R&M Communication on Progress

Participant
Published
  • 2021/11/19
Time period
  • November 2020  –  November 2021
Format
  • Stand alone document – Basic COP Template
Differentiation Level
  • This COP qualifies for the Global Compact Active level
Self-assessment
  • Includes a CEO statement of continued support for the UN Global Compact and its ten principles
  • Description of actions or relevant policies related to Human Rights
  • Description of actions or relevant policies related to Labour
  • Description of actions or relevant policies related to Environment
  • Description of actions or relevant policies related to Anti-Corruption
  • Includes a measurement of outcomes
 
  • Statement of continued support by the Chief Executive Officer
  • Statement of the company's chief executive (CEO or equivalent) expressing continued support for the Global Compact and renewing the company's ongoing commitment to the initiative and its principles.

  • One year after joining the UN Global Compact, I am pleased to confirm that River & Mercantile supports the Ten Principles of the United Nations Global Compact, covering the areas of Human Rights, Labour, Environment and Anti-Corruption. In addition to our own support, we are also integrating the Principles to our investment activities. We also share the information within this Communication on Progress with our stakeholders.

    James Barham, Group Chief Executive

Human Rights
  • Assessment, policy and goals
  • Description of the relevance of human rights for the company (i.e. human rights risk-assessment). Description of policies, public commitments and company goals on Human Rights.

  • As an investor, we are exposed to human rights issues both as a corporate and in our investments. This section addresses our response as a corporate.

    We are committed to preventing acts of modern slavery and the occurrence of human trafficking in our business and supply chain. We expect our suppliers to uphold human rights. We have a Modern Slavery Statement, which is available on our website (https://riverandmercantile.com/modern-slavery-statement/), and continue to survey our largest suppliers for compliance with the Modern Slavery Act.

  • Implementation
  • Description of concrete actions to implement Human Rights policies, address Human Rights risks and respond to Human Rights violations.

  • Commencing in Q4 2021, we apply conduct-related exclusions to our equity investment activities.

    This is defined as companies where verified, sustained (beyond allegation) breaches of the Ten Principles of the UN Global Compact.

    Companies that are flagged for actual or potential UN Global Compact breaches are treated as high ESG risk. Fails are a straight exclusion. Potential breaches inform our decision to exclude or to engage (with potential caps on investment amount and higher reporting thresholds / controls to manage the ESG risk). We note there may be investment upside potential for a company following a UNGC issue that we shall wish to consider.

    In addition, we plan to contribute to the UNPRI's initiative on human rights in to 2022 (awaiting details), and to monitor our the impact of our investments against the 17 UN Sustainable Development Goals (in H1 2021 we commenced reporting our engagement activities against the SDGs).

  • Measurement of outcomes
  • Description of how the company monitors and evaluates performance.

  • For investments, a controversy screening service from an external data provider is used in order to identify breaches of Ten Principles of the UN Global Compact (covering the specific principle, date and reasons). This is then verified internally to determine the action. This data also considers the OECD Guidelines for Multinational Enterprises and the UN Guiding Principles on Business and Human Rights / the UN Universal Declaration on Human Rights (1948) to determine whether a company can be called 'sustainable'.

    We acknowledge that at times there may be differences between data reported by the provider and the opinion of the company itself regarding the UNGC issue. In these instances, the data will be supplemented by our own research and engagement activities and a verdict reached, in particular for concentrated portfolios.

    Stewardship is core in dealing with incidents of Human Rights violations. Where these occur at a company we have exposure to, dialogue to monitor and evaluate is a priority. We are also commencing with an outsourced engagement service with the same data provider. We have the option to join a collaborative engagement with many other investors in the same company, co-ordinated by the provider, in order to investigate / resolve the issue.

Labour
  • Assessment, policy and goals
  • Description of the relevance of labour rights for the company (i.e. labour rights-related risks and opportunities). Description of written policies, public commitments and company goals on labour rights.

