Christian Ethics in Practice January 2021

Featuring our work on Tax Justice, Principles of Responsible Investment, Modern Slavery and Mining.

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.

Voting Report – September 2020

Voting Report – June 2020

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.

Christian Ethics in Practice July 2020

JACEI Annual Report 2020

Voting Report – March 2020

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.