Quarterly Engagement Report July-September BHP, , 2020 Sainsbury, ArcelorMittal, National Grid 2 LAPFF QUARTERLY ENGAGEMENT REPORT | JULY-SEPTEMBER 2020 lapfforum.org CLIMATE EMERGENCY

Puutu Kunti Kurrama and Pinikura Aboriginal Corporation Rio Tinto under pressure from investors over

As LAPFF has been learning more about “My interaction with Mr. Rio Tinto’s involvement in the destruc- Thompson, in his roles as Chair tion of the historically significant caves of both Rio Tinto and , has been at Juukan Gorge in Western , there have been increasing concerns positive thus far. However, I sense about the company’s corporate govern- that investors are losing confidence ance practices. Consequently, the Forum in his leadership and in his board at – along with other investor groups, most Rio Tinto. It will be a long road back What happened at prominently the Australasian Centre for for the company.” Juukan Gorge? Corporate Responsibility (ACCR) - has been pushing the company to review its Cllr Doug McMurdo In May, Rio Tinto destroyed 46,000-year- corporate governance arrangements. old Aboriginal caves in the Juukan One of the main strategies in this Gorge region of Western Australia. The engagement has been to issue press responding to information issued by explosions were part of a government releases citing LAPFF’s concerns as vari- Australian Parliamentary inquiries into sanctioned exploration in ous details of Rio Tinto’s practices were this matter. There appears to be increas- the region. The caves are of cultural revealed through a range of investiga- ing evidence of corporate governance fail- significance to the Puutu Kunti tions. There has been an internal inves- ures, particularly in relation to engaging Kurrama and Pinikura (PKKP) people tigation led by a non-executive director properly with indigenous communities, who claim Rio Tinto did not engage with on Rio Tinto’s board, which resulted in emanating from these inquiries. them adequately before the disaster. the elimination of short-term bonuses for LAPFF is continuing to ask questions Rio Tinto has since apologised, three senior executive members, includ- of the Rio Tinto board about its response and senior executives have resigned. ing the CEO. Subsequently, the CEO and to the mounting information on corporate However, an Australian parliamentary two other senior executives resigned. governance failures. The Forum cur- enquiry is continuing and may yet The Forum received significant press rently has requested LAPFF Chair, Cllr reveal further corporate governance coverage for its support of this meas- Doug McMurdo, meet with the Chair of failings. ure. LAPFF also issued press releases Rio Tinto, Simon Thompson, about the 3 LAPFF QUARTERLY ENGAGEMENT REPORT | JULY-SEPTEMBER 2020 lapfforum.org CLIMATE EMERGENCY

