annual review indst 2024 public - Flipbook - Side 31
Annual Review 2024
We attended the AGM of Swiss chemicals company Sika
virtually and asked the chair about its approach to managing
risks related to hazardous substances, reminding the company
that we co-lead the Investor Initiative on Hazardous Chemicals
(IIHC) for Sika. We were pleased to hear the chair confirm that
the company will make sure that no new products will contain
substances of very high concern. The company noted our
request on future reporting and said it would review its
reporting on hazardous chemicals.
%
Proposals with recommended votes against
management by key market, 2022-2024
40
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10
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Proposals with recommended votes against
management by theme, 2022-2024
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At cereal company Kellanova (formerly Kellogg’s), we
recommended support for a shareholder resolution seeking a
report on the risks associated with pesticide use in the supply
chain. We discussed this resolution with the company and
believe it does not yet provide robust disclosure on reducing,
assessing, and reporting on pesticide use.
A growing number of shareholder proposals addressed
digital rights issues such as privacy, freedom of expression,
and responsible artificial intelligence. We used our EOS
Digital Rights Principles to inform our decisions on these
proposals. For example, we supported a proposal filed at
Amazon requesting a report on customer due diligence.
The company has processes in place for this and policies
relating to the responsible deployment of AI. However,
there is room for improved transparency on how human
rights are considered in the company’s relations with
governments as customers.
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Source: EOS data
Other environmental proposals
This year, biodiversity made a strong showing via resolutions
on plastic pollution, deep sea mining, deforestation,
pesticide use, microfibre pollution, antimicrobial resistance
(AMR) and animal welfare. There were shareholder
resolutions on plastics and circular packaging at chemical
company Dow and Tyson Foods. We recommended support
for these on the grounds that pollution is one of the five
drivers of biodiversity loss, and these are material risks for
companies. We generally ask companies to increase
circularity in their operations and reduce the production and
use of plastics, which can end up in the environment or water
sources and be detrimental to biodiversity.
There were resolutions on animal welfare at H&M, Denny’s
Corp, Kraft Heinz and McDonald’s. We recommended support
for a resolution asking H&M to report on the reputational
impact of clothing containing feather down, due to concerns
about live plucking and other risks. At Kraft Heinz, Walmart,
and Denny’s Corp, we recommended voting in favour of
phasing out pork purchases from suppliers who use gestation
stalls. At McDonald’s, we recommended supporting a
shareholder resolution asking the fast food chain to disclose
its key welfare indicators, and explain how it uses each to
measure and improve animal welfare.
Diversity and inclusion
In line with our fiduciary duties to support board composition
characteristics which, in our view, improve governance and the
effectiveness of management in pursuit of long-term value
creation, we consider recommending a vote against the reelection of responsible directors where we do not see clear
indicators of cognitive diversity.
In Europe, we support a goal of 50% overall board diversity,
including gender (with at least 40% representation of the
minority gender, including those who identify as nonbinary), race and ethnicity, and other diversity traits such as
LGBTQ+ and disability. Where best practice or listing rule
obligations exist in a country, we expect companies to
adhere to these at a minimum. In Europe we also support
gender diversity at the management team level, and will
consider our voting approach for companies of significant
size where there is no female representation at the top
levels of executive management.
In 2024 we continued to look for greater gender diversity on
boards and in leadership teams and opposed companies that
did not meet our minimum expectations. This included at
KBC Group, HelloFresh, PolyPeptide Group and British
American Tobacco. In the US, our guideline is for companies
to demonstrate 40% or more overall diversity across a range
of indicators as available, reflective of good management of
inclusion. This is in line with our fiduciary duties to enhance
long-term value at each company.
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