Centrica, Com- pass Group, Hei- delberg Cement, HSBC, National Grid, , Vale

Quarterly Engagement National Grid, Report January-March BHP, HSBC, 2021 Centrica, HSBC, Compass Group, Heidelberg Cement 2 LAPFF QUARTERLY ENGAGEMENT REPORT | JANUARY-MARCH 2021 lapfforum.org CLIMATE EMERGENCY

National Grid Commits to Vote on Climate Heidelberg Cement Commits to Review of Lobbying Activity Objective: LAPFF has promoted a ‘Say “As a supporter of ‘Say on Climate’, on Climate’ at the National Grid AGM LAPFF is pleased to have been part of Objective: An ‘explicit and decisive’ as a crucial mechanism for investors to securing a vote at this year’s AGM for response was sought from Heidelberg be able to approve (or otherwise) the the company’s climate change targets Cement to towards complying with inves- company’s net zero transition plans, and action plan. We appreciate the tor expectations relating to corporate preferably on an annual basis. serious consideration the board has climate lobbying. Achieved: Following a series of meetings given to the matter and very much Achieved: A collaborative letter, under held with the chair, the board announced welcome the company taking this the auspices of the CA100+ initiative, set in March that an advisory vote would out a request for public disclosure of a opportunity to seek shareholder be provided for shareholders at the comprehensive corporate lobbying review support’. 2021 AGM to put the company’s climate to assess the alignment of lobbying change-related targets and action plan to Cllr Rob Chapman, LAPFF vice-chair activities with the Paris Goals, and to the 2022 AGM for review and approval. set out what steps the Company intends In Progress: Within the Climate Action electricity and gas distribution busi- to take in the event of areas identified 100+ (CA100+) investor initiative, nesses and from the carbon-intensity in misalignment. After a call from lead National Grid has come to be identified as of heat in UK homes. In October 2020, investors, a response was forthcoming. a ‘leader’ in many respects, not least due the company announced scope 3 carbon The company noted it has pushed its to its ambition to operate a zero-carbon emission reduction targets for the elec- associations to take a pro-active stance electricity system in the UK by 2025 and tricity and gas sold to customers of 20% towards industry transformation in align- for the entire company to be net zero by reduction by 2030. This was welcome, ment with the Paris agreement and that 2050. In engaging we have continued and was a target aligned with the Science these actions had already changed the to push on the long-term objective for Based Targets Initiative’s two degrees stance of key organisations leading to the the company to set targets for its scope pathway. CA100+ has issued its bench- publication of carbon-neutrality road- 3 emissions and for it to identify a 1.5 marking analysis for National Grid, and maps by them. degree scenario for the business. For engagement will pick up on those areas In Progress: The company has fully National Grid, the biggest challenge for where further action can better align the committed to a review to be published scope 3 emissions comes from the US company with a 1.5 degree pathway. before the 2021 AGM. 3 LAPFF QUARTERLY ENGAGEMENT REPORT | JANUARY-MARCH 2021 lapfforum.org CLIMATE EMERGENCY

