Specific engagement topics in 2015

Each year, Triodos Research aims to draw the attention of companies we invest in to specific topics. Triodos Research focuses on these topics in relation to the Annual Report and Annual General Shareholder Meeting(s). In 2015, these topics were board diversity and climate change.

Board diversity

Early 2015, Triodos Research sent a letter to 119 investee companies ahead of their AGMs, explaining our main voting principles and raising questions about gender diversity at board level. The fund believes that companies with more diverse boards, aligned with the company’s activities and customers, stimulate creativity and innovation. Therefore, such companies are better equipped to face challenges in an ever-changing environment. A diverse board will have better discussions and divergent opinions. Furthermore, a diverse board reflects the real world, which may have an impact on the rest of the organisation. What defines a diverse board is however different for each company. Diversity in a board includes at least a good gender representation. Despite recommendations by governments and voluntary targets, gender equality in boards is still inadequate, with only few women having a seat on companies’ boards. In its letter, the fund called upon companies to publicly disclose their gender policies, programmes, targets and performance. 37 companies replied to our questions providing additional information and answers to the questions. This information is used to determine the fund’s support for director elections. One of the companies that does not yet report on this topic but promised to report on this in the next annual report is Dutch Wessanen.

Climate change

In December 2015, Triodos Research sent a letter to 110 investee companies to announce the topic the fund will focus on in the AGMs in 2016. This topic is climatechange. The ambitious agreement to keep temperature rise well below the agreed 2 degrees Celsius reached at the December 2015 UN Climate Change Conference in Paris (COP21) will only be achieved with the support of all members of society, including the private sector. A corporate climate protection strategy starts with full support from the board. It requires boards to develop a climate strategy policy and to monitor progress. In our letter we call upon companies to disclose their strategy on climate protection, develop targets that are in line with the COP21 Universal Agreement, to disclose their roadmap to meeting these targets and their annual progress in this regard. Finally, we also call on them to refrain from lobbying against policies aimed at meeting the Universal Agreement. During 2016, we will closely monitor the progress made by companies on these targets and take their efforts into account in our voting decisions at the AGMs.

One of the responses to our letter came from Sound Global. The Singapore-based company stated that it has discussed our concerns with its management and directors and that they are willing to publicly disclose more information related to its social responsibilities. “Our business is in favour of energy conservation and emission reduction. It is our responsibility to disclose the key performance indicators related to our business in our Annual Report. We expect to disclose the information in the Environmental, Social and Governance Reporting Guide in the coming year.”

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