Attending AGMs is an “under-used stewardship tool” for wealth managers, who can use the meetings to apply pressure on the underlying companies of the funds they invest in, EQ Investors’ Louisiana Salge, has told PA Future.
The head of sustainability has updated on EQ Investors’ team “more extensive stewardship plan” that is in its second year, after sharing the results of the first year with PA Future in July 2023. This year EQ has attended seven AGMs across the UK to further engage directly with the underlying companies in EQ portfolios and directly address the boards of directors on policies around climate and social issues.
“We were first introduced to the power of AGM engagement through our collaboration with ShareAction,” said Salge.
“While corporate management teams often engage with shareholders, board members (who have significant influence over long-term corporate strategy) are often non-executives with little interaction with the day-to-day and so may be disconnected with shareholder concerns.
“We continue to see AGMs as an under-used stewardship tool, an important space for public accountability and where change really can happen.”
Climate risk and safeguarding
The team attended the AGMs of both HSBC and Standard Chartered to reflect the firm’s ongoing engagement theme on climate risk in banks.
“We wanted to question the board on their green financing targets, and specific requests on strengthening their fossil fuel financing policies. While Standard Chartered was highly successful and further meetings are now planned, HSBC cut the Q&A section short and left many shareholder questions unanswered – including EQ’s – a frustrating and uncommon occurrence.”
They also attended Rio Tinto’s AGM to request greater transparency over how the company will work to provide the “future facing materials” needed for the energy transition in a manner that is responsible, just, and respects human and community rights. Meanwhile, at the Kingfisher AGM – the holding company of the home-improvement stores B&Q and Screwfix – EQ asked the board to re-commit to the “gold standard” science-based targets initiative. “We also want Kingfisher to disclose how it plans to achieve its carbon target on the use of its sold products in the longer-term – currently one of the largest sources of the company’s emissions,” Salge explained.
“The second strategic theme concerns human rights safeguarding in supply chains. Moving away from a “controversy” avoidance approach to encourage companies to embrace proactive policies, audits and remediation offers has been a major engagement focus with EQ’s selected fund managers.
“We also attended the AGM for Antafogasta to push for change. While the copper miner does not have a highly controversial track record, we pushed for more transparency over how it is identifying, assessing, and addressing human rights impacts and risk, and disclose the findings of independent audits from their sites. Board members at once saw the relevance of this and promised improvements on our request in the next reporting year.”
A third engagement theme, biodiversity risk, was discussed at the AGM for UK water utility Severn Trent. EQ asked how it will connect infrastructure spending with climate impact analysis – given that recent freshwater pollution events were driven by extreme rainfall which will only become more exacerbated as our global temperatures rise.
Further, they attended Croda’s AGM. “We asked the board of the UK speciality chemicals company, to substantiate its “land positive” aim with certified sourcing targets across all its important bio-based inputs.”
While there were some frustrating conversations, Salge and team said: “AGMs are a valuable opportunity for shareholders to directly address the board of directors and the company’s decision-makers on areas of concern.
“AGMs are an important space for public accountability and where change really can happen.”
