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Boston Common Asset Management

PRI reporting framework 2019

You are in Direct - Listed Equity Active Ownership » Outputs and outcomes

Outputs and outcomes

LEA 09. Number of companies engaged with, intensity of engagement and effort

Indicate the proportion of companies from your listed equities portfolio with which your organisation engaged with during the reporting year.
We did not complete any engagements in the reporting year.

Number of companies engaged

(avoid double counting, see explanatory notes)

Proportion of companies engaged with, out of total listed equities portfolio

Individual / Internal staff engagements

85
32

Collaborative engagements

289
31

09.2. Indicate the proportion breakdown of engagements conducted within the reporting year by the number of interactions (including interactions made on your behalf)

No. of interactions with a company
% of engagements
One interaction
2 to 3 interactions
More than 3 interactions
Total
100%

09.3. Indicate the percentage of your collaborative engagements for which you were a leading organisation during the reporting year.

Type of engagement

% Leading role

  Collaborative engagements

09.5. Additional information. [Optional]

Boston Common was a lead or a co-lead investor in more than two-thirds of the collaborative engagements it undertook in 2018.  In many cases Boston Common also played a lead or co-lead convening role for the overall engagement initiative including Banking on a Low Carbon Future, our Eco-Efficiency Initiative,  2018 Global and US Spotlight Access to Nutrition Index and Disclosing the Facts (oil and gas score card on methane).  As in previous years, we continued to to engage beyond our portfolios at an industry level to accelerate the rate of company change on these issues.  In 2018 we did this through backing existing issue benchmarks such as the Access to Nutrition Index, KnowtheChain's 2018 Benchmarking Report on forced labor in the IT sector, and the 2018 Ranking Digital Human Rights.  We also did this by creating our own metrics to assess and benchmark ESG practices such as the Banking on a Low Carbon Future and Eco-Efficiency initiatives.

 


LEA 10. Engagement methods

10.1. Indicate which of the following your engagement involved.

10.2. Additional information. [Optional]

In order to prioritize our resources and effectiveness as active owners we have established a three year engagement framework (the latest of which runs from 2018-2020) which focuses on:

Environmental Issues:  Promoting the transition to a low carbon economy

Social Issues:  Respect for Human Rights, and promoting gender and income equality

Governance issues: Advocating for ethical, transparent, inclusive and accountable corporate cultures.

In addition we are focused on aligning our investments and our engagement activity with the United Nation's SDGs and the post 2030 sustainable development agenda.

Finally we tackle emerging issues such as gun violence, private prison labour and immigration detention.

 

 


LEA 11. Examples of ESG engagements

11.1. Provide examples of the engagements that your organisation or your service provider carried out during the reporting year.

ESG Topic
Climate Change|Company leadership issues|Pollution|Sustainability reporting|Water risks
Conducted by
Objectives

Eco-Efficiency Initiative 

Eco-Efficiency is one of the main tools to promote a transformation from unsustainable production and consumption to sustainable development.  It is based on the concept of creating more goods and services while using fewer resources creating less waste and pollution.  Boston Common’s Eco-Efficiency initiative expands upon our engagement work over the years—in alliance with other investors— to encourage companies to adopt GHG emissions reduction targets, to report to CDP on their climate impact and water use and management and to effectively manage their waste.

The goal is to encourage our portfolio companies to achieve:

Rapid, absolute reductions of greenhouse gas (GHG) emissions in their own operations and supply chains.
Long-term goal is to prompt companies to redesign their products and processes to adapt to new era of carbon budgets and water shortages.

Scope and Process

We published our first report on our ambitious Eco-Efficiency efforts from 2015-2018, “Improving Efficiency, Unlocking Returns”. The report sets a baseline for current Eco-Efficiency practices—on energy, water and waste—and outlines a framework for companies to improve efficiency and productivity. 

Companies:  In 2018 companies analyzed and/or engaged across our strategies under this initiative included: 3M, Air Liquide, Apache, ConocoPhillips, Covestro, Cummins, Ecolab, ENN, EOG Resources, Equinor, Ford, International Flavor & Fragences, Origin Energy, Repsol, and Schneider Electric, Panasonic, Taiwan Semiconductor.

OutcomesAir Liquide committed to new energy efficiency goals and a global water risk assessment. 

ConocoPhillips became one of the first major US energy companies to publicly support many of the recommendations of the Taskforce on Climate-related Financial Disclosures.  Boston Common is the lead investor  under Climate Action 100+.  

Beijing Enterprises Water to provide guidance on their sustainability disclosure and urged them to take the next step and respond to the CDP Water.   