restoration of water quality in the Doce River, community cohesion, and mental health services for people suffering from the impacts of the dam collapse. The reparations were meant to be undertaken by the Renova Foundation, a joint venture established through Vale and BHP in partnership with Brazilian officials. However, Renova has been unable to follow through to date. Part of the problem appears to be that the affected communities do not trust Renova to act on their behalf. In fact, there has now been a lawsuit filed by the Brazilian Public Prosecutor in Minas Gerais, where Mariana is located, call- ing for Renova to be disbanded. The suit alleges that Renova has served to limit the liability of BHP and Vale rather than pursue the interests of the communities in the reparations process. Given these obstacles and delays, LAPFF’s primary objective is to put pres- sure on BHP, Vale, and Renova to speed up the reparations process. A corollary of this objective has been to determine what the specific community asks of the companies and of Renova are. Achieved: While BHP Chair, Ken MacKenzie, does not appear to be eager to engage, Cllr McMurdo had another committed to set, disclose and implement useful meeting with Sandra Guerra, a HSBC Resolution Pulled after a strategy with short- and medium-term non-executive director at Vale. He also Shareholder Requests Met targets to align its financing across all met with Renova Foundation’s CEO, sectors with the goals of the Paris climate Andre de Freitas. Neither Ms. Guerra Objective: A shareholder resolution was agreement. It will use 1.5C pathways that nor Mr. de Freitas is happy with the filed for the 2021 HSBC AGM asking for are not overly reliant on negative emis- slow pace of reparations, but they both publication of a strategy, with short, sions technologies. pointed to obstacles they believe have medium and long-term targets, to reduce In Progress: Commitments made by the prevented a faster process. the company’s exposure to fossil fuel company are set out in a special resolu- Cllr McMurdo also joined Adam assets on a timeline aligned with the tion tabled by the bank for its 2021 AGM. Matthews and John Howchin in LAPFF’s goals of the Paris agreement. The bank has committed to publishing a quarterly discussion with affected Achieved: The LAPFF chair engaged new coal policy by the end of 2021. community members. The community with HSBC in July 2020 on the group’s members present urged the investors to approach to climate change, with a New LAPFF Monitoring do more and emphasised the slow pace particular focus on the insurance side of Pledge on Dam of reparations. The meeting was quite the business, raising concerns over the Collapse frustrating in that LAPFF was unable to lack of clarity on climate and business ascertain exactly what the community strategy. Following the resolution filing, Objective: LAPFF has been engaging is asking of BHP, Vale, and Renova. LAPFF participated in a meeting in with Vale and BHP for around two years However, subsequently it became clear February 2021 hosted by Investor Forum now in relation to both the Samarco and that they would like to see Renova with the CEO & Chair to discuss the Brumadinho dam collapses. Samarco is disbanded and replaced with an entity resolution. The company has acknowl- a particular concern in relation to the that better respects and incorporates edged that ‘expansion of coal-fired power time it is taking to make appropriate community voice into reparations is incompatible with the goals of the reparations. Over five years from the dam decision-making. Paris agreement, and has committed to collapse in Mariana, Brazil, only five of LAPFF does not doubt that there phasing out coal-fired power and thermal the over 500 houses destroyed have been are significant obstacles to providing coal mining in the EU and OECD by 2030 re-built, and none of them are occupied. reparations. Nonetheless, over five and other regions by 2040. Further, Houses represent only one aspect of years on, it is also clear that no excuses in line with the resolution, HSBC has the reparations needed, including a can be made. Cllr McMurdo was clear 4 LAPFF QUARTERLY ENGAGEMENT REPORT | JANUARY-MARCH 2021 lapfforum.org COMPANY ENGAGEMENT

in both meetings that notwithstanding all houses will be re-built by 5 November, will check in monthly with Renova and the obstacles articulated, both Vale and the next anniversary of the Samarco dam the communities to ensure that it has the Renova, along with BHP, must find a collapse. This first post on the LAPFF accurate number of houses to post on the way to speed up the reparations process. website will take place in early April. LAPFF website. This process highlights LAPFF therefore expressed its intention In Progress: LAPFF will continue to the importance of ensuring that compa- to all three parties to post monthly on engage with BHP, Vale, the Renova nies prevent these disasters rather than the LAPFF website the number of houses Foundation, and affected communities in scrambling to make reparations, where that have been re-built. It is hoped that the hopes of speeding up reparations. It these are even possible, after the fact.

Resolution Copper Developments on Hold

Objective: LAPFF has been engaging with BHP and Rio Tinto on the joint venture, Resolution Copper, to ensure that the project is being undertaken responsibly. Concerns have been raised about the type of engagement the companies have had with communities affected by the project. In particular, the San Carlos Apache Tribe in has objected to the project, claiming that the proposed copper mine would destroy one of the tribe’s sacred sites. Other groups have expressed concerns that Resolution Copper and Rio Tinto – the operating partner in Resolution Copper – have not taken adequate steps to protect natural resources, such as water, affecting surrounding communities. Therefore, meaningful community engagement and protection of natural resources, including water, are the two overarching objectives of this engagement. despite repeated requests to both parties Achieved: For Resolution Copper to move for this information. They only provided forward, the US Forest Service must issue 36 cultural impact assessments pertain- an impact assessment that allows for a ing to the land surrounding the mine. The land swap from the federal government to Forest Service impact assessment also Rio Tinto. In the final days of the Trump refused to assess the mine’s impact on Administration, this impact assessment the grounds that it would soon be private was issued, and it was assumed that the land and therefore not within the purview land swap would follow within 60 days, of its analysis. This assessment was as prescribed by the law governing the issued notwithstanding the fact that the exchange. LAPFF spoke with representa- lands are still public and there is some tives of Resolution Copper and Rio Tinto, question about the legality of transferring including a representative of the Hopi them to a private actor. In LAPFF’s view, Top: Sunrise Dance on the San Carlos tribe which, along with the San Carlos the quality of this assessment was also Indian Reservation Arizona Apache, is affected by the Resolution extremely poor overall. Among other defi- Copper project to obtain the companies’ ciencies, it failed to address water supply Above: Roy Chavez, a resident of Superior, view of the project. LAPFF also reviewed issues for the surrounding communities Arizona, and former miner, shows a the Forest Service impact assessment. in any useful way. model detailing the subsidence that What emerged from this research The water concerns surfaced in a can occur from the block cave mining was that there were huge gaps in the meeting between LAPFF Chair, Cllr method at the Campground, information provided by the Forest Doug McMurdo, and Mayor of Superior, which Chavez and others believe will be Service impact assessment. Neither the Arizona, Mila Besich. This meeting was destroyed by eventual cave-in from the Resolution Copper nor Rio Tinto repre- very interesting because Mayor Besich is Resolution Copper mine. sentatives have provided LAPFF with very keen for the Resolution Copper pro- Picture taken June 13, 2017 impact assessments of the mine itself, ject to proceed. She believes it will bring 5 LAPFF QUARTERLY ENGAGEMENT REPORT | JANUARY-MARCH 2021 lapfforum.org COMPANY ENGAGEMENT

