We review our Engagement Plan every year to ensure it is up-to-date and reflects client priorities. For 2024, we will continue our focus on the most material drivers of long-term value, with a focus on four priority themes:
- Board effectiveness: In 2024 to enhance the quality of board performance, which is foundational to good corporate decision-making, we will focus on improving board diversity, including improvements to ethnic diversity that at least match the recent progress on gender diversity, with the goal to achieve representation reflective of the diversity of the stakeholders it aspires to serve. We remain committed to improving a board’s “software”, relating to how it functions, in addition to its “hardware”, relating to its composition and structure. The board should continuously monitor and assess the prevailing company culture to ensure it is in line with the company’s purpose, strategy and values.
- Climate change: The emphasis of our engagement remains focused on companies having a strategy and greenhouse gas emissions reduction targets aligned to the Paris Agreement, seeking to limit climate change to 1.5°C, together with aligned financial accounts and political lobbying.
The recent UN Emissions Gap report, which stated that greenhouse gas emissions must still fall by 28% by 2030 to achieve the Paris Agreement 2°C pathway, and 42% for the 1.5°C pathway[1], highlighted the urgency with which companies and governments must seek to limit and reduce greenhouse gas emissions. In seeking Paris-aligned transition plans, we will evaluate the credibility of company transition plans including their reliance on technologies and seek to ensure that the governance oversight of investments adequately tests risks and dependencies. We will also continue to engage with companies in high methane emitting sectors to deploy the best available technology to identify and mitigate methane emissions, continue to engage on physical climate risks and work towards a ‘just transition’ for employees and communities.
- Human and labour rights: We expect companies to acknowledge the likelihood that human rights impacts are present within some operations and supply chains and to demonstrate appropriate board- and executive-level governance of human rights. We will further focus on the protection of indigenous and community rights, and human rights in high-risk regions such as disputed territories or areas of conflict. We also continue our emphasis on supply chain rights with an elevated risk of forced labour, unsafe working conditions, and other adverse human rights impacts. We will further focus on the protection of digital rights in the virtual world, such as challenges to the right to data privacy, the right to freedom of expression and protection from unfair biases which may be amplified by the use of AI. In the next decade of implementation of the UN Guiding Principles (UNGPs) on Business and Human Rights implementation – ‘10 or UNGPs 10+’[2], we will consider recommending votes against directors of companies where material breaches are not being adequately remediated or if the company lags on human rights benchmarks.
- Human capital: Amid anxiety about negative AI impacts from redundancies to bias in hiring and the cost of living crisis driving renewed interest in collective bargaining, we are intensifying our engagement on upskilling workers. Furthermore, we will maintain our focus on diversity, equity, inclusion and representation; asking companies to develop a strategy and action plan to close the ethnic pay gap and achieve proportionate ethnic and gender representation at all levels. We will also challenge companies to consider an expanded range of diversity metrics beyond representation, including those related to engagement and sense of belonging, upskilling and advancement, and pay gaps[3] for different groups and to report on workforce changes and wider employee engagement. Our engagement on health and safety will extend to mitigating climate related risks in the workplace (such as heat-stress) and continued focus on mental wellbeing and actions to halt continuing incidences of sexual harassment.