The full report can be found at:  http://news.bostoncommonasset.com/improving-efficiency/

 

Outcomes
ESG Topic
Executive Remuneration|Climate Change|Company leadership issues|Sustainability reporting|Deforestation
Conducted by
Objectives

Banking on a Low Carbon Future 

Our 2018 "Banking on a Low Carbon Future:  Are the World's Banks Stepping Up to the Risks and Opportunities of Climate Change?" report - the latest in a series of analysis undertaken since 2014 - examines the progress of 59 of the world's largest banks in making this critical business shift including alignment with the Taskforce for Climate-related Financial Disclosures (TCFD).  The report concluded that despite progress in some areas and several examples of best practice, the sector is failing to capture the risks and opportunities of climate change.  The report highlights regional differs in performance including European banks are far ahead of large banks in the U.S. and Canada in implementing climate-related risk assessments. 

The initiative calls on banks to take four actions:

1. Disclose their climate risk in line with the TCFD recommendations.

2.  Publish a company-wide, forward-looking strategy aligned with the Paris Agreement.

3.  Set clear targets to increase and promote low-carbon products or services.

4.  Disclose public policy positions related to climate change, and to influence their trade associations to take progressive positions on climate legislation.

The new report focus beyond financing of fossil fuels to also cover deforestation policies.

Scope and Process

In our 2018 report "Banking on a Low Carbon Future"  - 32 out of the 59 banks assessed by Boston Common committed to support the TCFD at some level to inform their assessment, policies, or climate-related disclosure - including Barclays, Citigroup, JPMorganChase, ING, ItauUnibanco, and Standard Chartered. 

The report findings were shared with all the banks analyzed while substantive dialogues (either in person or by phone) using the report findings occurred with many of our portfolio holdings through 2018 including Bank Rakyat, Barclays, Citigroup, Fifth Third Bank, JPMorganChase, ING, Morgan Stanley, PNC Financial, Standard Chartered, TD Bank, and US Bank. 

Company Outcomes PNC Financial expanded its analysis of key emerging threats and opportunities to include adoption of electric vehicles, emergence of alternative energy, and stranded assets as part of our key focus on scenario analysis and stress testing under this initiative.Standard Chartered also published a Position Statement on Power Generation and acknowledged Boston Common’s input and review, which helped to inform the company’s policy.  TD Bank is using the TCFD to inform its own approach to climate risk, as well as with its high-emissions clients.  

The full report findings can be found at http://news.bostoncommonasset.com/banking-on-a-low-carbon-future/.

 

Outcomes
ESG Topic
Climate Change|Company leadership issues|General ESG|Sustainability reporting|Other governance
Conducted by
Objectives

2018 Global & US Spotlight Index - Access to Nutrition Index Initiative 

Boston Common is co-leading the 2018/19 collaborative investor engagement of 22 food & beverage companies using the 2018 Global Access to Nutrition Index and the first US Spotlight Index and serves on the board of the Access to Nutrition Foundation. The 2018 Global Access to Nutrition Index shows overall improvement since the last assessment in 2016, but less than 1/3 of products assessed could be classified as healthy.

This initiative includes the formation of lead and co-lead investors for each company, quarterly calls with the lead/co-lead investor group to share challenges and best practices and an overall assessment of progress by the group on moving company performance on improving nutritional practices including product reformulation, access and affordability and marketing practices.

Please read our perspectives in Are Food and Beverage Companies Making the Grade on Nutrition? and Healthier Returns which can be found on our website at:  http://news.bostoncommonasset.com/are-food-beverage-companies-making-the-grade-on-nutrition/ and http://news.bostoncommonasset.com/healthier-returns/.

 

Scope and Process

Active dialogue with companies began in the second half of 2018 and will conclude at the end 2019 with initiative and company level outcomes reported out.  The focus of the company engagements are on performance gaps highlighted by the Index findings and suggested recommendations.  

In 2018 Boston Common took the lead with Grupo Bimbo, Mondelez, PepsiCo and is one of the co-leads for Unilever.  We urged Grupo Bimbo to demonstrate better performance on nutrition including setting global portfolio goals.  We urged Grupo Bimbo, Mondelez and Unilever to use an external framework such as the Health Star Ratings and compare to their own internal nutritional profiling system to identify gaps and areas for improvement.  We urged Unilever to set portfolio level nutrition goals beyond 2020. 

 

 

Outcomes
ESG Topic
Climate Change|Human rights|Company leadership issues|Pollution|Diversity|Sustainability reporting|Water risks|Labour practices and supply chain management
Conducted by
Objectives

Sustained Dialogue in Japan (2018)

Boston Common has a robust engagement program that spans almost a decade in Japan.