significant economic benefits to her town, Compass Group Food Parcels company’s governance as a whole during which has suffered from job losses and Questioned the pandemic and met with the compa- economic woes since the 1980s. However, ny’s Investor Relations representatives on she spoke about her struggles in engaging Objective: In January 2021, multiple media the 31st of March. with Resolution Copper and Rio Tinto. articles came to light about Chartwell (a Specifically, she found the companies subsidiary of Compass Group Plc) and its Amazon Investor Letter dismissive of her community’s needs, contract awarded by the government to Questions Company’s Trade including access to water. Moreover, supply £30 for free school meals. The arti- Union Practices she expressed the opinion that what the cles and pictures of school meals in the companies needed to do to fix the water press presented what a family had been Objective: LAPFF signed onto a letter access concerns would have cost the supposedly been provided for ten days coordinated by Folksam and Ohman equivalent of a rounding error to them. and were highly critical of the allocation. to ensure that Amazon is respecting LAPFF was concerned after this Cllr McMurdo immediately reached out workers’ rights to free association and engagement that there was not enough to Compass Group to ascertain what had collective bargaining at the company’s information to make a good assess- gone wrong in Chartwell’s supply chain. facility in Bessemer, Alabama in the US. ment about the risks of the project. He asked why there had been govern- The request includes reassurance that Additionally, in LAPFF’s view, it made ance failings and what was being done to a free and fair union election will take no sense to proceed with the land swap ensure this did not happen again. place at the facility. without understanding if the project Achieved: After a thorough conversa- Achieved: There are now investors with was viable first. Therefore, LAPFF wrote tion around where these failings had just over US$7.1 trillion in support of to Deb Haaland, who was confirmed happened and why, Compass discussed this initiative. To date, Amazon has on 15 March as the new – and first ever how it was ensuring that this would responded in letter form that it has Native American - US Secretary of the not happen again with more thorough appropriate human rights and labour Interior. The letter expressed LAPFF’s procedures in place in certain parts of standards in place. The company stated concern about the risks surrounding the theirs and Chartwell’s business opera- that it respects trade union rights and Resolution Copper project and the need tions, to ensure that all food parcels were has good relationships with its employ- for the companies to engage in a positive of adequate standard. Compass also ees. However, the investors in this way with communities affected by their publicly made a commitment that free collaborative engagement have not been project. breakfast was going to be included in the satisfied with the company’s response. Just after the Biden Administration food parcels for every child eligible for This is in part due to reports that Amazon took office, LAPFF received notification free school meals from the 25th of January, has hired a consulting company to from a community representative that the as a gesture of goodwill. obstruct trade union activities. US Forest Service impact assessment had In Progress: The Forum has since reached In Progress: There has been a follow up been rescinded and that consequently out to Compass Group to discuss the letter sent requesting a meeting with the land swap would be postponed. Amazon to discuss this issue further. The The US Forest Service will issue a new investors are awaiting a response from impact assessment, presumably to help the company. address some of the shortcomings of the rescinded assessment. The time frame for the new Forest Service assessment and land swap is not clear at this point. In Progress: LAPFF has made clear to both BHP and Rio Tinto that there cannot be another Juukan Gorge (the event in Western Australia where Rio Tinto blew up two culturally significant caves against the will of the affected Aboriginal community). LAPFF has also made clear that it makes no sense for the land swap to proceed unless there is clear evidence of Resolution Copper’s viability. There are continuing discussions with both BHP and Rio Tinto on these issues. LAPFF continues to be open to discussion with a San Carlos Apache representative who has been invited to discuss the issue with Cllr McMurdo. It is also hoped that with Ms. Haaland’s confirmation, she might meet with Cllr McMurdo to share her thoughts on the project. 6 LAPFF QUARTERLY ENGAGEMENT REPORT | JANUARY-MARCH 2021 lapfforum.org COMPANY ENGAGEMENT