  • We have the following HR policies for all staff:

    Display Screen Equipment Policy RMG 2021
    Health & Safety Policy RMG July 2021
    No Smoking Policy RMG March 2021
    Prevention of Harassment Policy and Procedure RMG December 2020
    RMG Adoption Leave Policy - December 2020
    RMG Alcohol and Substance Abuse Policy 2021
    RMG Bereavement and Compassionate Leave Policy 2021
    RMG Disciplinary & Dismissal Policy and Procedures
    RMG Flexible Working Policy

  • Implementation
  • Description of concrete actions taken by the company to implement labour policies, address labour risks and respond to labour violations.

  • Commencing in Q4 2021, we apply conduct-related exclusions to our equity investment activities.

    This is defined as companies where verified, sustained (beyond allegation) breaches of the Ten Principles of the UN Global Compact.

    Companies that are flagged for actual or potential UN Global Compact breaches are treated as high ESG risk. Fails are a straight exclusion. Potential breaches inform our decision to exclude or to engage (with potential caps on investment amount and higher reporting thresholds / controls to manage the ESG risk). We note there may be investment upside potential for a company following a UNGC issue that we shall wish to consider.

    We also have a bi-annual staff survey (with an interim pulse survey) to measure employee sentiment, plus various groups including Diversity.

  • Measurement of outcomes
  • Description of how the company monitors and evaluates performance.

  • For investments, a controversy screening service from an external data provider is used in order to identify breaches of Ten Principles of the UN Global Compact (covering the specific principle, date and reasons). This is then verified internally to determine the action. This data also considers the ILO Convention concerning Occupational Safety and Health and the Working Environment (1981), the ILO Convention concerning Conditions of Employment of Plantation Workers (1958) and the ILO Convention concerning Migration for Employment (1949) to determine whether a company can be called 'sustainable'.

    We acknowledge that at times there may be differences between data reported by the provider and the opinion of the company itself regarding the issue. In these instances, the data will be supplemented by our own research and engagement activities and a verdict reached, in particular for concentrated portfolios.

    Stewardship is core in dealing with incidents of Labour violations. Where these occur at a company we have exposure to, dialogue to monitor and evaluate is a priority. We are also commencing with an outsourced engagement service with the same data provider. We have the option to join a collaborative engagement with many other investors in the same company, co-ordinated by the provider, in order to investigate / resolve the issue.

Environment
  • Assessment, policy and goals
  • Description of the relevance of environmental protection for the company (i.e. environmental risks and opportunities). Description of policies, public commitments and company goals on environmental protection.

  • As a corporate, our specific goals in the area of environmental protection centre around reporting our carbon emissions under the UK SECR regulations.

    The total emissions attributable to River & Mercantile in compliance with the UK SECR guidelines were calculated to be 167.3 tCO2e for the 2020-21 reporting period. Our full operational carbon footprint for the period, beyond emissions covered by SECR, is 369 tCO2e.

    As a net zero asset manager, we hold ourselves to account in the same way as our investee companies. We have therefore commenced heading towards being a net zero firm, beyond just carbon neutrality, by taking more carbon out of the atmosphere than we put in there. This has been achieved by purchasing offsets worth 461 tCO2e, and will be followed by engagement with our staff to reduce future emissions.

    As we are a UK firm, we have included high quality offsets for UK reforestation projects that contribute to the UK’s own net zero commitment. The other projects were selected on the basis of being located in the world’s biggest emitters. There is also a focus on soil given its significant carbon capture properties and methane given the materially higher amount of heat that it traps.

  • Implementation
  • Description of concrete actions to implement environmental policies, address environmental risks and respond to environmental incidents.

  • Environment is one of our five corporate sustainability pillars.

    We have made the Net Zero Asset Managers commitment (and commenced the roadmap for funds in scope for the interim 2030 target), and are actively considering the Net Zero Investment Consultants Initiative (which will make net zero funds the default start position for advice we provide to pension clients).

    We introduced a specific group-wide climate policy this year (https://riverandmercantile.com/wp-content/uploads/2021/10/Tier-2-RMG-Climate-Policy.pdf). Its objectives are managing transition and physical risks, capitalising on investment opportunities and integrating climate considerations to activities across the Group. This includes our own corporate TCFD disclsoure, in our annual report.