NET ZERO BENCHMARK

The Forum is proud to be a member of Climate Action 100+, a collaboration with 518 investor groups with $47tn in assets. From 2021, the CA100+ net zero benchmark will help its members assess a company’s alignment to net zero emissions. Using 30 indicators, the benchmark will provide comprehensive analysis on which Juukan Gorge incident. In the meantime, BHP’s cultural heritage team discuss its companies are leading the transition to LAPFF is participating in a collaborative operation. Cllr McMurdo then met with net-zero emissions, alongside a range investor group led by Adam Matthews both BHP Chair Ken MacKenzie and Vice of other indicators used by investors at Church of England to discuss a way President of Governance, Geof Stapledon to inform investment and corporate forward not only for Rio Tinto, but the to ask about joint ventures and com- engagement strategies. LAPFF’s mining industry more broadly. LAPFF has munity engagement. Cllr McMurdo took involvement with CA100+ has helped in also engaged with Rio Tinto in relation to some comfort in the fact that BHP has successful engagements this quarter the company’s progress on scopes 1 and two safety checks on cultural heritage, and we expect the benchmark will 2 carbon emission targets; progress on including measures Rio Tinto does not encourage more companies to reduce partnerships; and review of trade associa- have. First, BHP re-engages with affected carbon emissions and demonstrate tion memberships. communities if it has not undertaken high ambition to align with the Paris work within 12 months of approval from Agreement goals. the communities on a given site. Second, BHP Next Investor Target the community engagement department on Indigenous Peoples at BHP is located within the site-level THE ARCELORMITTAL Engagement function rather than the corporate CLIMATE CHALLENGE headquarters. With BHP’s AGM coming up, investors Still, investor confidence in the mining Steelmaking accounts for 7-9% of are keen to ensure the company avoids sector has been shaken, which has, in global carbon emissions today, and another Juukan Gorge-type situation. A part, led to the Australasian Centre for as the largest steelmaker in the repeat is of particular concern in rela- Corporate Responsibility (ACCR) filing world ArcelorMittal is responsible tion to its proposed Resolution three shareholder resolutions with BHP, for a significant share. The majority mine in , USA. BHP is in a joint one of which is on cultural heritage. The of carbon emissions come from the venture with Rio Tinto to scope out the cultural heritage resolution is in three process of reduction. The possibility of operating the mine, with parts and calls for: carbon challenge for the industry BHP as the non-operating partner. Given (a) a moratorium on the destruction of in the coming decades must be to the company’s partnership with Rio cultural heritage sites until better transform the way in which iron ore is Tinto and its joint venture with Vale in laws are enacted in Australia to turned into . the which collapsed in protect Indigenous communities in Over the period of engagement, Brazil, there are concerns about how BHP the context of mining projects; ArcelorMittal has been responsive and engages with environmental, social and (b) non-enforcement of contractual LAPFF and other lead investors have governance issues in joint ventures where provisions essentially imposing a ‘gag had notable success with the company it is the non-operating partner. order’ on communities to allow them separately identifying carbon-neutral In the wake of the Juukan Gorge to speak about concerns regarding hydrogen technology as central to its disaster, BHP announced that it will mining projects on their land; longer term zero-carbon transition. not damage 40 cultural heritage sites (c) disclosure of the approach to cultural Most recently ArcelorMittal has set in Western Australia without exten- heritage held by the industry associa- an objective for the whole group to be sively consulting Traditional Owners. tions to which BHP belongs. carbon neutral by 2050 in addition to The Forum has engaged at length with its shorter term target in Europe to BHP this quarter ahead of the AGM to The other two resolutions cover a reduce CO2 emissions by 30% by 2030. understand more about the company’s constitutional amendment to allow for Such targets are encouraging but plans and its approach to community advisory shareholder resolutions to be it is active shareholders that must engagement. filed and the Covid-climate link. LAPFF continue to hold the company – and A LAPFF representative attended will issue a voting alert on these resolu- others like it – to their targets. Our a shareholder meeting in July to hear tions shortly. engagements continue. 4 LAPFF QUARTERLY ENGAGEMENT REPORT | JULY-SEPTEMBER 2020 lapfforum.org COMPANY ENGAGEMENT

ArcelorMittal and National Grid CA100+ Engagements Continue Engagement to date with ArcelorMittal has led to a 30% carbon emission reduc- tion target for its European operations by 2030, and for carbon neutrality for 2050. A follow-up meeting at the beginning of July sought commitments to global targets for 2030 and 2050. At the National Grid meeting, the Forum’s objectives were for greater clarity on when the company will set scope 3 targets, and a commitment to report on climate lobbying and alignment with trade industry positions. The meeting with ArcelorMittal resulted in a commitment for a group 2030 carbon emission reduction target to be disclosed in a report released later this year. This had been delayed due to repercussions from the Covid-19 pan- demic. At a collaborative meeting with National Grid representatives, Cllr Rob Chapman, LAPFF vice-chair, raised a number of areas, including the provision of electric vehicle charging stations. The company had previously identified this as the most positive area of ‘value change’ for shareholders, but progress on this has been slow. For setting scope 3 targets, the challenge for the company, which has been proactive in the UK for aiming for a carbon-neutral grid by 2025, in its US gas LAPFF joins other investors the complicated nature of commodity and electricity distribution operations. on anti-deforestation push supply chains and why it is important Following up on a LAPFF question to the to conduct effective environmental and AGM, the company committed to look at The impact of deforestation on climate human rights due diligence on the entire disclosing company positions on direct change is a growing concern. LAPFF has supply chain, not just first or second tier and indirect lobbying. worked with other investors to push the suppliers. As joint-lead investor, LAPFF sent Brazilian government to stem deforesta- The Tesco meeting also addressed the letters to the chairs of both companies, tion in the Amazon. At a meeting with problem of plastics in the supply chain. providing information on the new Climate Tesco, one objective was for the company Hygiene requirements resulting from Action100+ Net Zero Benchmark which to set out how it aimed to achieve its Covid-19 have forced Tesco to re-orient its will rank companies from 2021 onwards. target of fully recyclable packaging by short-term efforts to reduce packaging. The benchmark builds on Taskforce on 2025. However, the company has retained its Climate Related Financial Disclosure The investor coalition drafted and long-term strategy and will continue to (TCFD) recommendations and looks at the co-signed a letter to the Brazilian work on rolling it out. most significant aspects of companies’ government and held a call hosted by The investor coalition appears to corporate strategy related to climate. The Storebrand to encourage better protection have helped drive proposed legislation companies were asked to work toward of the Amazon. on stemming deforestation in supply providing disclosures consistent with the LAPFF’s meeting with Tesco discussed chains. LAPFF has drafted a consulta- framework; align with net zero by 2050 how the company’s meat supply chain tion response to DEFRA draft legislation1 or sooner; and work with companies on might contribute to deforestation through designed to prevent forests and other action plans. A response was requested its supplier, JBS, which received a lot of natural areas from being converted ille- for October. media attention on this issue. The soy, gally into agricultural land. The legisla- which is used to feed the cattle eventually tion would require a number of larger purchased by Tesco as meat, is targeted companies to ensure their ‘forest risk’ by the campaign. This issue has raised commodities have been produced legally.

