Sycomore AM-Committed to pushing fossil fuel giants to transform.

Shareholder engagement requires the ability to take action to encourage progress, relaunch projects that are struggling to materialize, and find solutions to potential stumbling blocks.

Sycomore AM, 31 Ott 2023 - 09:31
Shareholder engagement involves encouraging companies to improve their sustainable development practices over the long term, by formulating areas for improvement as part of a constructive dialogue and long-term monitoring .

This is a key element of our role as a responsible investor seeking to make an impact. We are convinced of the importance of these dialogues, and of the collective dynamic in which we participate, for the development of more sustainable business models that meet today's social and environmental challenges.

With a view to progress, we identify and share best practices with the companies in our investment universe, particularly with regard to governance, human rights, social, societal and environmental issues. We encourage companies to make these issues a core part of their strategy, and to be more transparent about the means they use and the results they achieve. Through the dialogues we engage in, we aim to provide companies with a global vision and in-depth knowledge of their market and their peers' methods on sustainability issues. For example, they regularly consult us to review the materiality of their CSR challenges.

Sycomore AM invests to enrich its know-how in this area and offer real added value to the companies it supports in these fields. Each of our experts specializes in the vast world of ESG, whether in environmental issues, biodiversity, climate, social and societal issues, human rights or technology. Their mission is wide-ranging, and goes beyond conducting ESG analyses to assist investment decisions, they define doctrines and exclusion policies, clarify our positioning when current events require it, lead voting and commitment initiatives, etc.
We have very little exposure to fossil fuels, but we have decided to support certain players in the sector in their transformation. This exposure is systematically accompanied by a sustained shareholder commitment to accelerate transitions and achieve targeted goals without losing sight of the objectives of the Paris Agreement.

In our portfolios, which include a pocket of companies "in transition", we have chosen, for example, to maintain exposure to TotalEnergies. The company has set in motion a process to decarbonize its activities, and regularly revises its ambitions upwards. This progress comes at the price of a sometimes stormy shareholder dialogue with the company, via investor coalitions in which we are very active. When it comes to energy, we consider a company to be in transition when at least 15% of its Capex is invested in renewable energies. If TotalEnergies maintains this momentum, by the end of the decade the Group will be one of the world's three biggest players in renewable energies.

On these issues, which take time, we set ourselves 3-year horizons in order to see significant progress in three years. So, after the submission of our first resolution in 2020, 2023 will be a decisive deadline. We have chosen to vote against TotalEnergies' resolution concerning the progress report on its sustainable development strategy. In our opinion, TotalEnergies' climate strategy is not ambitious enough, particularly as the Group has not yet committed to developing a target trajectory for its activities in line with the IAE's 1.5C scenario. This is a major issue at the heart of our dialogue with them.

Nevertheless, the Group has made commitments to our investor coalition regarding the work it will carry out to build a more ambitious strategy for 2023. We want the Group to adopt a "human rights" policy covering all its areas of activity, particularly those where armed conflicts are taking place. With the support of the Heartland Initiative, we led a collaborative engagement effort throughout last year to ask the Group to leave Myanmar following the coup d'état in January 2021. This work is finally bearing fruit, as the company has been committed to leaving the territory since January 2022, conceding that this decision was in response to pressure from NGOs and shareholders.
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