Liontrust Responsible Capitalism Report 2024 - Flipbook - Page 54
Monitoring change in equity ownership
A position will be sold if the shareholding of directors and senior
management falls below 3% among smaller companies in any of
the funds managed by the economic advantage team.
Monitoring and analysis
The team monitors potential ESG issues associated with an
investment. These may include the impact of company operations,
governance practices and/or products and services that allegedly
violate national or international laws, regulations, and/or other
commonly accepted global norms. The team may also conduct
fundamental analysis on each potential investment to further assess
the adequacy of ESG programmes and practices of a company to
manage the ESG risks it faces. In addition, the team monitors ESG
risks on an ongoing basis through reviewing ESG data published
by the company (where relevant) or selected data providers to
determine whether the level of ESG risk has changed since the
initial assessment was conducted. Where there is an increase in
ESG risk, the exposure to the relevant security may be reduced,
taking into account the best interests of investors in the fund.
Impact on weighting / portfolio sizing
The information gathered from this analysis will be taken into account
in deciding the size of the position that the investment team might
take on behalf of a fund. The investment team may grade securities
differently to data providers where the investment team believes that
their ESG rating does not fully reflect the position of the relevant
company or has not captured recent positive ESG-related changes
which have been implemented by the relevant company.
Difficulties of limited data
Some companies (for example smaller companies) may not be
rated or covered by data providers and may publish little or no
information on their ESG policies and sustainability risks. In these
cases, the team’s scope for analysis of ESG risk will be more
limited, although the team does undertake such analysis on every
company it holds on at least an annual basis.
Engagements
Carbon-related engagements
The team engaged some of its holdings during the calendar year
on climate-related topics. Examples of these during 2022 include:
Company
What the group does Date
Discussion topic
Discussion points / outcomes
Shell Plc
British multi-national
November
oil and gas company 2022
Energy transition
The team met Shell to discuss how the Group is progressing
against its strategy. Shell discussed the trading loss in Q3 and
how the Prelude strikes had played a role. It also covered how
the Niger Delta problems and divestment were progressing and
provided an update on the Hague ruling. Reputational concerns
and how the Group balances high returns, potential taxes, energy
security, investing in the transition, share buy backs and dividends
were also discussed.
British pottery
manufacturer
De-carbonisation
Churchill China Plc
54 - Responsible Capitalism Report 2022
September
2022
Energy security
Employee
engagement
The team met the CEO, CFO, and Head of Marketing
and discussed Churchill China’s products, business progress at
the interims, as well as the steps the Group has taken to reduce
energy costs as a high energy user. (This includes putting solar
panels on their building and putting hedging in place until late
2023.) The team discussed the company’s ESG approach more
broadly and how it works with the local community and invests in
its workforce. The company is increasingly trying to automate to
upskill its workforce and move workers into more interesting areas
of the company.