1 https://consult.defra.gov.uk/eu/due-diligence-on-forest-risk-commodities/ 5 LAPFF QUARTERLY ENGAGEMENT REPORT | JULY-SEPTEMBER 2020 lapfforum.org COMPANY ENGAGEMENT

LAPFF engages further on completed, the meeting information will LAPFF ramps up engagement climate finance be assessed to determine new objectives on supply chain due to take this work forward. diligence For much of this year, LAPFF has engaged with major asset managers and insurers Dam engagement Between the Boohoo scandal in Leicester, on their activities. The reaches milestone the supply chain component of the goal is to ensure they gain awareness of Modern Slavery Act, and the proposed the impact the insurance side of their Since February 2019, LAPFF has joined deforestation in the supply chain law, businesses does - and can - have on in the investor initiative on UK investors face supply chain chal- climate change. safety to ensure that collapses - such as lenges from several quarters. LAPFF has So far, the Forum has engaged with those in Mariana and Brumadinho, Brazil engaged with a number of other investors eight of the eleven companies contacted. - do not occur again. to explore initiatives that address supply This quarter, LAPFF engaged with HSBC There have been various sub-initiatives chain concerns. and . stemming from the over-arching project During the quarter, LAPFF representa- Overwhelmingly, engaged compa- established by Adam Matthews from tives joined a supply chain due diligence nies see the investment aspect of their the Church of England Pensions Board workshop hosted by the newly inde- businesses as more relevant to tackling and John Howchin from the Swedish pendent Workforce Disclosure Initiative. climate change, with little or no thought Council of Ethics to the AP Funds. One Attendees discussed what companies and given to the role their insurance sides can such initiative was a tripartite relation- investors can do to improve workplace play. That said, those companies offering ship between Principles for Responsible standards at supplier facilities. LAPFF property and casualty insurance agree Investment (PRI), UN Environmental also met with Andrew Adams at CCLA this business is vulnerable to climate Programme (UNEP), and International to discuss joining an investor coalition change, more so than the health and life Council on Mining and (ICMM) to to promote compliance with the Modern insurance lines. However, one company establish a Global Tailings Standard. The Slavery Act. This would be in addition to noted that health and life insurance Standard was launched on 5 August with the Forum’s participation in Rathbone’s might be equivalently - or even more - over 1,200 webinar participants. engagement with companies that fail to affected in future. Only one company While affected communities were adhere to Modern Slavery Act require- representative recognised and spoke consulted in the drafting of the Standard, ments. LAPFF is also working with about the companies’ impact on climate they were concerned that their input was other investors to stem deforestation in change rather than just the impact of not incorporated adequately. A number of company supply chains, as mentioned climate change on their business. investors also raised concerns about the above. LAPFF will work to set up meetings lack of an independent body to monitor The details of the CCLA engagement with the remaining three companies: its implementation. These points will are to be decided, and the LAPFF consul- , Group, likely continue to be areas of focus as the tation response on the proposed law on and Hathaway. When this Standard is rolled out. deforestation in the supply will be shared initial round of engagements has been when complete. The Forum also held a

