Issue: Labour standards
- 8.8 – Protect and promote safe working environments for all workers
- 13.2 – Integrate climate change plans into policies and strategies
In 2018, Amazon surpassed 600,000 employees, double that from two years prior, with many of these being low-skill and low-wage positions. Moreover, distribution activities are still highly reliant upon contract workers. Given the significant exposure to labour-related issues, we have expressed to the company our concerns that poor relevant disclosure hinders investors’ ability to assess practices and performance. Our engagement with the company has included co-filing a shareholder resolution to push for improvements in sustainability disclosure; pushing for dialogue with their newly appointed Head of Sustainability; and coordinating with other investors on urging the company to disclose its oversight and performance of ESG issues. Despite increased dialogue with the company, we remained concerned that its culture remains inward-looking and resistant to public disclosure, with slow progress in developing sustainability programmes being fast outpaced by a rapidly growing operational footprint.
Issue: Public health
Targets: 3.b – Support research into vaccines and medicines for diseases primarily in developing countries
As the largest fast-food chain globally, McDonald’s exerts significant influence over its suppliers. We believe the company should use this influence to address antimicrobial resistance (AMR) by upholding responsible sourcing practices and adopting strong stewardship practices. We support the implementation of an antibiotic policy that includes clear timelines for phasing out the routine, non-therapeutic use of antibiotics across all species. If the misuse and overuse of antibiotics continues, livestock production may decline, which would negatively impact McDonald’s business model.
We arranged a call with operational specialists to discuss AMR. We began by discussing the company’s progressive stance on responsible antibiotic use. We were encouraged to learn that McDonald’s is partnering with its beef producers to measure and understand their use of antibiotics, and we commented positively on plans to establish reduction targets. Regarding poultry farming, the company representatives highlighted that the use of essential oils and enhanced biosecurity practices have resulted in a 70% reduction in antibiotic use in some markets. However, developing an antibiotic policy for pork poses challenges, due to fragmentation in the industry and a lack of regulatory oversight. We commended McDonald’s for its commitment to responsible antibiotic use, and strongly encouraged the company to continue to be as transparent as possible on issues related to antimicrobial stewardship.
Our call was positive and informative, confirming our view that McDonald’s is a leader among peers on antimicrobial stewardship. We gained useful insights into all aspects of the company’s approach to promoting responsible antibiotic use, and – given its high profile and global influence – we will closely monitor its progress in 2020. Important next steps will be the publication of an antibiotic policy for pork, and reduction targets for medically important antibiotics in the company’s key beef sourcing markets.
The value of investments and any income derived from them can go down as well as up and investors may not get back the original amount invested.
Views and opinions have been arrived at by BMO Global Asset Management and should not be considered to be a recommendation or solicitation to buy or sell any companies that may be mentioned.
Over the two decades we have run an ESG engagement programme, we have seen more and more companies come to the realisation that if they work together with investors, both sides can reap the benefits in terms of long-term performance.
Coca-Cola Hellenic Bottling Company (CCHBC)
Issue: Environmental stewardship
- 6.4 – Increase water-use efficiency to address water scarcity
- 6.6 – Protect and restore water-related ecosystems
We attended the CCHBC Stakeholder Forum in Athens and visited the company’s manufacturing ‘Megaplant’. The forum was organised by Coca-Cola Hellenic Bottling Company and The Coca-Cola Company. We were the only investor amongst key stakeholders in the Central and Eastern European Region. The theme was water stewardship, primarily the implementation of strategies to manage water-related risks and opportunities and, in turn, promote the long-term sustainability of the business. With 89-99% of soft drinks‘ content being water and having a water-intensive agricultural supply chain, CCHBC is exposed to significant water-related risks.
We shared recommendations with representatives from the two companies, including business unit leaders and senior management. We called for the analysis and disclosure of the full water footprint of key products, incorporation of the true value of water into business planning, and development and implementation of context-based water targets. We also encouraged the company to leverage its brand power and distribution network to educate consumers, and work with suppliers further to improve water management practices across the value chain. We visited the Schimateri plant, the largest Greek beverage manufacturing plant, which distributes over 400m litres of beverages per year and over 500m preform bottles. The site received the Gold Certification for responsible water management from the European Water Stewardship (EWS) organisation. We welcomed this achievement and encouraged management to put manufacturing sites in areas of high water risk through the same certification process. CCHBC also reported on a successful community initiative in Challawa, Nigeria, where it has provided a million people with access to water near its bottling plant, trained local managers on water and is helping the community control water quality.