LAPFF Challenges Shell on Forum has been monitoring the ongoing businesses have aligned with a 1.5 degree Climate Transition Plan situation in the territories and reached global temperature rise. out reached out to 16 companies in which Achieved: Since LAPFF began engaging Objective: LAPFF continues to engage a number of member funds hold to seek with Suzano 18 months ago the company with Shell. In addition to its own engage- an engagement meeting. The aim of has set a target to reduce emissions ment, LAPFF is engaging via the CA100+ these engagement letters was to ascertain intensity of scope 1 & 2 emissions by 15% group of investors on Shell. The Forum whether these companies had under- by 2030. The company has also set a goal is very keen to continue the collabora- taken human rights impact assessments of removing an additional 40 million tion with other investors, and make sure on their operations and if not, ask them tons of carbon from the atmosphere by that investors collectively communicate to do so. 2030, this on top of the already estab- a consistent and robust case to ensure Achieved: Out of the 16 companies, LAPFF lished target of carbon neutrality. Suzano all aspects of the company’s financial had one engagement meeting in the third has a forest base of approximately 2.2 outcomes and performance are under- quarter of 2020 with Altice Europe N.V million hectares and therefore the degree stood fully. and received a number of responses from to which carbon can be sequestered Achieved: Last year, 2020, LAPFF recom- other companies. As a general blanket naturally is significant. The company mended voting for a shareholder resolu- response from those whom responded in recognises the contribution its natural tion at the Shell AGM that requested only written form, companies considered asset base can make to global net-zero specific targets for Shell’s claimed that they were acting in accordance with efforts which is reflected in its carbon- climate change ambitions. However, on 11 local law by not discriminating against negative ambition. In terms of disclosure, February 2021 Shell published goals that any residents of the territories in which the company submitted a response to the are ambiguous. For example, it claims they were operating. These companies CA100+ global benchmark during January to remove 120 million tonnes of carbon were concerned that simply operating 2021. After the data has been collated, dioxide by introducing nature-based in these areas was justification enough LAPFF will be able to identify areas of solutions (trees) by 2030. Achieving that for them to be included on what many the Suzano’s carbon reduction strategy in target would require a mature forest observers have dubbed a ‘blacklist’ from which it is excelling as well as those areas the size of Washington State, which is the UN. improvements are required. difficult to envisage. In addition, Shell In Progress: The Forum reached out to the In Progress: LAPFF will continue to claims to want to remove 25 million UN OHCHR, seeking a meeting to engage focus on the company’s carbon reduc- tonnes of carbon dioxide by carbon on a couple of aspects of the UN list: (1) tion strategy with a focus on setting capture and storage (CCS) by 2035. This the methodology used when deciding more ambitious scope 1 & 2 emission has not been detailed or scheduled in any what companies would be included on reduction targets. It is important that other material. The claim represents ten the their list; and (2) what the UN consid- Suzano’s natural offsetting capability is times the largest existing CCS project – ers companies have to do or provide for not used as a distraction from reducing Gorgon Project (Shell 25 percent, Chevron them to be removed from the list. This its operational emissions. There is a finite 75 percent) and this project in Australia meeting took place at the end of March. carbon budget available all of which will continues to experience problems. Shell’s The Forum has also been investigating be required to support industry in sectors announcement includes increasing liquid models for a human rights impact assess- that are harder to abate. natural gas output by 20 percent by 2030 ments as a baseline to provide companies and only plans for a 17 percent reduction with in what the Forum might expect Tesco and Nutrition in oil extraction, compared to BPs 40 them to be undertaking. percent. Objective: During January 2021, LAPFF In Progress: Shell has proposed a non- Suzano and CA100+ met with Tesco to discuss the company’s binding shareholder resolution on its long-term strategy relating to health climate change plans. The LAPFF position Objective: Suzano, the Brazilian-based and nutrition. Part of the objective of will be guided by research and further pulp and paper company, has been this engagement was to encourage the engagement. At present, it is consid- identified by CA100+ as critical to the company to disclose metrics relating ered much more detail and evidence is net-zero energy transition. As one of to the proportion of healthy versus required before any conclusions can be two lead investors, LAPFF has been unhealthy produce available to custom- drawn about what vote is advisable. engaging with the company over the ers and to set relevant targets to improve last 18 months, pushing it to take action the availability of healthy items. This Israeli-Palestinian Letters to reduce greenhouse gas emissions, engagement aligns with the Healthy improve disclosures, and implement Markets initiative being coordinated by Objective: The Israeli-Palestinian a strong governance framework from ShareAction. Territories have long been fraught with which company decision making can be Achieved: Tesco outlined that it already controversy. In February 2020, the Office made accountable. In January, LAPFF collected data relating to health and of the United Nations High Commissioner met with the company to encourage a nutrition. Since the engagement took for Human Rights published a list of 112 response to the CA100+ net zero company place, ShareAction has announced the business entities that it had identified benchmark. The benchmark will enable filing of a resolution at the upcoming as having business activities related comparative assessment of the world’s Tesco AGM requesting that the company to settlements in these territories. The key emitters and the extent to which disclose the share of total food and 7 LAPFF QUARTERLY ENGAGEMENT REPORT | JANUARY-MARCH 2021 lapfforum.org COMPANY ENGAGEMENT