Garment workers overcrowded into the back of a truck, commuting home after work, Phnom Penh, Cambodia 6 LAPFF QUARTERLY ENGAGEMENT REPORT | JULY-SEPTEMBER 2020 lapfforum.org COMPANY ENGAGEMENT

webinar on environmental and human LAPFF signs onto ICCR rights due diligence which covered all the Covid-19 letters to issues above. pharmaceutical companies Cybersecurity Engagements There has been concern that some Underway pharmaceutical companies might take advantage of the Covid-19 pandemic The LAPFF membership increasingly by implementing unfair distribution or recognises the variety of business risks pricing practices. The Interfaith Centre on that can stem from companies’ cyber- Corporate Responsibility (ICCR) organised security failures. In response members a collaborative engagement between expressed interest in engaging further investors and a number of pharmaceutical on this issue. Consequently, LAPFF has companies to ensure they are adhering to begun a round of engagements with fair practices in the context of the virus. transport and logistics companies, which Letters to most of the seventeen com- can be particularly vulnerable to cyberat- panies have been sent, with responses tacks, to assess their cyber resilience. received from Sanofi – which is working appropriate clinical trial protocols and Letters have been sent to Plc, on a coronavirus vaccine – and Biogen, ensuring access to the vaccine once it is AP Moller-Maersk, Wincanton Plc, which is not. AstraZeneca also sent a available. Expeditors International of Washington letter reassuring investors about the com- Lead investors are following up with Inc. and C.H. Robinson Worldwide Inc. pany’s approach to developing a vaccine. other companies for either first responses Meetings have been conducted with A major focus for the company seems or clarifications to responses. There have Clipper Logistics Plc and Plc. to be reducing the body’s overblown also been discussions about engag- Subsequent engagements with other immune response to Covid-19, and it is ing with company audit committees to companies will take place over the looking both to a vaccine and existing understand how they are addressing coming months. drugs to help deal with this problem. coronavirus within their company risk The company is insistent upon following frameworks.

with the remuneration policy trade associations to which AGMs & resolutions up for vote in the company belongs. The VOTING 2020 at many UK companies. company was also pushed on The Ryanair voting alert its delayed setting of scope ALERTS raised concerns about the 3 carbon emission reduction company’s response to the targets. The company Although the summer period Covid-19 pandemic. response was published on was quieter with regard to In preparation for the SSE its website, indicating that it AGMs and voting alerts, there AGM, Cllr Rob Chapman met would provide information on were a couple of notable with SSE Chief Sustainability scope 3 targets in October engagements. Engagements Officer, Rachel McEwen, who and a commitment to look with SSE and National Grid thanked LAPFF for its helpful at lobbying disclosure would – both held virtually due to engagement over the years. follow in a subsequent coronavirus - focused on LAPFF then asked a question meeting. climate practices. LAPFF about carbon capture and Ms McEwan also sits on has engaged with both storage at the SSE AGM. The the Scottish Just Transition companies for many years Forum’s question was both Commission, so Cllr now and for SSE was seeking posted on SSE’s website, Chapman asked her if she to continue the long-lasting and CEO Alistair Phillips- would be willing to talk about relationship. Davies mentioned the Forum her participation in this The Forum also issued by name in responding to Commission with LAPFF. voting alerts for , LAPFF’s question in a video. Given the Covid pandemic, , and Ryanair. The Questions submitted for it is not clear when or how Homeserve and Experian the National Grid AGM asked this communication will voting alerts addressed the company to commit to happen, but she has agreed remuneration concerns. disclosing consistency or to speak to LAPFF on the just This followed on from other otherwise between corporate transition. For National Grid, LAPFF remuneration alerts climate change policies the next ‘call in’ point will be this year which coincided and the positions taken by its October ESG day. 7 LAPFF QUARTERLY ENGAGEMENT REPORT | JULY-SEPTEMBER 2020 lapfforum.org POLICY ENGAGEMENT AND CONSULTATION RESPONSES

