Liontrust engagement and voting report 2021 - Flipbook - Page 9
CASE STUDY
Shell and bp
Shell and bp are the two highest-emitting companies for Liontrust
(each held by multiple Liontrust investment teams). We had several
engagements with them in 2021 that centred on their net zero
commitments. In all the engagements, we dug deeper into their
commitments, discussing their acquisition and VC strategies and
their Carbon Capture and Storage. We talked about their corporate
cultures and the extent to which these will enable the businesses to
make the necessary transition. Access to talent was also discussed
and we sought to understand more about the trading arms of each
company and how these supported the energy transition. Prior to
some of the meetings, we worked with Carbon Tracker, which
prompted questions around stranded assets and the oil price used
for impairment assumptions.
There were some more specific areas that we spent time on with
each of the companies. With bp, a particular area of questioning
was around Rosneft’s emissions and why they were not included
in bp’s emissions/emission targets. We asked about the steps
being taken to encourage Rosneft to adopt an ambitious carbon
reduction plan. With Shell, we debated why it had intensity- rather
than absolute-based targets. We were pleased when it announced
it would move to absolute targets.
CASE STUDY
ArcelorMittal, Carnival and Evraz
ArcelorMittal, Carnival and Evraz were all held by the Liontrust
Cashflow Solution team but Carnival and Evraz have since been sold.
We met with ArcelorMittal to understand its approach to
decarbonisation. This covered the governance oversight,
accreditation and zero-emissions steel. We also discussed the
agreements in place with governments and the cashflow implications
of its decarbonisation commitments and plans.
The meeting with Carnival centred on decarbonising its fleet.
Carnival described how its ship commissioning was changing to
keep decarbonising in mind and that it had already built several
LNG ships. We touched on the controversy around the use of
scrubbers, and the company advised us of its desire to get to net
zero by 2050 but felt a lot needed to happen for this target to be
met. This included the need for the LNG supply chain to improve and
for green fuels to be made available. We discussed the challenges
posed by hydrogen, including the greater volume of it that would be
required and the impact this would have on ship sizes.
Evraz was the fifth highest contributor of carbon emissions for Liontrust.
While we repeatedly requested a meeting, the interactions took
place over email. However, Evraz did answer the questions we put
to it. We queried Evraz’s commitment to a low-carbon future for steel;
what its intentions were regarding net zero; why its carbon reduction
plan only covered the steel segments of the business; and its rationale
for carbon intensity-based targets. We pointed out that TPI identified
Evraz as having failed to disclose its Scope 3 emissions. We asked
Evraz whether it was planning to disclose this information and what
involvement it had with organisations dedicated to climate issues.
Liontrust: Engagement and Voting Report 2021 - 9