Stewardship activities in brief
ARCELORMITTAL
As part of a long-standing engagement dialogue, a meeting to hear an update on the company’s decarbonisation efforts. We discussed consolidation within the industry, as well as how ArcelorMittal might better communicate the value of its capital expenditure plans to investors. We also touched on the company’s joint venture in India, and how operations in the region will fit into its decarbonisation strategy.
BAKKAVOR GROUP
A meeting focused on the company’s capital allocation plans. In particular, we discussed the relative merits of paying a dividend to shareholders versus reducing Bakkavor’s debt burden or investing in the company.
BRITISH AMERICAN TOBACCO (BAT)
A meeting to discuss a range of ESG-related issues, including product waste, biodiversity, public health, human labour rights and risk management. We spoke at length about the company’s product lines and its strategy to convert traditional cigarette consumers to lower-risk products, such as heated tobacco, vapour or chewable tobacco. These products also raise the question of circularity and recycling, which BAT acknowledged was a challenge with its single-use products. We asked about human and labour rights with respect to activities in Malawi, where MSCI ESG have BAT on a UN Global Compact watchlist for child labour. BAT confirmed that it has policies and procedures related to identifying and eliminating child labour.
CLIMATE ACTION 100+ WORKING GROUP
As supporting investors in the Climate Action 100+ Working Group for Shell, we joined a call with the lead investors and other supporting investors to reflect on the company’s recent Capital Markets Day announcements and discuss how the collaborative group of investors could engage more productively with the company. We also considered the potential for policy-oriented engagement.
EPWIN GROUP
A site visit to Telford by a wider Ruffer team to view the factory where Epwin manufactures energy efficient products using partially recycled plastics. The company demonstrated how the process and the inputs used keep scrap rates and emissions low.
ESSENTRA
A meeting to assess how Essentra is considering capital allocation, specifically in terms of potential mergers and acquisitions. We discussed how the company can implement its acquisition strategy if the current economic environment continues or worsens, as well as whether a continuation of its current buyback would generate more value in the long term for shareholders.
EXXON MOBIL
A general discussion with members of the investor relations team, the first since we have meaningfully reinvested in the company. While the meeting covered Exxon’s approach to ESG at a very high level, we intend to build on this dialogue and engage on more specific issues in future meetings. We had a follow up meeting later in the quarter to discuss the company’s plans for scaling up its carbon capture projects, to get more clarity on how Exxon addressed a recent shareholder resolution related to methane emissions measurements and to understand the skills matrix of the board of directors. We also spoke about the company’s recent Global Outlook report, in the context of resilience to stranded asset risk.
KINROSS GOLD
A meeting with investor relations to discuss how decarbonisation efforts are part of the company’s capital allocation plan and how biodiversity considerations are incorporated in its environmental strategy. We were pleased to hear that each mine has a biodiversity management plan in place. We also discussed health and safety measures that have recently been strengthened, and touched on the just transition.
ON THE BEACH
A meeting initiated by On the Beach to seek our input on its current remuneration policy. We encouraged the company to think about setting more stretching financial targets that would be compensated through a greater share-based payment. We then held a follow up call with management to convey our opinions to them directly.
PERSEUS MINING
Following a letter we sent to the company as a part of the CDP Non-Disclosure Campaign, a meeting to discuss our request for Perseus Mining to respond to the CDP’s climate change questionnaire. We also briefly discussed how the company is considering renewable energy solutions in its new mining projects. After our meeting, the company committed to submitting an unscored response and will look to include the CDP questionnaire in its reporting cycle next year.
SWIRE PACIFIC
A meeting to fully understand the strategic rationale and pricing of the significant related-party transaction the company plans to undertake. We wanted to ensure that the transaction – which involves the sale of a subsidiary (whose management will then be outsourced back to the company) to the controlling shareholder – is in the best interests of minority shareholders such as ourselves.
WATCHES OF SWITZERLAND
Given Rolex’s acquisition of Bucherer, a meeting to discuss the company’s future plans for capital allocation. We discussed whether acquisition activity or share buybacks would lead the market to infer that Rolex was serious in its commitment to Watches of Switzerland as a partner and the likelihood of either route being followed.
WISDOMTREE
A meeting as part of an ongoing discussion about how to incorporate ESG considerations into the structuring of WisdomTree’s commodity-based products. We spoke about the complexities of linking environmental or social issues of certain mining companies to the price of the commodities they mine, such as lithium or cobalt. WisdomTree is working on developing a product which meets certain environmental and social criteria by ensuring the underlying metal or mineral is certified against a responsible mining standard (or its equivalent). This may meet the suitability criteria for inclusion in an Article 8 strategy.
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