2021 ESG Annual Report


Background: CVSG is the largest integrated veterinary services provider in the U.K., with a presence in the Netherlands and Ireland. Its more than 400 U.K. sites include first opinion practices and referral hospitals, and its operations extend to laboratory, cremation and online retail. Long a key contributor to animal welfare and care, we believe CVSG had the potential to improve the extent and quality of its practices and disclosures. Scope and Process: Over several years, we engaged with CVSG on many occasions regarding business fundamentals and management. In 2019, the company experienced a business crisis where we intervened with detailed strategic advice and then watched as CVSG was able to “right its ship.” Extensive dialogue continued, with regular in-person meetings, site visits and conference calls involving multiple senior executives, with the focus shifting more squarely on material ESG topics. Specifically, we suggested that the company seek to (1) improve its ESG disclosures, (2) focus on factors that were material to the business and (3) engage with ESG rating agencies to promote better understanding of its initiatives and impact. Its human capital policies and practices were particularly relevant given the essential role of its workforce in maintaining effectiveness and cost-efficiency. We also proposed the introduction of key performance indicators (KPIs) to help the company more effectively track and report its progress over time. Outcome and Outlook: The company accepted our recommendations and acknowledged the need to improve its external communications on ESG, which previously focused on internal information- sharing. Last year, for the first time, CVSG included ESG factors as part of its standard earnings reporting slides. It also began engaging on sustainability with MSCI, which upgraded its rating to AA in March 2021 thanks to better disclosures. Also, CVSG is working to improve its reporting on sustainability, and it expects to publish a sustainability update with relevant KPIs in its 2022 annual report. We have been pleased to see the company improve its human capital management practices. The firm’s emphasis on quality of care, as well as qualitative and monetary support for its staff, continued to drive improved retention and new hires, leading to a decline of its vacancy rate from 12% in 1H 2018 to 7.5% in 1H 2021. U.K. Veterinary Company Enhances Its ESG Profile

ISSUE Materiality, Disclosure, Human Capital Management


STRATEGY Global Sustainable Equity

SECTOR Health Care

PHILIP CHAU, CFA, CAIA Research Analyst Global Sustainable Equity


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