non-alcoholic drink annual sales by volume made up of healthier prod- ucts and publish a target to significantly increase that share by 2030. In Progress: LAPFF is monitoring the company response to the shareholder resolution and will issue guidance to members in due course. Volkswagen and General Motors on Electric Vehicles and Climate Change Objective: Vehicle emissions are a major contributor to carbon emissions. As a result, carmakers are facing tightening regulatory environments. Rapidly chang- ing emissions standards present financial risks to those carmakers not seeking to move to electric vehicle production. LAPFF has sought to engage with the auto indus- try to ascertain how car makers will be approaching the challenges of electrifying their fleets, to push for net zero commit- Lithium Ion Battery for Chevrolet Volt Electric Car ments, and to ensure that plans would support a just transition to net zero. science-based targets for their scope 3 energy, transportation and materials Achieved: The Forum met with General emissions will do so imminently and also sectors was from the Audit Committee Motors (GM) and Volkswagen (VW). Both expects investee companies to ensure that Chair who clearly understands what was companies outlined their commitments they are sufficiently capable of electrify- asked for and addresses it directly. He to investing in and scaling up electric ing their fleets. The Forum intends to stated that the company has undertaken vehicle production. VW stated that it was continue engagements with carmakers to a review of climate risks in its financial committed to achieving net zero by 2050 ensure that they are meeting their targets statements and will publish the results and highlighted the reputational damage and that short-term emission reductions in the forthcoming Annual Report and to the company caused by the emissions are being achieved.This goal is especially Accounts. The committee chair referred to scandal. important given the rise in the sales of specific risk areas including valuation of GM stated that it was aiming for an larger vehicles which in some cases is assets (i.e. impairment testing) where the all-electric future, was aiming for carbon offsetting gains from greater fuel efficiency committee considers carbon pricing and neutrality, and was working with the and increased electric vehicle sales. the impacts for assets and to asset expo- Science-Based Taskforce Initiative on this sure to physical risks – specifically the aim. Two weeks after the engagement GM AngloAmerican on Climate Chile copper mines to water scarcity – all formally announced its plans for carbon of which feeds into the viability statement neutrality by 2040 in products and Objective: LAPFF wrote to analysis. operations and its aspiration to eliminate AngloAmerican in November 2020 as part In Progress: The audit committee chair tailpipe emission for light-duty vehicles of a collaborative initiative coordinated has asked that, due to clear parallels, by 2035. The meeting also covered the by Sarasin and Partners, underscoring issues raised in this engagement be level of investment in carbon reduction the vital role of accounting and audit aligned with CA100+ engagement. LAPFF methods relative to other carmakers in in driving the net-zero transition. An is also a member of the CA100+ collabora- electric vehicles and when price parity Investor Expectation document provided tive investor group for Anglo-American. between electric and internal combustion guidance for ensuring material climate engine vehicles would be achieved. risks associated with the transition to a LAPFF Socio-Economic At both meetings, the just transition 2050 net zero pathway are fully incorpo- Diversity Engagement Kicks to net zero was discussed. This discus- rated into the financial statements. The Off sion included assurances from both letter asked that the guide be shared with companies about how they were seeking all members of the Audit Committee as Objective: LAPFF seeks to enhance the to support their workforce and ensure well as the auditor, from whom independ- diversity of both boards and the work- high standards within their supply chain, ent assurance on Paris-alignment is also force at investee companies. Ensuring including the human rights of miners in being sought. diversity across a range of characteristics the Congo. Achieved: One of the best responses within boards helps to tackle group In Progress: LAPFF hopes that manu- received to date to a total of 36 letters think while improving diversity in the facturers that haven’t already set sent to European companies in the workplace helps ensure that all talent 8 LAPFF QUARTERLY ENGAGEMENT REPORT | JANUARY-MARCH 2021 lapfforum.org ENGAGEMENT