    We are active members of the Institutional Investors Group on Climate Change, including the Climate Action 100+ collaborative engagement (current involvement in 5+ cases) and working groups to progress asset-class level net zero frameworks. Similarly, we are signatories to CDP and use their annual assesment data in our investment decisions, alongside other detailed environmental analysis as part of our fundamental research. This research also uses the PACTA and TPI (which we publicly support) tools for climate impacts.

  • Measurement of outcomes
  • Description of how the company monitors and evaluates environmental performance.

  • For investments, a controversy screening service from an external data provider is used in order to identify breaches of Ten Principles of the UN Global Compact (covering the specific principle, date and reasons). This is then verified internally to determine the action. This data also considers the Rio Declaration on Environment and Development (1992) to determine whether a company can be called 'sustainable'.

    We acknowledge that at times there may be differences between data reported by the provider and the opinion of the company itself regarding the issue. In these instances, the data will be supplemented by our own research and engagement activities and a verdict reached, in particular for concentrated portfolios.

    Stewardship is core in dealing with incidents of Environmental violations. Where these occur at a company we have exposure to, dialogue to monitor and evaluate is a priority. We are also commencing with an outsourced engagement service with the same data provider. We have the option to join a collaborative engagement with many other investors in the same company, co-ordinated by the provider, in order to investigate / resolve the issue.

Anti-Corruption
  • Assessment, policy and goals
  • Description of the relevance of anti-corruption for the company (i.e. anti-corruption risk-assessment). Description of policies, public commitments and company goals on anti-corruption.

  • The Group is committed to good conduct and to carrying out all business in an honest and ethical manner. We are committed to acting professionally, fairly and with integrity in all our business dealings and relationships wherever we operate and implementing and enforcing effective systems to counter bribery, corruption and tax evasion facilitation. As part of this all-new joiners are required to complete countering bribery and corruption training in their induction training and ongoing annual training (last issued in Q4 2020).

    We also have a Group Group Anti-Bribery, Corruption and Anti-Facilitation of Tax Evasion Policy. This covers the following sections:

    Compliance and Responsibility
    What are bribery and corruption?
    What is tax evasion facilitation?
    What You Must Not Do
    Facilitation Payments and Kickbacks
    Gifts, Hospitality and Expenses
    Donations
    Record-Keeping
    Your Responsibilities
    How to raise a concern
    Protection
    Provision of the policy to third-parties
    Breaches of this policy
    Potential risk scenarios: "red flags"

  • Implementation
  • Description of concrete actions to implement anti-corruption policies, address anti-corruption risks and respond to incidents.

  • Commencing in Q4 2021, we apply conduct-related exclusions to our equity investment activities.

    This is defined as companies where verified, sustained (beyond allegation) breaches of the Ten Principles of the UN Global Compact.

    Companies that are flagged for actual or potential UN Global Compact breaches are treated as high ESG risk. Fails are a straight exclusion. Potential breaches inform our decision to exclude or to engage (with potential caps on investment amount and higher reporting thresholds / controls to manage the ESG risk). We note there may be investment upside potential for a company following a UNGC issue that we shall wish to consider.

  • Measurement of outcomes
  • Description of how the company monitors and evaluates anti-corruption performance.

  • For investments, a controversy screening service from an external data provider is used in order to identify breaches of Ten Principles of the UN Global Compact (covering the specific principle, date and reasons). This is then verified internally to determine the action. This data also considers the UN Convention against Corruption (2003) to determine whether a company can be called 'sustainable'.

    We acknowledge that at times there may be differences between data reported by the provider and the opinion of the company itself regarding the issue. In these instances, the data will be supplemented by our own research and engagement activities and a verdict reached, in particular for concentrated portfolios.

    Stewardship is core in dealing with incidents of Corruption. Where these occur at a company we have exposure to, dialogue to monitor and evaluate is a priority. We are also commencing with an outsourced engagement service with the same data provider. We have the option to join a collaborative engagement with many other investors in the same company, co-ordinated by the provider, in order to investigate / resolve the issue.