Environmental, Social & Governance (ESG) -1- ESG Investment - - PowerPoint PPT Presentation

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Environmental, Social & Governance (ESG)

ESG

⚫ Regulation ⚫ Taxation ⚫ Competitive disadvantage ⚫ Brand impairment ⚫ Financing ⚫ Physical asset impairment ⚫ Litigation

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Investment risks of climate change

ESG

TCI requires the companies in which we invest to

⚫ Disclose greenhouse gas emissions and reduction targets ⚫ Make full annual disclosure to CDP (www.CDP

.net)

⚫ Disclose a credible low-carbon transition plan

TCI will typically vote against all directors of companies which do not

⚫ Publicly disclose their emissions ⚫ Have a credible plan for emissions reduction

Divestment is always an option TCI advocates that asset owners should fire investment managers that do not require such disclosure TCI will typically vote against the auditors where the annual report fails to report material climate risks

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TCI ESG Policy

ESG

⚫ Change business processes ⚫ Efficient energy management of buildings and factories ⚫ Source electricity from new-build renewables ⚫ De-carbonise transport fleets ⚫ Offset emissions from corporate travel ⚫ De-carbonise supply chains and help customers lower their carbon intensity ⚫ Advocate for regulations which drive industry de-carbonisation

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Components of a low-carbon transition plan

ESG

⚫ Meetings and calls with senior and ESG management ⚫ Public letter (on TCI website) to CEO of each company setting out

− TCI policy and requirements − Feedback on CDP submissions and grade − Our views on company de-carbonisation plans − Recommendations on industry opportunities to de-carbonise TCI portfolio company CDP scores for 2018

⚫ 7 A grade – Alphabet, Canadian National, Ferrovial, Microsoft, S&P, Union Pacific, Vinci ⚫ 8 B to D grade – Aena, Airbus, Anthem, Atlantia, Canadian Pacific, Getlink, Moody’s, Safran ⚫ 2 no/non-public disclosure – Charter, Univar

− TCI actively assisting companies to achieve an A grade CDP score in 2020

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TCI engagement with portfolio companies

ESG

⚫ Power of the argument ⚫ Specific recommendations ⚫ Transparency ⚫ Engaging with other shareholders ⚫ Voting ⚫ Public embarrassment ⚫ Membership and funding of CDP ⚫ Advocacy to regulators (CIFF)

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How we influence change