Setting out our engagement agenda for the year ahead

Setting out our engagement agenda for the year ahead

For over two decades we’ve been proactively engaging with businesses to drive positive change. In this article we explore where we’re focusing our efforts on 2022.

As the year begins in earnest and the annual reporting season looms, we’ve been assessing our priorities for the coming months when it comes to engaging with our portfolio companies and on behalf of our reo® clients.

At Columbia Threadneedle Investments, we are determined to continue to engage constructively with businesses with the aim of achieving positive results, particularly on issues of sustainability. We’ve been doing so for more than two decades.

The prevalence of extreme weather events, including forest fires and flash floods, over the past year – combined with the ongoing disruptions caused by the pandemic – have made us even more convinced of the need to act in the interests of the planet and its future.

Central focus

With this, and our continued belief in active ownership, in mind, we’ve now fine-tuned our approach for the year ahead. Our central focus in our engagement with companies will be the key environmental issues of combating climate change and protecting biodiversity.

We will also continue to engage in the area of executive pay, specifically around the incorporation of environmental, social and governance (ESG) risk metrics, and we will impress on companies the importance of their human rights obligations.

One of our main priorities this year will be to hold companies to account for the previous commitments they have made in areas such as net-zero pledges and strategies for decarbonising.

Climate change and biodiversity

Our engagement on climate change will focus on the planned phasing out of ‘unabated’ coal generation, whose emissions are not mitigated by carbon capture and storage technologies. This is due in the developed world by 2030, and by 2050 in developing markets, in line with the Paris Agreement. While our engagement will be in all sectors, we will concentrate on mining and utilities, identifying laggard countries as well as companies. We will take forward our ongoing work with the Climate Action 100+ coalition and on energy efficiency in the Real Estate sector.

On biodiversity, we will step up our engagement in the most critical sectors, including food and drinks, ‘extractives’ such as mining and quarrying, materials, transport and finance. We will be looking for strategies, targets and metrics for mitigating biodiversity risks.

Spotlight on chemicals

We will encourage chemical companies to make the sustainable transition to clean energy and lower environmental impact, including by cutting greenhouse gas emissions, reducing plastic waste and investing in recycling technologies. The materials and chemicals industries will also be a key focus for us because of their propensity to operate and manage supply chains in areas that are vulnerable to extreme weather events.

ESG in executive pay

Executive remuneration needs to be linked to success in climate-related strategies and initiatives, and we will push for this in every industry, including oil and gas, electric utilities, the automotive sector and financial institutions.

We expect executive incentives to be aligned with the interests of long-term shareholders. And we will advocate for the introduction of risk-related preconditions to bonus awards to ensure that climate-related payments are not made inappropriately when there are still concerns in other areas such as financial strength or credit quality.

Human rights and supply chains

We will engage with companies about implementing human rights protection, and checks, across their supply chains. We see this as part of good practice in supply chain management.

Our team will also work to ensure the quality of social audits in checking that suppliers comply with their human rights obligations. In particular, we will engage with companies in the clothing, retail and services sectors to ensure they do not fall short with their obligations on human rights and labour standards.

We will also continue our work on the rights of Indigenous peoples in the extractives and renewables sectors.

At BMO GAM (EMEA), we have a 25-strong responsible investment team, which last year engaged with 940 companies in 49 separate geographies. In the same period, we achieved 388 ‘milestones’ or positive outcomes as a result of direct engagement over time.

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Risk warnings

The value of investments and any income derived from them can go down as well as up and investors may not get back the original amount invested.

The information, opinions, estimates or forecasts contained in this document were obtained from sources reasonably believed to be reliable and are subject to change at any time.

Views and opinions have been arrived at by Columbia Threadneedle and should not be considered to be a recommendation or solicitation to buy or sell any companies that may be mentioned.

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Important information: Past performance is no guide to future returns. The value of investments and any income is not guaranteed and can go down as well as up and may be affected by exchange rate fluctuations. This means that an investor may not get back the amount invested. Your capital is at risk. Threadneedle Specialist Investments Funds ICVC (“TSIF”) is an open-ended investment company structured as an umbrella company, incorporated in England and Wales, authorised and regulated in the UK by the Financial Conduct Authority (FCA) as a UCITS scheme. Certain sub-funds of TSIF are registered for public offer in Austria, Belgium, Chile, Denmark, France, Germany, Ireland, Italy, Luxembourg, the Netherlands, Norway, Portugal, Singapore, Spain, Switzerland, Sweden and the UK. Shares in the Funds may not be offered to the public in any other country and this document must not be issued, circulated or distributed other than in circumstances which do not constitute an offer to the public and are in accordance with applicable local legislation. Please read the Prospectus before investing. Subscriptions to a Fund may only be made on the basis of the current Prospectus and the Key Investor Information Document, as well as the latest annual or interim reports and the applicable terms & conditions. Please refer to the `Risk Factors’ section of the Prospectus for all risks applicable to investing in any fund and specifically this Fund. The above documents are available in English, French, German, Portuguese, Italian, Spanish and Dutch (no Dutch Prospectus), Swedish (for the Key Investor Information Document only) and can be obtained free of charge on request from: Columbia Threadneedle Investments PO Box 10033, Chelmsford, Essex CM99 2AL. Issued by Threadneedle Investment Services Limited. Registered in England and Wales, Registered No. 3701768, Cannon Place, 78 Cannon Street, London EC4N 6AG, United Kingdom. Authorised and regulated in the UK by the Financial Conduct Authority. Columbia Threadneedle Investments is the global brand name of the Columbia and Threadneedle group of companies. columbiathreadneedle.com

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