Liontrust Responsible Capitalism Report 2024 - Flipbook - Page 55
Engagements on other ESG-related areas:
The team also undertook engagements on other ESG-related topics during the year. These include:
Company
What the group does Date
Discussion topic
Discussion points / outcomes
Haleon Plc
Consumer healthcare
July 2022
Packaging and
emissions
Churchill China Plc
British pottery
manufacturer
September
2022
Energy costs and
investment in
workforce
The team met with the CEO, CFO and Head of Marketing to discuss
the group’s products and how durable they are as well as steps the
group has taken to reduce energy costs, including solar panels and
the hedging it has in place. The team also discussed the group’s
ESG approach more broadly and how it works with the community
in Stoke and how the group invests in its workforce. The company is
increasingly trying to automate in order to upskill its workforce and
provide opportunities in more interesting areas of the company.
Instem
IT solutions for health
and life sciences
June 2022
Board
independence
and diversity
The team had several engagements with Instem about the level of
independence on its Board – and Board committees - over the last
two years. During engagement, the team also asked the Group to
consider increasing the diversity of its Board. The first year, Instem
added a new independent NED who also added ethnic diversity.
The team then abstained at the following AGM on the re-election
of one of the NEDs following further discussions with the company
whereby it committed to increase further the independence of the
Board. The team agreed to a period of grace for Instem to attract
someone with the right expertise and background. The company
announced in January 2023 that it has appointed a new female
independent NED to the Board. This aligns the company with best
practice in terms of Board composition for a company of its size.
Following Haleon’s spin-off from GSK, the team met the company’s
CFO, mostly to discuss the intellectual capital strength of the
business. The conversation centred on the strength of the Group’s
Group’s new Board
distribution network, IP, and power brands. The cash flow return
on capital (CFROC) profile of the business was also discussed.
ESG was covered to understand where the Group’s focus lies – in
packaging and emissions. The new Board was also discussed.
Global Compact-related controversies
Below is a list of some of the corporates held by the Economic Advantage funds during 2022 that have been flagged by MSCI as being
on the watch list for controversies against the Global Compact:
Name
Description of status
Engagement and conclusions
Shell
On the watch list due to toxic emissions and waste and due to
the local community impact in Nigeria, in particular the Niger
Delta, as well as alleged corruption in the OPL-245 acquisition.
The team discussed the issues with Shell during engagement.
The team understood that the problems the Group is facing
are largely the result of illegal (destructive) activity against the
company. Shell has announced its intention to divest from the
Niger Delta region and is seeking a buyer.
BP
On the watch list due to the Deepwater Horizon explosion,
the Gulf of Mexico oil spill, and the resulting environmental
and local community impacts.
The team discussed Deepwater Horizon with BP on a number
of occasions, including with the CFO. It is clear that the
incident led to widescale cultural change at the business and
that BP is a very different company than it was when the
accident took place in 2010.
Petrofac
Was on the watch list (but has since been removed) due
to involvement in the Unaoil scandal, and for bribery and
corruption.
The SFO penalty against the company was lower than
expected and the comments from the judge in the case
acknowledged a change of culture within the business.
The team decided to support the Group’s capital raise as
it already held shares in Petrofac and following meetings
with the company. The team was impressed by the personal
commitment of the new CEO to a culture of corporate reform.
British American
Tobacco
On the watch list due to allegations of sourcing tobacco from
forced and child labour farms.
The team did not engage with BAT in 2022.
Controversial weapons policy
The Economic Advantage team chooses not to be governed by
Liontrust’s controversial weapons policy. The team is unlikely,
however, to invest in companies with ties to controversial weapons.
Alignment with Liontrust’s Net Zero commitment
The Economic Advantage team has not committed its funds to
Liontrust’s net zero goal.
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