BEIS Select Committee

LAPFF responded to the BEIS Select Committee Inquiry following up on its 2019 Future of Audit Inquiry. The Committee addressed progress on imple- menting the findings of • the Kingman Review into replacing the Financial Reporting Council and • the Competition and Markets Authority Review of the audit market. The LAPFF response was both favourable to those reviews and con- cerned at the slow progress in their implementation. On the subject of the Brydon Review, LAPFF commented that “The Brydon Review is disappointing and confuses and distracts from the sound recommenda- SUBSTANTIAL long-held support the chair, Lakshmi tions of the BEIS Committee report” and IMPROVEMENTS Mittal, has voiced for such a mechanism. “LAPFF believes that the best driver of Discussions with CA100+ co-lead inves- audit quality is implementing existing law ArcelorMittal issued a press release tors for utility companies and IIGCC have properly which the Committee concluded at the end of September announcing a continued over the past couple of weeks, the large accounting firms have been group-wide target to be carbon neutral around a potential response to Ofgem on avoiding. Brydon has ended up in the by 2050. Testing of technology to reach its ‘RIIO-2 draft determinations’. These same muddle on the same issues that the this goal will include a direct reduced determinations set out Ofgem’s ‘approach large accounting firms were muddled over iron – electric arc facility for carbon-free to ensuring transmission network in giving evidence to the Committee.” steelmaking to be up and running in companies have sufficient revenue to LAPFF concluded the only change to Hamburg by 2023. run an efficient network’. The original the law should be to implement the struc- A meeting with Martin Scicluna, the intention was for a short note of concern tural reforms of the Financial Reporting chair of JS Sainsbury provided detail from investors about risks if investments Council (FRC) from the Kingman Review. underpinning the company’s net zero into the grid are insufficient for compa- On the Committee’s question whether by 2040 target, announced since the last nies to fulfil their net zero commitments. “audit reform [can] help track progress meeting with LAPFF. The discussion However, to ensure a balanced approach, made by companies in meeting the UK’s covered aspects of scope 3 emissions not favouring either the company or regu- Sustainable Development Goal commit- such as incentivising the use of electric lator’s position, the response will contain ments and in particular Net Zero”, LAPFF vehicle for deliveries and by customers. a more general call on Ofgem to ask the flagged this as an area where ‘greenwash’ The meeting also covered the response companies to set out net zero plans. can already be seen. Some companies to the pandemic including doubling the and sectors give the appearance of companies’ on-line sales and a focus on CONSULTATION RESPONSES progress towards net zero because such employee engagement. Progress towards a target provides scope to exaggerate the plastic reduction goal of 50% by 2025 LAPFF has submitted a number of consul- deducted elements to achieve the ‘net’. was explored in addition to management tation responses during the quarter. This includes loose commitments to plant of deforestation within cattle and soy One was a consultation on the future of trees or capture carbon at some time in supply chains. audit. Of note is that Baroness Sharon the future. Bowles appears to have run with LAPFF’s LAPFF also expressed concern that the POLICY ENGAGEMENT IFRS engagement, submitting a long longstanding problems with the auditing list of Parliamentary questions on audit profession, mean auditors would have a IIGCC meeting company practice, at least one of which negative effect on getting reliable finan- has yet to be answered. cial information. In the case of Wirecard, A LAPFF representative participated in an The Forum also responded to a NMC Healthcare (the FTSE 100 company Institutional Investors’ Group on Climate Department of Transport consultation on now in administration) and Patisserie Change (IIGCC) webinar on the proposed the phasing out of vehicles powered by Valerie, it is clear that the auditors could EU Carbon Border Adjustment fossil fuels. A third submission went to not properly verify cash in the bank. mechanism. LAPFF has not taken a the House of Commons Select Committee formal position, but was able to explain Inquiry on Decarbonisation and Green how this has been a central element Finance. of engagement with ArcelorMittal to date, particularly with the strong and 8 LAPFF QUARTERLY ENGAGEMENT REPORT | JULY-SEPTEMBER 2020 lapfforum.org CONSULTATION RESPONSES