- Our Japanese company engagement has shifted expectations from developing awareness and policies to establishing ESG metrics and targets and assessing the impact of companies’ policies.
- Over the past four years we have expanded our engagement under the Asian Corporate Governance Association (ACGA) to meet with regulators and industry groups.
- While Japan has made some progress toward better ESG practices and disclosure to support corporate governance and long-term growth prospects, more work is required to accelerate the pace of change.   

In March 2018, the Director of Shareowner Engagement, Lauren Compere continued our robust engagement program in Japan and met with five portfolio companies (Astellas, Kao, Orix, Panasonic and Shiseido) while in Tokyo.  Common questions across all the dialogues included:  board diversity and evaluation, governance of sustainability, advancement of women in the workplace, responsible sourcing and results and potential next steps to their 2017 CDP responses. We also discussed alignment with the Sustainable Development Goals and TCFD.

Each meeting included specific next steps on material ESG disclosure or practice which are reported in our Japan client report at http://news.bostoncommonasset.com/wp-content/uploads/2018/04/Japans-Sustainability-Leadership-2018.pdf.

Scope and Process

Advancement of Women and Workplace Safety - Japanese companies continue to face challenges given the lack of access to sufficient daycare and nursing facilities which prevent mothers from returning to work quickly.  Panasonic joined the Women’s Empowerment Principles and is improving its human capital management programs through training programs on sexual harassment and LGBT awareness. 

Given the rising numbers of Karoshi or “death by overwork” we encouraged all companies to tackle this critical employment issue.  Portfolio companies Kao and Panasonic have begun shutting off lights and electricity at 8 PM to encourage employees to go home, in addition to promoting “early leave” Fridays.

CDP -  We focused on companies’ CDP scores across carbon, water, forests, and supply chains.  We balanced our discussions by commending company progress, such as the adoption of Science-based Targets, while encouraging adoption of internal carbon pricing and renewable energy targets.

Chemical Safety - We encouraged Shiseido and Kao to adopt more robust chemical safety practices.

TCFD - We encouraged Orix to establish more robust sector-specific guidelines related to high-carbon sectors. We recommended that Orix review the TCFD guidance to inform its risk assessment and disclosure process for 2018.  Board awareness of TCFD was also discussed.

 

.  

 

 

 

Outcomes
ESG Topic
Human rights|Sustainability reporting|Other governance
Conducted by
Objectives

Banks & Human Rights Due Diligence Engagement Program

We launched another layer of dialogue with global banks, integrating human rights due diligence into our meetings with Barclays, Citigroup, ING, JPMorgan Chase, PNC Financial, and Standard Chartered. We urged banks to: address gun violence by following Citigroup’s policy, and Indigenous peoples’ rights with fossil fuel projects in the US, apply the Equator Principles beyond developing countries, and respect human rights by adhering to the UN Guiding Principles (UNGPs). 

Standard-Setting Bodies:  We also continue our process of engaging standard setting bodies (e.g. OECD, Equator Principles) on revising their standards for banks in an effort to improve performance across the sector. This included participating in a number of calls and a formal public consultation conduced by the OECD on human rights due diligence for bank corporate lending.

We sent a letter to the Equator Principles Association advocating for the rights of Indigenous Peoples and asking the Association to consult wih Indigenous Peoples in the revision of the Equator Principles.  In October 2017, the Equator Principles Association committed to revise its policies on Indigenous Peoples in response to the Dakota Access Pipeline controversy and a Boston Common co-led global investor engagement.

 

 

Scope and Process

Human Rights Due Diligence 

We led engagements with JPMorgan Chase and PNC Financial urging them to adopt a more restrictive policy similar to Citigroup’s related to financing firearms manufacturers or involved in credit merchant processing.  ING, for example, has one of the most advanced human rights policies supported by formal oversight with a Steering Committee across business lines. Its public, transparent human rights policy is aligned with the UNGPs.

Gun Violence

We joined a coalition of 44 investors to engage 20 banks that recently provided direct financing to firearms manufacturers or are involved in credit merchant processing.  We are urged banks to prohibit lending or the use of credit cards/payment systems to gun manufacturers that sell, produce, or design weapons or ammunition - as well as those that do not support federal universal background checks and/or endorse the Sandy Hook Principles.  Companies also actively engaged under this initiative included Barclays, Morgan Stanley, TD Bank, US Bank and Visa.

