Helping businesses change from within
The main method that the UKRF uses to influence business on social issues – and meet the social element of its responsible investment aims – is engagement, through our stewardship service provider, EOS at Federated Hermes (EOS).
In brief, stewardship involves:
- Asset holders using their rights to influence those organisations where they invest with the aim of safeguarding good long-term returns on those assets.
- Direct engagement with companies on strategy, performance, operations and culture.
The background
In the event that the UKRF invests in equities – or company shares – it would become a shareholder in those companies. As a result, we would have the right to a vote on any resolutions or actions taken during shareholder meetings. In that case we would use EOS’s voting service to enable us to vote on a scale we could not otherwise manage. EOS’s global proxy voting rights govern their recommendations to proxy voting clients. It directly references ESG factors and aims to harness voting rights in conjunction with achieving engagement outcomes.
The UKRF's implementation statements give the latest information on how the Trustee's activities and decisions are aligned to the Statement of Investment Principles.
EOS currently advises on more than $2 trillion worth of assets when providing its corporate engagement and proxy voting services.
EOS's engagement activities enable long-term institutional investors to be more active owners of their assets, through dialogue with companies on environmental, social and governance issues. EOS believes this is essential to build a global financial system that delivers improved long-term returns for investors, as well as better, more sustainable outcomes for society.
Focus on human rights
Socially responsible investment cuts across many topics including workers' and human rights
Taking the lead from the UN Global Principles on Business and Human Rights, EOS has a three-part strategy framework in place to support organisations in taking positive action on human rights issues.
- Governance: Leadership should set the company’s human rights policy and overall strategy, then delegate actions and responsibilities to a dedicated team.
- Due diligence: Identify where possible risks and abuses occur, then develop and put into practice remedies that address them.
- Reporting: Publish full details of the strategy, including the risks and solutions adopted, with outcomes.
The EOS approach in action
EOS divides human and labour rights issues into five types or categories. This table outlines each of those categories and gives a real-world example of successful and ongoing engagement by EOS in that area where the UKRF has investment holdings.
| Category | Description | Example |
|---|---|---|
| CategoryAccess and affordability | DescriptionEnsuring people have access to payment, food and medicine. | ExampleStarbucks raised the minimum wage floor to US$15 per hour. |
| CategorySupply chain rights | DescriptionMonitoring impact of business on external populations (such as suppliers and customers). | ExampleAmazon workers across Europe strike and protests against working practices ahead of Black Friday. |
| CategoryDigital rights | DescriptionProtecting online security and privacy, freedom of speech and expression. | ExampleWhile the accelerating deployment of AI is creating new opportunities for companies, EOS continues to engage with companies on key risks, including potential workforce disruption, regulatory infraction or reputational damage. |
| CategoryIndigenous and community rights | DescriptionRespecting land rights and obtaining relevant community consent before impact. | ExampleRio Tinto putting in place an extensive programme of remedial action following a significant cultural heritage incident. |
| CategoryHigh geographic risks | DescriptionMaintaining awareness and appropriate action in war zones and disputed regions. | ExampleTotalEnergies withdrew from Myanmar, severing links with its humanitarian crisis. |
Read more
For more information about EOS activities, look here.