The Financial Reporting ‘Decarbonisation and Green The US mining industry is a case Council’s response to Finance’ The Treasury Select in point. , the USA’s larg- International Accounting Committee call for evidence est coal mining company, which had a market capitalization in excess of $20bn, Standard 1 (‘IAS 1’) LAPFF made a submission to the now has debt of $10bn and a market consultation Committee drawing heavily on the fact capitalization of $250m having had two that renewables have become cheaper Chapter 11 bankruptcies to get there. Further to the UK’s exit from the than sources. Exxon, formerly the largest US listed European Union, all new international There was a premise that the transi- company, has recently fallen out of the accounting standards will have to be tion to a lower carbon economy would Dow Jones Index. endorsed by the Secretary of State and be costly. But with the cost of renewables A transition that will benefit market then Parliament. The International below the cost of currently low fossil fuel entrants with new technologies and affect Accounting Standards Board (IASB) prices, there is an economic incentive to existing operators negatively, needs to be consulted on a revision to the key invest in greener energy sources, with not handled in a rational and balanced way. standard IAS 1 to which the FRC drafted a only the low carbon benefit but also less A risk therefore is backdoor ways response giving the UK’s position, which volatility and other problems associated that maintain the fossil fuel industry via is itself open for comment. with carbon and methane emissions in grants and other assistance. LAPFF cited The proposed standard is wrong in the distribution of fossil fuels. that state support for carbon capture and several respects. The words describing A second premise was that a move to storage (CCS) for the power sector. This the numbers required are incorrect. renewables would be at the pace of the model has seen CCS used to keep coal The purpose of the accounts is wrong, fossil fuel companies transitioning their power plants open rather than close and which in UK law is for shareholder and businesses. The International Energy replace them with renewables. creditor protection. It misses the inter- Authority’s models have tended to be relationship between profits, capital and influenced by such thinking. However, Response to the FCA going concern. It also puts the emphasis the pace of investment in solar power, consultation on proposals on management intent deciding whether offshore and onshore wind as well as to enhance climate-related a company is a going concern or not. The storage by batteries and electrolysis for actual driver is whether the company is hydrogen production have led the way, disclosures by listed issuers and can be funded by cash flow gener- with some fossil fuel assets becoming ated or by new or replacement external stranded earlier than anticipated. LAPFF responded to the FCA’s consulta- sources of funding. The LAPFF response It therefore appears that the negative tion on climate-related disclosures. The to the FRC points out these issues and cost of transition will not be the cost of FCA proposed introducing a new rule for focuses on the BEIS Select Committee the new energy system but the demise UK premium listed companies, requiring Inquiry into the Future of Audit which of the old one, stranded assets, and them to state whether they comply with had already concluded in the correct way. stranded debt and equity funding in the the recommendations of the Financial The LAPFF response has been fossil fuel sector. Stability Board’s Taskforce on Climate- copied to the Secretary of State, the related Financial Disclosures (TCFD) and Law Commission and the BEIS Select to explain any non-compliance. Committee. The Forum strongly supports the A key problem is the IASB has introduction of mandatory carbon emis- accommodated the false construct of an sions and risk reporting. The Forum also ‘expectations gap’ regarding the qual- supports the recommendations of the ity of accounts; thus giving auditors an TCFD and has long promoted mandatory excuse to not look for fraud. As frauds climate risk reporting. may impinge profits, capital and going The Forum’s response therefore concern, a standards system which seeks welcomed the proposed rule as greater to obfuscate or avoid the issue of fraud disclosure would help investors fulfil will also have to obfuscate the very ele- their stewardship duties and also enable ments it affects; profits, capital and going more informed decisions about capital concern. allocation. LAPFF did note some con- The recent High Court case against cerns about the effectively voluntary Grant Thornton has been upheld by the nature of the rule. While companies do Court of Appeal. That makes the auditor face challenges in being TCFD compliant, duty in respect of profits, capital and the potential scale of the value at risk going concern unequivocal where there and urgency of the climate emergency is fraud. demand a mandatory approach. The Forum would therefore suggest if the rule is to be brought in on a ‘comply or explain’ basis, that the FCA also announce its intention to make the rule 9 LAPFF QUARTERLY ENGAGEMENT REPORT | JULY-SEPTEMBER 2020 lapfforum.org WEBINARS AND MEDIA COVERAGE