 

Outcomes
ESG Topic
Human rights|Sustainability reporting|Labour practices and supply chain management
Conducted by
Objectives

Technology Sector & Human Rights Engagement Program 

Materials human rights risks in the technology sector include raw material sourcing such as conflict minerals and child labor used to mine cobalt, forced labor, restrictions to freedom of expression and privacy, and the rights of users when companies do not disclose who has access user information. Specifically forced labor includes potential use of migrant workers paying high recruitment fees, the retention of identification documents, and the use of forced or child labor. 

 

Scope and Process

In 2018 we leveraged our participation in key benchmarks including the Corporate Human Rights Benchmark and KnowtheChain which assessed material human rights risks in the technology sector.  We also backed for the first time the findings of the Ranking Digital Human Rights benchmark.  These collaborative engagements were coordinated by ICCR and the Investor Alliance for Human Rights (IAHR).  Boston Common sits on the Steering Committtee of the IAHR.

KnowtheChain - We joined ICCR in backing the findings of the KnowTheChain’s 2018 Benchmarking Report on Forced Labor in the ICT sector which rated 40 ICT companies on each company’s approach to reducing exploitation and protecting the rights of workers in their supply chain. Boston Common led inquiries with Analog Devices, Hoya, Infineon, Keyence, Nintendo, & TE Connectivity.

2018 Ranking Digital Human Rights - As part of an investor inquiry to 22 ICT companies on digital human rights, we reached out to Microsoft, Samsung Electronics and Tencent Holdings after their evaluation by the Ranking Digital Rights 2018 Corporate Accountability Index on their disclosed commitments and policies affecting freedom of expression and privacy.

Cobalt - We continued our long term dialogue with Microsoft on their raw materials soucing including cobalt from the DRC.

Outcomes
ESG Topic
Climate Change|Labour practices and supply chain management
Conducted by
Objectives

Tax Transparency

A recent Oxfam America report, “Prescription for Poverty,” concluded that some US pharma companies could be using tax havens to avoid paying up to $100 million in taxes every year to numerous Emerging Market countries. We joined a collaborative engagement focused on responsible tax management and transparency to better understand the tax policies and disclosure of pharma and ICT companies.

Scope and Process

In our role as lead investor, we sent letters to Dr. Reddy’s and Johnson & Johnson.  Other portfolio companies covered by this initiative included Biogen, GlaxoSmithKline, Microsoft, and Novartis. 

Dr. Reddy’s in India provided a comprehensive response to how the company was managing tax risks, the oversight role of the audit committee, and the level of county by country reporting.  We led a substantive discussion with Johnson & Johnson on this topic including their governance oversight and openness to country-by-country reporting.

Outcomes
ESG Topic
Climate Change|Human rights|Water risks|Labour practices and supply chain management
Conducted by
Objectives

Water Stewardship Engagement Program

At Boston Common, we believe that companies must use water responsibly for the health of society and for their own financial health. Without water, businesses will be unable to grow product offerings in the long run. Companies that fail to manage water efficiently and those that do not protect water access for local communities endanger their license to operate.

The importance of water is reflected in the UN Sustainable Development Goals (SDGs), which designate “access to clean water and sanitation” and “oceans conservation” as key priorities (SDG6 and SDG14).

Boston Common advocates for companies to adopt a comprehensive approach to water risk management by encouraging them to:

- Develop policies to manage the company’s operational water footprint
- Engage with their supply chains in order to assess their total exposure to water risks
- Evaluate the company’s and supply chain’s water footprint through water risk assessments
- Identify water risk priority areas (sites or basins), develop actions plans, and work with local communities and stakeholders to ensure local water management and equitable access to water.      

 

 

Scope and Process

PRI Agricultural Focus: Agriculture is the world’s largest user of water, so Boston Common has been working with the Principles for Responsible Investment (PRI) Water Risks in Agricultural Supply Chains Working Group for the past three years to affect change in this area. Our lead engagement with VF Corporation was highlighted by PRI as a case study in “Growing Water Risk Resilience, an Investor Guide on Agricultural Supply Chains.” This engagement led the company to adopt a global water strategy and assess water risks in its supply chain.

Lithium Producers:  Our individual inquiries to Albemarle and Sociedad Química y Minera, lithium producers, on their water stewardship practices in Chile led to robust dialogues with senior representatives at both companies about their management of water usage, discharges, and site level assessments. We encouraged both to begin to respond to CDP Water to enhance their internal management systems and to adopt a global approach to managing water risks.

CDP Water - We joined 60 investors with $6 trillion in assets asking companies to respond to CDP with Boston Common leading with Apache, ConocoPhillips, and Cimarex.

Outcomes

11.2. Additional information. [Optional]


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