available to companies is utilised. IOPA ENGAGEMENT Achieved: HM Treasury and BEIS have MEETINGS commissioned an independent taskforce to improve socio-economic diversity at WEBINAR LAPFFW has participatedEBINA in the monthlyR senior levels in financial and professional IOPA meetings around after signing on services across the UK. The taskforce is to a number of letters last year calling for being run by City of London Corporation better governance at big pharamaceuitcal with support from Deloitte. LAPFF met companies around employee safety and with a representative from Deloitte to bonus structures in light of the current discuss the taskforce and highlight the pandemic. There have been multiple reso- role of investors. Alongside this meeting, lutions filed through IOPA, one of which the Forum also attended the latest recently saw investors revolt against a meeting of 30% Club investor group. Webinar3 September, on securities lending 2.00pm andGMT ‘Say on3 Pay’September, vote at AmerisourceBergen 2.00pmGMT In Progress: Over the next quarter the responsibleBrazilian investment Community with 48%Brazilian of all investors Community voting against Forum will be meeting with companies Member Update on the payMember which was Update made up on of 72% non- from the financial services sector, which WebinarCovid with and Colombian Tailings Community Dams insiders.Covid and Tailings Dams has a wide gender pay gap, to push for Representativesregister her Affectede by Cerrejon Two Brazilian community greater diversity. The Forum intends to CONSULTATIONmembers will share their stay in contact with the socio-economic The burning of wood by Drax. Is it net RESPONSESexperiences with mining diversity taskforce. zero, sustainable, and replicable? companies in relation to Covid and tailings dams. Addressing Rio Tinto’s legacy on LAPFF Just Transition COLLABORATIVE You can register here. ENGAGEMENTS Bougainville: ongoing environmental Inquiry and human rights impacts of the Panguna mine LAPFF has now held two inquiry Asset Manager Engagements sessions on the just transition through “We continue to hear from the All Party Parliamentary Group on LAPFF Chair, Cllr Doug McMurdo, has community members affected by local government. In the first session, met with a range of large global asset mining companies how little the attendees heard from Rachel McEwen, managers to discuss their approaches companies engage with them, if at SSE PLC & Scottish Just Transition to responsible investment. Topics have all. The companies then tell us they Commission, Katrina Szwarc, Grantham covered climate change, human rights, are engaging with communities Research Institute on Climate Change, and audit, among others. The goal of and cherry pick people to extol Tom Harrington, GMPF, and Alison Tate, these engagements is to ensure that asset International Trade Union Confederation. the companies’ virtues. This managers are engaging on behalf of Lord Deben (Chair, Committee on Climate goes across the industry. Such a LAPFF members in a way that facilitates Change) and Polly Billington (Chief LAPFF’s responsible investment policies massive failure of communication Executive, UK100) spoke at the next and objectives. There is some indication is astounding to me. How do the evidence session in mid-March. This that asset managers are starting to take companies begin to assess their inquiry will span the whole of 2021 and LAPFF’s input on board and engage social and environmental risks interim findings are reported at quarterly more meaningfully on areas like climate if they are so selective in their LAPFF Business Meetings. A final report and human rights in the wake of these engagements that they don’t speak will be made at the end of the year. A meetings, but it appears there is a long to the people they are impacting video of the launch on 20th January is way to go. the most?” available here.