mandatory after a set date (e.g. in three Human years’ time). This would provide a clear WEBINAR WEBINAR Rights and signal to the market and give all listed Environmental companies time to be compliant. It would Due Diligence also ensure that the benefits and objec- tives clearly outlined in the consultation 3 September, 2.00pmGMT 3 September, 2.00pmGMT document are not limited to one segment Brazilian Community Brazilian Community Member Update on Member Update on of the market. Covid and Tailings Covid and Tailings Dams register here Two Brazilian community members will share their experiences with mining Response to IIGCC Paris companies in relation to Covid and tailings dams. aligned investment initiative: You can register here. Net zero investment framework for consultation Tailings Dam and COVID The IIGCC have drafted a net zero Corporate ‘Electric update with investment framework for consultation. and Avenue: The Brazilian The Forum congratulated the IIGCC on Indigenous role of Electric Community producing the document, which is likely Community Vehicles in Members to be extremely helpful to many LAPFF Relations in reaching Net members. Australia Zero’ The Forum made a few general com- ments aimed at strengthening the frame- vehicles; developments on Covid-19; and with indigenous peoples, and in relation work. For example improving the focus updates on tailings dams, hearing from to Covid-19 and climate. on how asset owners can better ensure affected community members from Brazil, LAPFF then hosted a webinar with their managers are meeting their climate and environmental and human rights due Brazilian community members, Vagner priorities, having more of a focus on the diligence, among others. Diniz and Nicolson Resende, who just transition and emphasising the need The webinar on electric vehicles saw described their challenges in engaging to be cautious of company claims around a vigorous discussion on the contribu- Vale over reparations for tailings dam col- carbon capture and storage. tion of this technology to the UK’s net lapses, tailings dam safety, and company zero commitment. Speakers contributed Covid-19 practices. Both Vagner and MEDIA COVERAGE from the USA west coast, Berlin and Nicolson set out a list of asks for investors . Speakers included Jakob Thomä, which LAPFF will review and speak with The Forum received a range of coverage co-founder of the 2 degree investing ini- community members to determine how on its press releases related to Rio tiative from Berlin; Katie Fehrenbacher, best to proceed. Tinto and Juukan Gorge. You can find Senior Writer, Transportation, GreenBiz Toward the end of the quarter, LAPFF these press releases and others on the Group from the USA west coast and hosted a webinar with three lawyers – press section of the new LAPFF website, Sandra Roling, Head of EV100 and Colin Robert McCorquodale, Arianne Griffith, along with related press articles about McKerracher of Bloomberg, from London. and Anna Kirkpatrick – to hear their LAPFF’s involvement in the Juukan Gorge LAPFF has established a productive perspectives on the need for mandatory engagement. working relationship with the Australasian environmental and human rights due LAPFF was also referred to in this Centre for Corporate Responsibility (ACCR) diligence. All three speakers noted the article on Tesla and this article on in working on the Rio Tinto Juukan Gorge increasing number of laws in this area the Forum’s participation in CCLA’s engagement. The Forum has also been and cited their impacts for investors. collaborative engagement on the Modern liaising with representatives of Brazilian LAPFF also had a representative from Slavery Act. communities to establish a more consist- Investors for Opioid & Pharmaceutical The Forum made it into and the ent and two-way engagement framework Accountability (IOPA) participate in a India Times with its call to ban new petrol, with community members. call. A recent call noted that the opioid diesel and hybrid cars by 2025. In respect of both relationships, LAPFF crisis worsened during the Covid-19 IPE cited LAPFF’s concern about hosted webinars to highlight issues of con- pandemic, with many people thrown International Accounting Standard (IAS) 1. cern. The Forum and ACCR co-developed by the isolation of lockdown and other a webinar featuring prominent aboriginal restrictions that mean they do not receive NETWORKS AND EVENTS community leader, Marcia Langton, and the support they need. another well-respected community leader, The Forum has re-committed to sup- LAPFF webinars Karrina Nolan. Both Marcia and Karrina porting the Access to Nutrition Index. shared their thoughts and concerns on the Cllr Caron raised nutrition in the meet- During the Covid pandemic, the Forum Rio Tinto Juukan Gorge disaster. LAPFF ing with Tesco because good health and offered a series of webinars on topical also contributed to the drafting of share- nutrition are deemed to be important responsible investment issues. LAPFF holder resolutions filed by ACCR with BHP factors in stemming the severe impacts of held successful webinars on electric in respect of its approach to engagement Covid-19. 10 LAPFF QUARTERLY ENGAGEMENT REPORT | JULY-SEPTEMBER 2020 lapfforum.org COMPANY PROGRESS REPORT

