that vaping is 95% safer than smoking. An independent commissioned report (2015) found there to be no evidence that vaping was a route into smoking for children or non-smokers, and that it is a potentially successful route to curing addiction from smoking. E-cigarettes provide users with the nicotine rush gained from smoking, without cancer causing tar and other chemicals.

The House of Commons Science & Technology Committee published its report ‘e-cigarettes’ in July 2018, in which Parliamentarians concluded that ‘e-cigarettes present an opportunity to significantly (sic.) accelerate already declining smoking rates’ and on balance advised that smokers should be ‘encouraged to give up, but if that is not possible, they should switch to e-cigarettes as a considerably less harmful alternative’. More controversially, the Committee advised a public debate on whether vaping should be allowed in spaces where smoking is now prohibited on health and safety grounds (offices, public transport etc.) stating there is no ‘public health rationale for treating use of the two products (i.e. cigarettes and e-cigarettes) the same’.

However, as the Committee itself acknowledges, uncertainties remain, and Cancer Research UK (CRUK) maintains that questions linger over the long-term safety of vaping as it has not been in circulation long enough for quantitative and qualitative longer term tests to have been carried out. CRUK states that vaping should be more closely seen as nicotine replacement therapy (NRT), which has long been seen as a safer alternative to smoking. E-cigarettes are also believed to be low risk in respect of conditions such as ‘popcorn lung’ as the liquid believed to be the cause is banned from use in e-liquids.

Given the longer-term uncertainties, a precautionary approach has been assumed so that investing in vaping and e-cigarette products are avoided until quantitative and qualitative evidence regarding their safety emerges.

Health

Smoking is the biggest preventable cause of cancer, and is responsible for 25% of all cancer deaths and three in 20 of all cancer cases. There is no statistical difference in risk between cigarette smoking and other forms such as pipe, cigar or shisha.

Chemicals in cigarette smoke enter the bloodstream and affect the entire body, being held responsible for at least 15 types of cancer as well as heart and lung disease.

Smoking is primarily linked to lung cancer where it is responsible for around 70% of diagnoses. Lung cancer currently has among the lowest survivability rates of any cancer. Smoking is also linked materially to bowel, bladder, mouth, upper throat and oesophagus cancer.

Cancer develops as a result of DNA damage caused by the chemicals in cigarette smoke attacking the body, in particular benzene, polonium-210, benzo (a) pyrene and nitrosamines. Each cigarette is a cocktail of around 5,000 chemicals of which 70 are cancer causing e.g. cadmium, arsenic, formaldehyde and chromium.

Passive smoking increases the risk of contracting cancer by 25% and is particularly dangerous for children and young people. Second hand smoke exposure most often occurs in the home or in private transport. Smoking in a car with a person under 18 was made illegal in 2015, however, infringement is limited to a £50 fine and does not apply to drivers who are 17, or to convertible vehicles where the roof is (fully) down!

Establishing a causal link between smoking and cancer took sometime, but gathered pace during the 1950s as medical practitioners monitored and observed the prevalence of lung cancer cases. By 1956 evidence had mounted sufficiently for the British Medical Journal to publish, and this was followed by a recommendation in 1962 by the Royal College of Physicians providing incontrovertible evidence of the link between smoking and cancer.

Regulation

Tobacco is now among the most tightly regulated of products that are legitimately offered for sale. Advertising or marketing of tobacco was prohibited in the UK in 2002. The UK became a party to the WHO Framework Convention on Tobacco Control in 2005, which outlawed the practice of smoking in indoor work or public spaces and on public transport. Display of tobacco products in retail outlets was prohibited at the same time, restricting ‘display’ to behind closed non-viewable cabinets.

The final piece of highly restrictive legislation arrived in 2016 with the Tobacco and Related Products Regulations 2016, and Standardised Packaging of Tobacco Products Regulations 2015. These mandate standardised, plain packaging for all cigarettes and loose leaf tobacco, and cannot contain any text, trademark, brand or symbols other than health warnings, brand name (in standardised font), quantity and producer. These form among the most constraining sales and marketing restrictions for any legally sold product anywhere.

