Shareholder engagement involves shareholders or asset managers entering into a direct dialogue with companies. The focus lies on challenges in the areas of governance, society and the environment. At Globalance, we conduct dialogues on the topics of climate, biodiversity and human rights.
We see human-induced climate change and all the associated risks as one of the greatest challenges of our time. That is why we focus our dialogues with companies on their climate strategies. We take a five-step approach to our climate engagement:
The US retailer Best Buy is pursuing ambitious climate targets at operational level. However, 90 % of the company’s total greenhouse gas emissions come from energy consumption during the use of electronics and household appliances. Best Buy can reduce these by selling more energy-efficient appliances. Regarding these emissions, the company is aiming for a 20 per cent reduction by 2030.
We are demanding greater transparency regarding the assumptions this goal is based on. Are products with high energy consumption actually being removed from the range or is the company simply hoping that customers will increasingly run their appliances on renewable electricity? We expect Best Buy to explain how the company is committed to the development of energy-saving appliances and to promoting their sale through appropriate measures (e.g. targeted marketing and product placement).
Best Buy has developed internal measures for tracking its climate progress. Energy efficiency is measured for all product categories. Little has been published on either topic to date. Globalance continues to advocate for more meaningful communication and disclosure.
Sekisui House has achieved outstanding results in our “climate” analysis. The company has set itself ambitious goals and has already achieved impressive successes in reducing emissions during the utilisation phase of buildings with its innovative “net zero energy houses”. However, the issue of “grey energy”, which is contained in the materials used to build houses, is still being neglected. The company could save more emissions by reducing the use of concrete and steel.
We are demanding that Sekisui House systematically records the greenhouse gas emissions from new construction and adopts reduction targets for this category.
The company confirms the established status quo. A binding declaration of intent for future recording has not been issued yet. We will keep at it.
By using leather, paper and cardboard, Nike runs the risk of causing the deforestation of rainforests. To prevent this, Nike traces the leather it buys back to the country of origin. In the case of leather from Brazil, suppliers must confirm to Nike in writing that the cattle were reared outside the Amazon region.
We demand that Nike ensures that for high-risk raw materials and countries of origin, the raw materials are traced back to the place of production. Information from suppliers alone is insufficient. An audit by an independent, qualified third-party organisation is required.
Nike’s initial response to our demands was generic and unsatisfactory. We will continue to monitor the company’s progress in this area and bring up our demands again next year.
We analyse portfolio companies for their impact on the environment and health and write to the companies with tailored recommendations for improvement.
We will publish our recommendations here in the first quarter of 2024.