An update on our engagement and advocacy activities

Our active stewardship goes beyond proxy voting to include direct and collaborative engagement and advocacy initiatives. We've summarised some key ones from January-March 2022

As an ethical and responsible investor, we hold the companies in which we invest to high standards. The first step in our investment process is to undertake rigorous screening to determine which companies are suitable to invest in. We then carry out detailed analyses and evaluations on each company to better understand the financial strength and E-S-G risk exposure alongside governance capability and United Nations Sustainable Development Goals’ alignment and aspiration. Finally, we take the practice of ethical investment one step further through active stewardship. Beyond simply voting on proxies, this covers:

  • Direct engagements: Individually communicating with holdings in our investment portfolio;
  • Collaborative engagements: Working with industry peers for greater leverage and a unified voice, targeting portfolio holdings (and those outside our portfolios) and critical themes for responsible investors; and
  • Advocacy initiatives: Individually and collectively addressing systemic risks by influencing decisions within political, economic and social institutions.

We believe that on-going dialogue and collaborations drive long-term outcomes; financially, as a result good governance and sustainability-wise, by reducing or pre-empting social and environmental impacts.

Looking back over the period of January – March 2022, we summarised our key engagement and advocacy initiatives below:

Direct engagement activities

U Ethical’s investment team have continued direct engagement with portfolio companies to drive positive impact. Some key activities included:

Fortescue Metals Group (FMG) – Reconciliation Action Plan

U Ethical has previously discussed a diversity of ESG considerations with FMG and, more recently, led an investor engagement focused on the company’s community relations with First Nations peoples in the Pilbara, Western Australia. Following a number of engagements with the company throughout 2020-2021, in early February we held a collective virtual meeting with FMG’s executive team. Joining a group of institutional investors, we discussed their progress. FMG’s representatives confirmed they are working towards a new co-management model with First Nations peoples and have expanded the company’s cultural heritage team to bolster that. We look forward to our future meetings with FMG to learn about their continued engagement with First Nations peoples and to track progress.

Westpac Banking Corporation (WBC) – A range of ESG factors

In late March, we held a virtual meeting with WBC to discuss a range of ESG factors concerning: responsible timber sourcing in Papua New Guinea timber, First Nations peoples employment – clarifying some misreported figures, gender diversity initiatives and climate risk. For the latter, we discussed the bank’s lending to new oil and gas projects that misalign with the Paris agreement and the International Energy Agency’s scenarios and commitment to accelerate ambition.

Collaborative engagements

Under the Investors Against Slavery and Trafficking (IAST) initiative, of which U Ethical is an active participant, we continued to hold collaborative discussions with the below portfolio holdings on their ethical sourcing practices:

JB Hi-Fi

The company has ramped up commitments to transparency and reporting with recognition of the IAST collaboration in the HY22 results presentation. The next step is for our investor group to continue to support JBH with its ethical sourcing undertakings.

Super Retail Group (SUL)

The company is making strides on ethical sourcing within its supply chain and is recognising the benefits of collaborating with investors as a means to inform its own policy development and implementation.

Coles Group

U Ethical reviewed Coles’ modern slavery report to support a collaborative engagement meeting held earlier in April. The investor group will continue to track and discuss ethical sourcing matters with the group on an annual basis, with ad hoc calls to seek clarifications on current disclosures.


Tax transparency

In early March, we supported a Pensions & Investment Research Consultants Ltd (PIRC) letter to the US Securities and Exchange Commission (SEC) in support of tax transparency at Amazon. For the first time, the SEC has ruled that tax transcends "ordinary business" and is a significant policy issue. Amazon's arguments against the resolution show that it is out-of-step with investor and community expectations for greater transparency and oversight of its operations¹. Amazon is not currently included in our investment portfolio and we engaged on this matter because we consider tax transparency an important indicator of good governance. Through advocacy we hope to drive market improvements.

Vaccination equity and access

In mid-March, we also participated in an international investor call organised by Achmea Investment Management with Johnson & Johnson (JNJ)’s Corporate Secretary and representatives from investor relations to discuss executive remuneration. This call follows on an earlier collaborative engagement with Pfizer, Moderna, AstraZeneca and JNJ on vaccine equity² where all companies replied with differing investor relations angles and initiatives. Investor pressure has brought remuneration on the ballot at pharmaceutical board’s AGMs in April³.

Social and affordable housing

In late March, U Ethical signed a civil society letter to Treasury in support of social and affordable housing investment ahead of the 2022 budget. The letter was coordinated by Everybody’s Home on behalf of 150 organisations in favour of improved housing affordability for Australians struggling in the rental market. The letter also outlined that investing in social housing would result in improved economic and social benefits. For example, building 25,000 social and affordable homes per year would generate an annual economic output of $12.7 billion and create 15,700 jobs.

Ending plastic pollution

Earlier this year we signed the business call for a UN Treaty on plastic pollution. This has led to the adoption of a mandate for an International Negotiating Committee (INC) to develop a legally binding UN Treaty on Plastic Pollution⁴. The Treaty is a starting point for further advocacy on legally binding terms to address the full cycle of plastics, harmonise standards and recognise the industry’s employees globally.

Addressing climate and biodiversity risks in the global salmon farming industry

In late March, U Ethical supported FAIRR’s engagement initiative Managing climate and biodiversity risks in feed supply chains. Along with a group of like-minded investors representing $16.7 trillion in collective assets, FAIIR wrote to encourage Bakkafrost (a leading salmon farming company based in the Faroe Islands) to establish a science-based strategy to develop and scale alternatives to marine and soy feed ingredients used in the salmon industry. Reducing dependency on salmon feed sources such as soy, fishmeal and fish oil is fundamental to protecting biodiversity and reducing climate risks as well as ensuing the future resilience of the salmon farming sector. We found this to be a critical step to addressing biodiversity and climate risk on the back of our latest thematic research on aquaculture and food products, which we will publish later this month.

Summary of positive key outcomes

  • Progress with Fortescue Metals Group discussions on community relations with First Nations
  • JB Hi-Fi/SUL/COLES progress with transparency and reporting on ethical sourcing in a bid to pre-empt, reduce and, where the case, address modern slavery risks
  • Adoption of a mandate for an International Negotiating Committee (INC) to develop a legally binding UN Treaty on Plastic Pollution
  • Investor pressure has brought remuneration on the ballot at pharmaceutical board’s AGMs which aims to address global vaccination equity
  • For the first time, the US Securities and Exchange Commission (SEC) has ruled that tax transcends "ordinary business" and is a significant policy issue which should see greater tax transparency from Amazon in the future

If you would like to learn more about U Ethical’s engagement and advocacy activities, or about ethical investment more broadly, please get in touch today.


²At present, these companies are not included in portfolio. At this stage, this collaboration could be considered for advocacy purposes across both local and international press.

³Example – Pfizer, 28th of April. Exempt solicitation: https://d18rn0p25nwr6d.cloudfr...

⁴AFR article “UN’s historic plastic pollution treaty”

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Article by

Desiree Lucchese


13 May 2022

Désirée is responsible for our ethical investment strategy, evolving the integration of ESG data and the UN Sustainable Development Goals into our investment process. A responsible investment specialist with expertise in environmental systems and innovation projects, Désirée has over 15 years' experience in the sustainability sector.