The second Sustainability Committee meeting of this year was held on Tuesday June 9th. The committee members went through the exclusions proposal and began by discussing the stance on Swedbank which had been on the committee watchlist prior to this meeting. After being fined by the Swedish FSA for deficiencies in its AML measures and for failing to be compliant, Swedbank was added to the Blacklist with the motivation of being in breach of Principle 10 of the UNGC Principles.
CRH Plc and Air Products and Chemical were both excluded from the universes due to emission intensities. AES Corporation, Diamondback Energy, Raytheon Company and Aggreko were removed because their sizes no longer reach the required market capitalisation thresholds. Indeed, the recent months have been characterised by volatile equity markets resulting in some companies to falling off out of the investment universe.
Yasmine Svan, a Senior Sustainability Analyst in the LGIM Investment Stewardship team, shared with the Committee some of LGIM’s recent observations related to the current crisis brought on by the COVID-19 pandemic. Over the past couple of months, the focus of the Investment Stewardship team has been to communicate with portfolio companies the importance of looking after stakeholders beyond investors, particularly employees and suppliers, to help ensure long-term survival and business recovery once the immediate crisis has passed. The team has also highlighted the need to ensure that the recovery post-COVID is green and supports the net-zero target set out in the Paris Agreement. To this end, LGIM has joined an informal “green recovery alliance” calling for the Green Deal to be placed at the centre of the EU’s post-COVID recovery package. More broadly with regards to public health, last year LGIM joined a joint investor engagement focused on the overuse of antibiotics in food supply chains, and recently became a member of the Access to Medicine Foundation. Stewardship activities related to public health will be further developed during 2020.
As the COVID-19 pandemic disrupts our lives, the Sustainability Committee will keep an eye on the potential social and governance matters arising. As employees work from home, companies should all demonstrate reliability in their ability to manage employees and offer flexible working arrangements where possible.