The law, however, remains somewhat quaint in its application: The legal age for buying tobacco was raised to 18 in 1987, but this applies only to cigarettes and not to other tobacco products. The legal age for smoking in public remains 16 in England & Wales. Vendors may be fined up to £2,500 for illegally selling cigarettes to minors, but there is no penalty for actually smoking as a minor, apart from confiscation.

Government, whilst motivated to promote health given the causal link of smoking with a range of diseases, nevertheless continues to benefit financially from the sale of tobacco products. UK excise duty and VAT is among the highest in the world on tobacco products, accounting for around 82% of the recommended retail price (RRP) of a packet of 20 cigarettes (c£9.91). Within the EU, the UK applies the most stringent duty rates followed by Ireland and France (by comparison a packet of 20 cigarettes in France will cost £5.67, and in Bulgaria – the lowest – £2.32).

The Treasury received c£8.9bn in tobacco excise duty in 2016/17 made up of a standard levy of 16.5% of the retail price plus a specific duty applied per 1,000 cigarettes sold (currently £207.99). Between 2000 and 2016, HM Government received over £146bn in tobacco related duty.

Biblical and theological background

As with so many modern ethical dilemmas, there are few direct Biblical references. Whilst tobacco has been smoked for many centuries by indigenous populations, it was only ‘discovered’ and developed as a cash crop for recreational purposes in the 16th century.

Whilst the Bible is silent on tobacco smoking, it is reasonable to draw attention to passages concerned with the body as a temple and ‘healthy or pure living’. The key text remains I Corinthians 6: 19-20; “Or do you not know that your body is a temple of the Holy Spirit within you, which you have from God, and that you are not your own? Glorify God in your body”.

These Biblical traditions support the view that practices that pollute or contaminate the body are not God- given and should be avoided.

John Wesley’s views on smoking are obscure. However, given his active interest with the outdoors, exercise, healthy bodies and views expressed in his well-known ‘Letter to an Alcoholic’, a presumption against the practice of smoking on ‘pollution’ grounds might be assumed. In his ‘Letter’ he was concerned at the harm caused by alcohol to the body and the soul that debased self-respect and worth. The intensity of his views on alcohol may not, of course, have extended to tobacco and smoking, given the effects were not so obvious, debilitating or well-known in the 18th century as were the all too obvious effects of alcohol addiction.

However, in Sermon 50, the ‘Use of Money’ he says ‘but this it is certain we ought not to do; we ought not to gain money at the expense of life, nor (which is in effect the same thing), at the expense of our health’. This would indicate that had the health effects of tobacco been known, he may have taken a not dissimilar view to smoking as he did to alcohol, and would certainly have opposed taking profit from business activities that involved tobacco.

Church investors approach

Tobacco is the most common and widely observed ethical exclusion among faith investors and other secular ethical investors. The Church of England has excluded tobacco since 1962; this was confirmed in 1964, and the position was re-affirmed in 1983 when the Church investment bodies stated; ‘the case for retaining this category [of exclusion] is clear cut’.

The Church Investors Group (CIG) regularly surveys its members on companies excluded from investment. The last survey suggested 96% of its members avoid investment in major stock-exchange listed tobacco companies. Denominations stating they avoid ‘tobacco products’ include the Baptist Union, Church of Ireland, Church in Wales, Church of Scotland, Roman Catholic Dioceses and the United Reformed Church.

Epworth/Central Finance Board of the Methodist Church (CFB) precedents

The first reference to a policy relating to investment in tobacco dates back to 1963, but there is no record of what this entailed. However, despite later comments that the CFB had always avoided investment in tobacco, there are indications that there was some exposure prior to the establishment of the Investment Unit in 1972.

From 1972 onwards, tolerance towards exposure to tobacco has been extremely low and has rarely been questioned. Consequently, there is little record of any debate on the subject. However, there has been an untested assumption that if tobacco accounted for 5% or more of profits or sales of any company, it would be excluded from investment on ethical grounds, whilst exposure approaching 5% would be referred to the Joint Advisory Committee on the Ethics of Investment (JACEI) for advice. An early precedent was the sale of a company that manufactured machinery for the tobacco industry.

