As long-term stewards of our clients’ assets, we aim to drive positive change on your behalf, through our thematic investment process, active engagement, and policy outreach.
Our stewardship diaries offer an insight into this work, sharing the tangible impacts of your investments. This month, we see evidence of three steps forward towards net zero and encouraging progress on outstanding modern slavery issues.
HSBC: from net zero ‘ambition’ to ‘commitment’ with clear targets
Following negotiations between HSBC and a $2.4 trillion coalition of investors, HSBC’s board have tabled a resolution that commits the company to aligning all its financing with a goal of getting the world to net zero emissions by 2050, as well as phase out financing of coal-fired power and thermal coal mining by 2030 in the OECD and by 2040 elsewhere.
By covering all aspects of its financing, all regions in which it operates, and all sectors that it lends to, HSBC’s commitment offers a model for other banks to follow. In the end, of course, what matters is that the Board’s words are matched by action. All eyes will now turn to the targets HSBC plans to publish in coming months for phasing out its coal and other fossil fuel financing.
Investors to start voting for Paris-aligned accounting
One issue that we have championed over recent years is the need for financial statements to reflect material climate risks. Financial statements that leave out material climate impacts misinform executives and shareholders and, thus, result in misdirected capital.
We are pleased to see that the Investment Association has now announced that it will flag in its voting guidance when companies in high-risk sectors fail to deliver net-zero aligned accounts in line with our Investor Expectations for Paris-aligned Accounts paper, released with the IIGCC in November.
Sarasin endorses the IIGCC’s Net Zero Investment Framework
The Institutional Investors Group on Climate Change has launched the Net Zero Investment Framework, a global initiative to support investors who are taking steps to decarbonise the global economy and tackle climate change.
Paris alignment is essential. The challenge is in the delivery. The Net Zero Investment Framework provides a vital roadmap for investors to act. As Sarasin & Partners CEO Guy Matthews comments:
Net zero alignment is a bit like “motherhood and apple pie”. We can all agree that this is a goal we should get behind. Without it, none of our futures are secure. The challenge is in delivery.
For asset managers, the need for action is particularly pressing. We sit at the heart of the investment ecosystem, so our decisions on where to allocate capital and also how we hold companies to account for their capital deployment help to determine whether or not we get onto a net-zero pathway.
The Net Zero Investment Framework published by the IIGCC today provides a vital roadmap for investors to act. There can be few excuses left for those that turn the other way. A new benchmark has been set for our industry.
Amazon labour practices and human rights
In March we joined a collective investor engagement effort led by the Swedish asset owner, Folksam, to call on Amazon to strengthen its labour practices. Investors represent over $7 trillion assets under management. We are calling specifically for Amazon to further improve disclosure and transparency regarding:
- its efforts to assure its employees of their right to join or not join a union
- human rights due diligence processes
- processes to engage in meaningful consultation with all relevant rights-holders and stakeholders
- results of processes Amazon has in place to review human rights risks and remediate negative impacts
We look forward to a response and will continue engaging with Amazon.
Engagement on modern slavery
It is vital that companies assess their exposure to modern slavery and take steps to address it and prevent it from happening in the future.
As part of the Find it, Fix it, Prevent it campaign, we are working with a number of other like-minded investors to call on companies to adopt anti-slavery principles and robust action to prevent the use of slave labour.
No company is immune to the risks of modern slavery but industries that depend on cheap labour, often located in less well-regulated countries, are more at risk than others. We have been engaging with Compass Group, the food outsourcing company, and have been encouraged that by increasing levels of visibility of their supply chains coupled with tighter policies and controls. We are pressing for more clarity on how Compass is addressing migrant worker recruitment in the Middle East, a region where risks of ‘debt bondage’ have increased during the pandemic.
You can keep up to date with our stewardship activities by following us on Twitter and Linkedin, and by visiting the stewardship section of our website.
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