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.
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.
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.
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.
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.
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.
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.
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.
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.