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Climate change, Indigenous relations among top ESG issues for ASX companies: Regnan

Investors need to work together to drive positive change since many pressing problems can’t be solved at a portfolio or company level, finds Regnan its annual Engagement Impact Report

RESPONSIBLE investing leader Regnan undertook 87 engagements with 44 ASX-listed companies over the past year, aiming to help improve business performance by addressing issues such as climate change, modern slavery and Indigenous relations.

Regnan supports some of the world’s most influential investors, investor networks and responsible investment initiatives in a number of ways, including via a company engagement program.

Regnan’s just-released Engagement Impact Report 2021 [PDF] shows that the 44 companies represented more than half the market capitalisation of the S&P/ASX 200.

“A quarter of the companies engaged were new to the current program — we continue to refresh and expand our influence, focusing on companies with material issues rather than relying on existing relationships,” says Regnan’s head of engagement, Alison Ewings.

Regnan says the COVID-19 pandemic has revealed the interconnectedness of the world and highlights the vulnerabilities faced by a globalised world.

The insight for investors is the need to consider not only risks to their own portfolios, but also work to understand and have an impact at a systemic level.

For example, feeding a growing global population in a sustainable way, tackling climate change and modern slavery are all examples of issues that cannot be solved by a single company or at a portfolio level.

“Our engagement efforts are focused on key participants within the value chain,” says Ewings.

“The need to collaborate to enhance impact has always been a part our collective engagement model. But this year has seen us change the way we work with clients, increasingly working more closely together on issues of importance.”

Top issues ASX investors should look out for

What are some of the material ESG issues that Regnan finds most prevalent in its engagement work with ASX-listed companies?

This year saw a continued rise in social issues become part of engagements including political lobbying, cultural heritage and stakeholder relations.

Among key focus areas, Regnan highlighted cultural heritage and indigenous relations as important issues this year after Rio Tinto’s destruction of cultural heritage at Juukan Gorge exposed questions about the relationships between companies and Indigenous communities.

Regnan has been working with HESTA, the $60 billion health and community services superannuation fund, to engage mining companies facing similar issues. Companies engaged included Rio Tinto, BHP Group, Fortescue Metals Group, Alumina, Newcrest Mining and Evolution Mining.

The focus has been on the effectiveness of internal reviews and the need to include traditional owner groups in reviews of company performance. The approach recognises that communities are also impacted by unlisted and global stocks and therefore the role of both companies and investors in the public policy process is also an important one.

Other engagements over the past year included sustainable agriculture, climate change, modern slavery and the role of board overseeing the conduct of executives and culture more broadly.

Regnan is now widening its engagement focus to cover the perspectives of debt holders as well as equity investors.

“This has included seeking enhanced ESG performance from issuers, as well as the quality of disclosure and performance within sustainability bonds issued by ASX200 companies,” said the report.

Regnan is also expanding engagement to selected ASX300 companies where there are risks for investors and a strong case for change as many of them grow.

Here’s are some of the most common topics covered in Regnan’s company engagements:

  • Climate Change
  • Social (eg political lobbying, cultural heritage and stakeholder relations)
  • Disclosures
  • Human capital
  • Remuneration
  • Workplace safety
  • Diversity
  • Board issues
  • Modern slavery
  • Conduct

Read the Engagement Impact Report 2021 here.

About Regnan

Regnan is a responsible investment leader with a long and proud history of providing insight and advice to investors with an interest in long-term, broad-based or values-aligned performance.

Building on that expertise, in 2019 Regnan expanded into responsible investment funds management, backed by the considerable resources of Pendal Group.

The Regnan Global Equity Impact Solutions Fund invests in mission-driven companies we believe are well placed to solve the world’s biggest problems.

The Regnan Credit Impact Trust (available in Australia only) invests in cash, fixed and floating rate securities where the proceeds create positive environmental and social change. Both funds are distributed by Pendal in Australia.

Visit Regnan.com

Find out about Regnan Global Equity Impact Solutions Fund

Find out about Regnan Credit Impact Trust

For more information on these and other responsible investing strategies, contact Head of Regnan and Responsible Investment Distribution Jeremy Dean at jeremy.dean@regnan.com.

This article has been prepared by Pendal Fund Services Limited (PFSL) ABN 13 161 249 332, AFSL No 431426 and the information contained within is current as at August 11, 2021. It is not to be published, or otherwise made available to any person other than the party to whom it is provided.
This article is for general information purposes only, should not be considered as a comprehensive statement on any matter and should not be relied upon as such. It has been prepared without taking into account any recipient’s personal objectives, financial situation or needs. Because of this, recipients should, before acting on this information, consider its appropriateness having regard to their individual objectives, financial situation and needs. This information is not to be regarded as a securities recommendation.

The information in this article may contain material provided by third parties, is given in good faith and has been derived from sources believed to be accurate as at its issue date. While such material is published with necessary permission, and while all reasonable care has been taken to ensure that the information in this article is complete and correct, to the maximum extent permitted by law neither PFSL nor any company in the Pendal group accepts any responsibility or liability for the accuracy or completeness of this information.

Performance figures are calculated in accordance with the Financial Services Council (FSC) standards. Performance data (post-fee) assumes reinvestment of distributions and is calculated using exit prices, net of management costs. Performance data (pre-fee) is calculated by adding back management costs to the post-fee performance. Past performance is not a reliable indicator of future performance.

Any projections contained in this article are predictive and should not be relied upon when making an investment decision or recommendation. While we have used every effort to ensure that the assumptions on which the projections are based are reasonable, the projections may be based on incorrect assumptions or may not take into account known or unknown risks and uncertainties. The actual results may differ materially from these projections.

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