This report shows public data only. Is this your organisation? If so, login here to view your full report.

Alphinity Investment Management Limited

PRI reporting framework 2020

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 in your listed equities portfolio with which your organisation engaged 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

90
97

Collaborative engagements

3
3

09.2. Indicate the 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 in which you were the leading organisation during the reporting year.

Type of engagement

% leading role
  Collaborative engagements

09.5. Additional information. [Optional]

We engage with every company we own on a regular basis. All individual engagement is conducted by the internal investment team; none by service providers. Collaborative engagement generally takes place when we take a role in a PRI or RIAA collective engagaement, such as the current Oil and Gas engagement on which we are the Australian co-lead, and the water security in agriculture engagement that recently was wound up. 

We note that the scoring involved here seems not to take into account important factors such as scope and portfolio concentration. It presupposes that if you have >$US5 billion under management you will therefore have hundreds of companies to engage with. We have interacted extensively with all of our companies but, as we have quite concentrated portfolios, the number of companies involved is still under 100 so max 3 stars

 


LEA 10. Engagement methods

10.1. Indicate which of the following your engagement involved.

10.2. Additional information. [Optional]

The degree of activity depends on the company and/or the particular ESG issues involved. Very few engagements we have with companies pertain only to ESG matters, most are comprehensive engagement with ESG forming a natural and important part, and the focus of the ESG matters raised will depend on the issues of the day and the scope of activity of the company involved. For instance, during AGM season there tends to be a lot of engagement about governance (remuneration and directors) and there is generally discussion between the team to arrive at the correct outcome in a way that reflects good governance practices and the best outcome for shareholders. 


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|Health and Safety|Water risks|Labour practices and supply chain management
Conducted by
Objectives

To determine whether a company operating in horticulture across Australia, China and Morocco is making adequate preparation for future climate-related water scarcity, and treating its seasonal workers appropriately.

 

Scope and Process

We worked with our external sustainability experts to determine the scope and nature of the engagement, gaining insights of potential issues from their expertise in climate change and utilising ESG data provider assessment of issues impacting the company

We had several meetings with management and the Chair, conducted site visits and undertook discussions with experts. We concluded that the company is thinking deeply about its climate exposure and has mitigated its risk as much as possible through protected cropping, geographic diversification, micro-irrigation and significant investment in on-site water storage.

In addition we engaged on issues around the use of seasonal labourers in fruit picking operations, particularly those from the Pacific Islands and those hired through labour hire organisations, some of which have poor or exploitative practices used on vulnerable people. We were encouraged that the company seems to have high standards when working with labour organisations and zero tolerance for poor behaviour. As a result, this company has become employer of choice among fruit pickers, many of whom return season after season.

We also encouraged the company to disclose some of the good things it was doing in a sustainability report. This has now been produced

 

Outcomes
ESG Topic
Human rights
Conducted by
Objectives

To arrive at a better understanding of a company's dealings with indigenous land owners when considering mining operations, particularly litigation

Scope and Process

Over a series of engagements we met with the company's CEO and legal counsel to understand the way it deals with various groups of indigenous people who have or claim native title over areas in which the company has resource rights. The company and its founder has always portrayed itself as a friend of the indigenous and has significant employment programs targetting local groups in order to drress some of the inequality they experience compared to broader society. It is testing aspects of its land access agreements in the High Court in order to legally establish what it can and can't do

Outcomes
ESG Topic
Climate Change|Pollution
Conducted by
Objectives

Engaged with a gas company around CO2 emissions, fugitive emissions and the risk of stranded assets given its capital expenditure plans

Scope and Process

Over several years we have had meetings with the Chair, directors with environmnetal responsibilities and the sustainability execs at the company. We tested them on their thinking around long-term gas demand, considering many of the projects in which they have invested have multi-decade lives and milti-year payback periods. We tested them about measuring fugitive emissions and pushed them on their plans to limit emissions.

We examined the company's view that the demand for gas will be sustained for some decades and that, in the short term, replacing coal in Japan and China with gas is an environmental positive, and that in the long term demand will be sustained in use cases not well catered for by electricity/batteries, such as haulage, air travel and shipping. being positioned at the low end of the production cost curve will provide some protection against stranding provided demand does not disappear completely.

In the end however we concludd that the time to get a return on the capital they need to deploy on gas field expansion is unlikely to be paid back before gas becomes a less viable fuel for generating electricity. We subsequently divested the position.

Outcomes

11.2. Additional information. [Optional]

We do not agree that outsourcing one's engagement is qualitatively equal to individual/internal engagement. 


Top