Eastspring Investments: Responsible Investment Report 2022
34
Milestone 1 R aised awareness of issue with company
Milestone 2 Dialogue in process
A cement company in China.
A utility company in Southeast Asia.
As the Chinese proverb says: 趁热打铁 (translation: strike whilst the iron is hot), we contacted CDP right away after our virtual meeting with the company. The team at CDP was very thrilled, as other investors and itself have tried to engage with the cement company since 2010. For the disclosure cycle of 2022, the cement company responded to CDP’s climate survey for the first time in over a decade after the CDP’s first request. We rate the engagement with the company as Milestone 2, because the company has yet to set targets for carbon emissions reduction and there is no concrete plan for decarbonisation.
The company was initially assessed on its climate action plan in 2021, and it did not pass any of our minimum expectations, including disclosure to CDP, setting credible targets to reduce carbon emissions, and explaining its decarbonisation journey. Our continued attempts of following up yielded results when we were eventually referred to the senior Investor Relations (“IR”) manager who is responsible of ESG. We arranged for a virtual meeting and had conducted the engagement in Mandarin. During the engagement, we communicated that investors primarily want to see that the company disclose for the first time and concerns over first time scores being poor are secondary. We encouraged the company to submit its first-ever disclosure in 2022, and it gave the IR manager confidence to agree to submitting its CDP disclosure for the first time.
In a very small number of cases, our engagement process is less effective than we would hope. In this case, the company did not disclose to CDP’s climate survey, did not share targets to reduce carbon emissions, and did not provide any details on decarbonisation. Our attempts to engage the company resulted in a non-response to date, which, should it persist, will result in the implementation of our escalation process incorporating proxy voting.
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