CCLA and Rathbones Modern Cllr Doug McMurdo, LAPFF Chair EU Human Rights and Slavery Engagements Environmental Due Diligence Consultation LAPFF has signed up to CCLA’s ‘Find It, Fix It, Prevent It’ engagement and has LAPFF submitted a response to the re-joined the Rathbones modern slavery IIGCC Shareholder European Union’s consultation on engagement. Both initiatives pair LAPFF Resolutions Sub-Group whether to implement a legal framework with other responsible investment part- meeting on human rights and environmental due ners to improve employment standards diligence. This consultation prompted in companies’ supply chains. Rathbones LAPFF has been participating nearly over 100,000 responses, according to is re-running its vote against slavery weekly in the IIGCC shareholder reso- Didier Reynerds of the EU. The EU’s engagement in 2021 with 69 FTSE350 lutions sub-group meeting regarding consultation comes after passage of and companies after success in 2020 in getting climate resolutions expected to arise over referenda on such laws in EU coun- target companies to comply with the UK the course of 2021. tries including France and Germany. Modern Slavery Act. Switzerland also narrowly rejected a 9 LAPFF QUARTERLY ENGAGEMENT REPORT | JANUARY-MARCH 2021 lapfforum.org ENGAGEMENT ENGAGEMENT DATA

human rights and environmental due dili- ENGAGEMENT TOPICS gence law, although the proposal received the majority of the popular vote. LAPFF supported the proposal for an Meeting EU legal framework on human rights Sent correspondence and environmental due diligence. This Received position is rooted in LAPFF’s engagement correspondence work which suggests that there are real Alert issued financial benefits linked to good social Press release and environmental conduct by inves- 0510 15 20 25 30 tee companies. LAPFF’s consultation response pointed to LAPFF engagements ACTIVITY on climate and human rights to demon- strate how these issues are financially material. On climate, LAPFF has seen Meeting the fear of stranded assets come into Sent correspondence full focus during the Covid pandemic Received with companies like Shell failing to offer correspondence Alert issued cogent and convincing climate transi- Press release tion plans. On human rights, LAPFF’s work with community members affected 0510 15 20 25 30 by mining projects has highlighted the importance of companies’ social licenses MEETING ENGAGEMENT OUTCOMES to operate as a means of producing sus- tainable financial returns for investors. Dialogue It remains to be seen whether the EU decides to enact such legislation. All Substantial improvement indications are that it will. However, Small improvement there was a lot of debate about what the Awaiting response law might look like, including the role of Change in process director duties in this legislation, so we No improvement will have to see what form the draft law Moderate improvement ultimately takes. Satisfactory response 0510 15 20 25 30 MEDIA COVERAGE https://www.ipe.com/news/lapff-backed- POSITION ENGAGED parliamentary-group-launches-just- transition-inquiry/10050135.article Chairperson https://www.reuters.com/article/ Specialist staff resolution-copper-lapff/uk-local- government-pension-group-raises- Exec Director or CEO concerns-over-rio--arizona-mine- Non-Exec Director idUSL1N2JJ1XN 0510 15 20 25 30 35 https://www.ft.com/content/30d2fc62- aa44-11e9-984c-fac8325aaa04 COMPANY DOMICILES https://www.newsroom. co.nz/2019/08/20/762606/nz-super-fund- GBR corrals-15tn-for-livestreaming-action USA FRA DEU https://www.itv.com/news/2021-03-25/ BRA will-deliveroo-stumble-on-its-stock- LUX market-debut ESP JPN NLD ITA GBR/AUS 010203040 10 LAPFF QUARTERLY ENGAGEMENT REPORT | JANUARY-MARCH 2021 lapfforum.org COMPANY PROGRESS REPORT

38 Companies engaged over the quarter *The table below is a consolidated representation of engagements so reflects the number of companies engaged, not the number of engagements