There are precedents for decisions taken on companies with exposure to both tobacco and alcohol. The major food retailers sell alcohol and tobacco, but combined sales were not considered sufficiently material to warrant disinvestment on ethical grounds. However, in the 1980’s, KwikSave bought an off-licence chain that took its combined alcohol and tobacco sales above 20%, and as a result the holding was sold on ethical grounds.

In 1999, British Airports Authority (BAA) was considered by JACEI following its purchase of a ‘duty free’ retailer in 1998. The company’s exposure to alcohol and tobacco temporarily rose close to 20%, but had then fallen back to around 15%; JACEI considered, at the time, that this “was not a cause of major concern”.

Conclusion

The long serving investment exclusion of tobacco and tobacco related products on grounds of health is clearly accepted and well established and therefore no change to this approach is proposed. Given the longer-term uncertainties, a precautionary approach has been assumed so that investing in vaping and e-cigarette products will be avoided until quantitative and qualitative evidence regarding their safety emerges.

Epworth has published an accompanying Policy Statement on Tobacco in which its investment approach to tobacco is set out.

Notes

  1. All sources (except 2) either NHS Digital, ONS ‘Adult Smoking Habits in the UK, 2017’, National Health England, Cancer Research UK (CRUK),CIG or HM Government.
  2. House of Commons Science and Technology Committee Seventh Report of session 2017-19 ‘e-cigarettes’ https://publications.parliament.uk/pa/cm201719/cmselect/cmsctech/505/505.pdf

Tobacco

Preamble

The prevalence of smoking in the UK has declined rapidly over time as a result of comprehensive health education, prevention initiatives and marketing regulation. In 1948, eight in 10 adult males smoked, but with the start of Government health education programmes in the 1970s, this began to reduce steeply, but more recently has tailed off and begun to plateau. 1

The disparity in smoking by age and gender has also narrowed over time. According to Government estimates, 15.5% of adults in England over the age of 18 and 15.1% for the entire UK (male and female) were presumed to smoke regularly in 2016 compared to 46% of men in the early 1970s (41% for women). This equates to around 7.4m active smokers.

Smoking declines with age. Whereas 17.8% of UK adult males (20% adult females) smoke between the ages of 18-24, for the over 65s the equivalent is 8.1%. Smoking appears to peak between the ages of 24-35 (19.7%), and then declines rapidly for both sexes.

Smoking is the leading cause of preventable mortality, with 81,000 deaths per year from tobacco related illness, and the biggest cause of preventable cancer, particularly lung cancer, where smoking is responsible for c70% of diagnoses. It is also linked materially to bowel, bladder, mouth, upper throat and oesophagus cancer. There is no statistical difference in risk between cigarette smoking and other forms such as pipe, cigar or shisha.

The socio-economic cost of smoking is stark. Research by Oxford University put the cost to the NHS at exceeding £5.2bn per year, with approximately 485,000 (England) hospital admissions in 2016 primarily linked to tobacco related conditions.

Public Health England has concluded that vaping is 95% safer than smoking. An independent commissioned report (2015) found there to be no evidence that vaping was a route into smoking for children or non-smokers, and that it is a potentially successful route to curing addiction from smoking. E-cigarettes provide users with the nicotine rush gained from smoking, without cancer causing tar and other chemicals.

However, as the House of Commons Science and Technology Committee 2 itself acknowledges, uncertainties remain, and Cancer Research UK (CRUK) maintains that questions linger over the long-term safety of vaping as it has not been in circulation long enough for quantitative and qualitative longer term tests to have been carried out. Epworth has therefore determined to take a precautionary approach to vaping and e-cigarettes in respect of investment.

Regulation

Tobacco is now among the most tightly regulated of products that are legitimately offered for sale. Advertising or marketing of tobacco was prohibited in the UK in 2002, and further restrictive legislation in 2016, mandated standardised, plain packaging for all cigarettes and loose leaf tobacco; these form among the most constraining sales and marketing restrictions for any legally sold product anywhere.

Biblical and theological background

As with so many modern ethical dilemmas, there are few direct Biblical references.

