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.
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.
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.
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.
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.
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.