Company/Index Activity Topic Outcome AIR LIQUIDE SA Sent Correspondence Climate Change Dialogue AMAZON.COM INC. Sent Correspondence Employment Standards Dialogue ANGLO AMERICAN PLC Received Correspondence Climate Change Substantial Improvement ARCELORMITTAL SA Meeting Climate Change Dialogue AVIVA PLC Sent Correspondence Board Composition Awaiting Response BARCLAYS PLC Meeting Climate Change Small Improvement BHP GROUP PLC Sent Correspondence Human Rights Dialogue BLACKROCK INC Meeting Climate Change Satisfactory Response CAPITA PLC Meeting Employment Standards Dialogue CENTRICA PLC Meeting Climate Change Change in Process CITIGROUP INC. Meeting Climate Change Small Improvement COMPAGNIE DE SAINT GOBAIN Received Correspondence Climate Change Change in Process COMPASS GROUP PLC Meeting Governance (General) Small Improvement DAIMLER AG Received Correspondence Climate Change Dialogue DIXONS CARPHONE PLC Meeting Environmental Risk Dialogue E.ON SE Meeting Climate Change Small Improvement ENDESA SA Received Correspondence Climate Change Substantial Improvement ENEL SPA Received Correspondence Climate Change Substantial Improvement ENGIE SA. Sent Correspondence Climate Change Dialogue GENERAL MOTORS COMPANY Meeting Climate Change Small Improvement HEIDELBERGCEMENT AG Received Correspondence Climate Change Substantial Improvement HSBC HOLDINGS PLC Meeting Climate Change Moderate Improvement LLOYDS BANKING GROUP PLC Sent Correspondence Board Composition Awaiting Response LONDONMETRIC PROPERTY PLC Received Correspondence Governance (General) Substantial Improvement LYONDELLBASELL INDUSTRIES N.V. Sent Correspondence Climate Change Change in Process RIO TINTO PLC Meeting Climate Change Substantial Improvement ROYAL DUTCH SHELL PLC Meeting Climate Change No Improvement SAINSBURY (J) PLC Received Correspondence Environmental Risk Dialogue SERCO GROUP PLC Sent Correspondence Employment Standards Awaiting Response ST JAMES’S PLACE PLC Sent Correspondence Audit Practices Awaiting Response STANDARD LIFE ABERDEEN PLC Received Correspondence Board Composition Dialogue SUMITOMO MITSUI FINANCIAL GROUP Meeting Board Composition Change in Process SUZANO SA Meeting Climate Change Small Improvement TELEPERFORMANCE SE Sent Correspondence Employment Standards Awaiting Response TESCO PLC Meeting Other Dialogue TOTAL SE Sent Correspondence Climate Change Moderate Improvement VALE SA Meeting Governance (General) Dialogue VOLKSWAGEN AG Meeting Climate Change Change in Process 11 LAPFF QUARTERLY ENGAGEMENT REPORT | JANUARY-MARCH 2021 lapfforum.org LOCAL AUTHORITY PENSION FUND FORUM MEMBERS

Avon Pension Fund Ealing (London Borough of) Leicestershire Suffolk County Council Pension Fund Barking and Dagenham (London East Riding of Yorkshire Council Lewisham (London Borough of) Surrey County Council Borough of) East Sussex Pension Fund Lincolnshire County Council Sutton (London Borough of) Barnet LB Enfield (London Borough of) London Pension Fund Authority Teesside Pension Fund Bedfordshire Pension Fund Environment Agency Pension Fund Lothian Pension Fund Tower Hamlets (London Borough of) Bexley (London Borough of) Essex Pension Fund Merseyside Pension Fund Tyne and Wear Pension Fund Berkshire Pension Fund Falkirk Council Merton (London Borough of) Waltham Forest (London Borough of) Brent (London Borough of) Gloucestershire Pension Fund Newham (London Borough of) Wandsworth (London Borough of) Camden (London Borough of) Greater Gwent Fund Norfolk Pension Fund Warwickshire Pension Fund Cardiff and Vale of Glamorgan Pension Greater Manchester Pension Fund North East Scotland Pension Fund West Midlands Pension Fund Fund Greenwich Pension Fund North Yorkshire County Council Pension West Yorkshire Pension Fund Cambridgeshire Pension Fund Gwynedd Pension Fund Fund Westminster CC Cheshire Pension Fund Hackney (London Borough of) Northamptonshire County Council Wiltshire County Council City and County of Swansea Pension Fund Hammersmith and Fulham (London Nottinghamshire County Council Worcestershire County Council City of London Corporation Borough of) Oxfordshire Pension Fund Clwyd Pension Fund Haringey (London Borough of) Powys County Council Pension Fund Pool Company Members Cornwall Pension Fund Harrow (London Borough of) Redbridge (London Borough of) Croydon LB Havering LB Rhondda Cynon Taf Border to Coast Pensions Partnership Cumbria Pension Scheme Hertfordshire Shropshire Council Brunel Pensions Partnership Derbyshire County Council Hounslow (London Borough of) Somerset County Council LGPS Central Devon County Council Islington (London Borough of) South Yorkshire Pensions Authority Local Pensions Partnership Dorset County Pension Fund Kingston upon Thames Pension Fund Southwark (London Borough of) London CIV Durham Pension Fund Lambeth (London Borough of) Staffordshire Pension Fund Northern LGPS Dyfed Pension Fund Lancashire County Pension Fund Strathclyde Pension Fund Wales Pension Partnership