Whilst the Bible is silent on tobacco smoking, it is reasonable to draw attention to passages concerned with the body as a temple and ‘healthy or pure living’. The key text remains I Corinthians 6: 19-20; “Or do you not know that your body is a temple of the Holy Spirit within you, which you have from God, and that you are not your own? Glorify God in your body”. These Biblical traditions support the view that practices that pollute or contaminate the body are not God given and should be avoided.

John Wesley’s views on smoking are obscure. However, given his active interest with the outdoors, exercise, healthy bodies and views expressed in his well-known ‘Letter to an Alcoholic’, a presumption against the practice of smoking on ‘pollution’ grounds might be assumed. In his Sermon 50, the ‘Use of Money’, he says ‘but this it is certain we ought not to do; we ought not to gain money at the expense of life, nor (which is in effect the same thing), at the expense of our health’. This would indicate that had the health effects of tobacco been known, he may have taken a not dissimilar view to smoking as he did to alcohol.

Epworth precedents

Epworth and the Central France Board of the Methodist Church has excluded tobacco and tobacco related products from investment since at least the early 1970s, when ethical investment policy was first formalised.

Tobacco is the most common and widely observed ethical exclusion among faith investors and other secular ethical investors. The Church Investors Group (CIG) survey of members suggests 96% of its members avoid investment in major stock-exchange listed tobacco companies.

Policy

Epworth will not invest in any company that wholly or mainly manufactures tobacco or tobacco related products.

For the purposes of this Policy, this includes finished tobacco products such as cigars, cigarettes, pipes and loose tobacco, filters, tips and bands. Epworth will also seek to avoid investment in any agricultural or commodity related company where tobacco is the main crop.

Retailers will not normally be excluded from investment unless the contribution tobacco sales make to overall company revenues are significant, or where wholesale tobacco is a material component of sales.

Although NHS England views e-cigarettes and vaping as carrying a fraction of the risk of conventional tobacco products, and recognises that they can be effective in controlling and alleviating addiction, Epworth will take a precautionary approach by avoiding investment in such products until long-term quantitative and qualitative evidence emerges.

Where necessary or appropriate, Epworth will engage with retailers on tobacco sales, although it is recognised that UK law applies very strong restrictions on marketing, advertising and branded sales, as well as restricting their sale to minors.

Notes

  1. All sources (except 2) either ONS, National Health England, Cancer Research UK (CRUK), CIG or HM Government.
  2. House of Commons Science and Technology Committee Seventh Report of session 2017-19 ‘e-cigarettes’ https://publications.parliament.uk/pa/cm201719/cmselect/cmsctech/505/505.pdf

Voting Report – March 2019

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.

Mining

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.

Voting Report – December 2018

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.

Plastic

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.

January 2019

Voting Report – September 2018

August 2018

UK Excluded Stocks

  • Acacia Mining
  • Antofagasta
  • Cairn Energy
  • Centamin Egypt
  • Energean Oil & Gas
  • Evraz
  • Exillon Energy
  • Ferrexpo
  • Fresnillo
  • Gem Diamonds
  • Glencore
  • Hochschild Mining
  • Hunting
  • Kazakhmys
  • Kenmare Resources
  • Lamprell
  • Nostrum Energy
  • Ophir Energy
  • Petra Diamonds
  • Petropavlovsk
  • Polymetal
  • Premier Oil
  • Soco International
  • Sirius Minerals
  • Tullow Oil
  • Avon Rubber
  • Babcock International
  • BAe Systems
  • Chemring
  • Cobham
  • EI Group
  • Essentra
  • Fuller, Smith & Turner
  • GKN
  • Greene King
  • G4S
  • GVC Holdings
  • Marston’s
  • Meggitt
  • Melrose
  • Mitchells & Butlers
  • Morgan Advanced Materials
  • N Brown
  • Paddy Power Betfair
  • Playtech
  • Qinetiq Group
  • Rank Group
  • Rolls-Royce Group
  • Serco
  • Sportech
  • Ultra Electronics
  • Wetherspoon (JD)
  • William Hill
  • 888 Holdings
  • British American Tobacco
  • Diageo
  • Drax
  • Imperial Brands
  • Inmarsat
  • McColl’s Retail Group
  • Stock Spirits Group
  • Arrow Global
  • IG Group
  • International Personal Finance
  • Provident Financial
  • Riverstone Energy
  • S&U