ROBECO - Wed, 01/31/2024 - 02:34

Tackling modern slavery leads Q4 Active Ownership report

Engaging to remove forced labor from corporate supply chains leads the Q4 report by Robeco’s Active Ownership team.

  1. New engagement theme aims to remove slavery from supply chains
  2. Work starts on Nature Action 100, continues on net-zero emissions
  3. Closure of executive pay theme, new focus on governance at SOEs

There can be few issues as emotive as that of modern slavery that is still found in industries ranging from textiles to fishing, predominantly in emerging markets. Many respectable companies remain unaware that it even exists in their increasingly complex and globalized supply chains. 

In an interview at the top of the report, Yumi Fujita outlines how the team’s new engagement theme focuses on enhancing companies’ effectiveness in identifying and addressing modern slavery risks across their supply chains. She also explains what Robeco expects in terms of remediation and prevention measures when human labor exploitation is uncovered.

Kicking off Nature Action 100

Biodiversity remains a core focus theme for Robeco, but it’s something that cannot be tackled in isolation. One year after its soft launch, the Nature Action 100 collaborative initiative has officially started to engage with 100 of the most influential companies to halt and reverse biodiversity loss. 

As Robeco leads engagements across the chemicals, consumer staples, and discretionary sectors on behalf of the initiative, Laura Bosch describes the basic expectations toward companies, including public nature commitments, science-based targets, and robust governance structures to minimize biodiversity impacts.

Net zero successes

Pushing for net-zero carbon by 2050 to meet the Paris Agreement is another core focus theme that has seen some success in recent years. As the first engagements under the 2020 ‘net-zero emissions’ theme come to an end, Sylvia van Waveren reflects on the progress achieved by the companies over the last three years. 

And while the first cases have closed, climate engagement continues to run as an ‘evergreen’ theme, pushing companies to adopt stronger decarbonization strategies to ensure the long-term viability and competitiveness of their operational models.

Executive pay theme closing

The theme of ‘Responsible executive remuneration practices’ about the thorny and seemingly unending issue of excessive executive pay is now coming to a close. Michiel van Esch reports on how the engagements focused on improving the structure, oversight, and incentive systems behind executive pay have yielded various positive results. 

Finally, corporate governance in state-owned enterprises (SOEs) continues to be a complex topic, yet it is gaining importance as SOEs’ role in global markets grows. Learning from past scandals and looking toward gold standards such as the OECD Guidelines on Corporate Governance of SOEs, Diana Trif outlines how we engage to ensure robust and accountable governance systems. 

Social justice as a guiding principle

“From the social implications of the energy transition, as presented in the third quarter, to the social risks hidden behind the growingly complex and untransparent supply chain models, the concept of social justice has emerged as a guiding principle when speaking about sustainability,” says Carola van Lamoen, Head of Sustainable Investing at Robeco. 

“The complex web of today’s global supply chains makes it difficult for companies to see and address not only environmental concerns, such as biodiversity loss, but also human rights. Our new theme engages with companies across the food and retailing, mining, technology and automotive sectors to try to enhance their effectiveness in identifying and addressing modern slavery risks.”

Six actions to protect nature

“We also remained active on the environmental side. As a first step, the 100 companies targeted under what is the world’s largest collaborative engagement effort on biodiversity so far have received a letter outlining six actions needed to protect and restore nature. Building on these common asks, we look forward to starting the engagements that we will be leading on behalf of the collaboration.” 

“Meanwhile, we reflect on the achievements made under the evergreen ‘net-zero emissions’ theme which engages with some of the highest emitting companies in our portfolio. We’ve seen key progress made in the steel and cement sectors, such as seeing increasingly detailed decarbonization plans and aligned capital expenditure strategies, along with some disappointments across other sectors.” 

“Moving into 2024, we aim to deepen our focus on key topics including human rights, climate change, biodiversity and corporate governance, and aim for another year of successful Active Ownership.”

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