Our approach to sustainable investing

An example of our commitment to positive contribution is an energy company that had been a Wesleyan holding for many years.

In 2021, Wesleyan made the decision to divest from this energy company as the Sustainable Investment (SI) Team felt it was not keeping pace with industry peers on ESG issues – mainly due to its response to climate change and the worldwide transition to renewable energy.

Before divesting, the SI Team voted at the company’s 2021 Annual General Meeting, to help it progress its transformation journey. Team members voted to replace two of the company’s Board directors with experts in the fields of energy transition and alternative fuels.

The team was pleased to see that change was made in line with its vote and the new Board Members at the energy company have brought expertise to help redefine the company’s strategy.

Since the vote, there has been significant improvement in the company’s approach to the sustainability of its operations, such as announcing plans to invest in low carbon energy and spending £15bn over the next six years on initiatives to reduce greenhouse gas emissions.

Even though Wesleyan decided to divest at the time, the SI Team felt it helped the company to embrace positive change.

In November 2021, two members of the Sustainable Investment (SI) Team met with an Investor Relations representative from one of the world’s largest metals and mining corporations to discuss a range of environmental and social issues.

This included the relationship between the company and Aboriginal Australian peoples, which had deteriorated following the tragic Juukan Gorge explosion. This event saw a 46,000-year-old sacred site destroyed by the company’s operations at the Brockman iron ore mine in the Pilbara region of Western Australia.

During the meeting, the SI Team challenged the company on the remediation measures put in place for the affected communities and its commitment on what it would do to ensure such a disaster would never reoccur.

Three months after the meeting, the company stated that it had entered a formal agreement with the Aboriginal Australian peoples to ensure that social values are protected during activities at its iron ore mine.

The mine’s expansion would also be designed to reduce its impacts on cultural heritage sites, and the plan will be used as a framework for future developments. It also stated that discussions regarding remediation for the destruction of Juukan Gorge were underway.

The SI Team felt that a global manufacturer of construction and mining equipment was falling behind its peers by not setting sufficiently challenging targets for carbon emission reductions and not giving enough prominence to sustainability issues in its business strategy.

The company responded positively to engagement, and we have seen it addressing key investor concerns. Since the Sustainable Investment (SI) Team began engagement activities, the firm has established the new leadership position of Chief Sustainability & Strategy Officer, reporting directly to the Chairman and CEO.

The Board of Directors has also committed to incorporating ESG factors into the 2022 incentive plan for Executive Officers. This goes a long way to ensuring that sustainability metrics are central to the business.

The SI Team continues to work with the company to ensure further improvements are introduced. In 2022, the team was also asked to review and provide feedback on their sustainability report.