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

Company Activity Topic Outcome Position Engaged Domicile 3i GROUP PLC Meeting Remuneration/ Climate Change No Improvement Chairperson GBR ALLIANZ SE Meeting Covid/ Climate Change Change in Process Specialist Staff DEU Sent Human Rights Dialogue Chairperson GBR Correspondence AP MOLLER - MAERSK AS Sent Other Dialogue Chairperson DNK Correspondence ARCELOR MITTAL SA Meeting Climate Change Moderate Improvement Specialist Staff LUX BHP GROUP PLC Meeting Governance/ Human Rights Dialogue Chairperson GBR BLACKROCK INC Sent Climate Change Awaiting Response Exec Director or CEO USA Correspondence BT GROUP PLC AGM Climate Change/ Awaiting Response/ Exec Director or CEO GBR Environmental Risk Moderate Improvement BUNZL PLC Sent Other Dialogue Chairperson GBR Correspondence C.H. ROBINSON WORLDWIDE INC. Sent Other Dialogue Chairperson USA Correspondence CLIPPER LOGISTICS PLC Meeting Social Risk/ Dialogue/ Satisfactory Chairperson GBR Covid/ Governance Response/ Small Improvement DELTA AIR LINES INC Meeting Climate Change Moderate Improvement Specialist Staff USA EXPEDITORS INTERNATIONAL Sent Other Dialogue Chairperson USA OF WASHINGTON INC. Correspondence EXPERIAN PLC Alert Issued Remuneration Dialogue Chairperson IRL HOMESERVE PLC Alert Issued Remuneration Dialogue Chairperson GBR HSBC HOLDINGS PLC Meeting Climate Change Change in Process Specialist Staff GBR AGM/ Meeting Climate Change Small Improvement Chairperson GBR REGIS RESOURCES LTD Meeting Climate Change/ Governance No Improvement Chairperson AUS RIO TINTO GROUP (GBP) Meeting Human Rights/ Dialogue/ Change in Chairperson GBR Governance/ Climate Change Process/ Small Improvement ROYAL MAIL PLC Meeting Cybersecurity Dialogue Specialist Staff GBR SAINSBURY (J) PLC Meeting Climate Change/ Substantial Improvement Chairperson GBR Environmental Risk SSE PLC Meeting/ AGM Just Transition/ Climate Change Change in Process/ Chairperson GBR Small Improvement SUZANO SA Sent Environmental Risk Dialogue Chairperson BRA Correspondence TESCO PLC Meeting Environmental Risk/ Governance Change in Process/ Dialogue Chairperson GBR PLC Meeting Governance/ Climate Change in Process/ Dialogue/ Chairperson GBR Change/ Covid Small Improvement VALE SA Sent Human Rights Dialogue Chairperson BRA Correspondence WINCANTON PLC Sent Other Dialogue Chairperson GBR Correspondence 11 LAPFF QUARTERLY ENGAGEMENT REPORT | JULY-SEPTEMBER 2020 lapfforum.org ENGAGEMENT DATA

ENGAGEMENT TOPICS MEETING ENGAGEMENT OUTCOMES 1 Just Transition 1 Social Risk 1 Substantial Improvement 1 Employment Standards 1 Satisfactory Response 3 Covid 3 No Improvement 3 Remuneration 3 Moderate Improvement 4 Governance 4 Environmental Risk 5 4 3 2 1 0 6 Small Improvement 5 4 3 2 1 0 6 Cybersecurity 6 Change in Process 6 Human Rights 22 Dialogue 18 Climate Change

ACTIVITY POSITION ENGAGED Press Release Press Release AGM AGM Received Correspondence Received Correspondence 1 Received Correspondence 9 Specialist Staff 2 Alert Issued Meeting 2 Exec Director or CEO Meeting 4 AGM Alert Issued 27 Chairperson Alert Issued

5 4 3 2 1 0

14 Sent Correspondence 5 4 3 2 1 0 Sent Correspondence Sent Correspondence 17 Meeting 01020304050 01020304050

Press Release Press Release COMPANY DOMICILES AGM AGM Received Correspondence Received Correspondence Meeting Meeting Alert Issued Alert Issued 25Sent Correspondence Sent Correspondence 01020304050 01020304050 GREAT BRITAIN 1DENMARK 1 1GERMANY 3 4 LUXEMBOURG USA

2 BRAZIL 1 AUSTRALIA 12 LAPFF QUARTERLY ENGAGEMENT REPORT | JULY-SEPTEMBER 2020 lapfforum.org LOCAL AUTHORITY PENSION FUND FORUM MEMBERS

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