Voting issue: environment

The company’s performance must also be assessed on the basis of its environmental impact, in which shareholders are increasingly interested, including but not exclusively in relation to the issue of climate change.

Etica Sgr aims to discuss, inter alia, the following issues (and to vote in favour of any shareholder motions in that respect):

• production of detailed reports on the environmental impact of processes and products, preferably using objective performance indicators (e.g. quantity of CO₂ emitted per employee or per unit of product);
• implementation of policies aimed at enhancing the efficiency of resource management, preferably in order to achieve internationally recognised certifications;
• the establishment of systems and procedures to minimise environmental impact (e.g. cleaner technologies, transparency on methods of sorting and triage of unusable products and any other recycling methods that may be used);
• publication of information on good practices implemented by the business.

Water is the most valuable commodity for the development of human life but also for collective security (manufacturing activities). Due to its scarcity, water is likely to become a strategic resource in the near future, especially since growing inequality in terms of access may lead to greater conflicts between the various uses and between categories of users.

Lack of access to drinking water and valid purification systems is still a feature of some European countries and some Italian regions, presenting greater challenges in the south, where water networks are often in poor condition and significant quantities of water are lost through leakage.

Etica Sgr believes that shareholders must also draw attention to the management policies of companies and institutions with regard to the use of resources and the volume of water extracted or consumed for production cycles.

Etica Sgr aims to discuss, inter alia, the following issues (and to vote in favour of any shareholder motions in that respect):

• reporting on water consumption;
• setting targets for reducing water consumption;
• investing to increase water consumption efficiency;
• producing documents that assess water consumption for each division or production cycle and company policies aimed at minimising water waste (water management activities), preferably using objective indicators (e.g. those set out in the “CDP Water” questionnaire);
• monitoring and declaration of the level of pollution caused by the production cycle to aquifers and environmental impact in the event of over-exploitation of water sources, including in relation to current legal provisions;
• announcing policies launched to mitigate the impact of the company’s activity on the use of drinking water (rainwater collection, closed reuse cycle), particularly in geographical areas with water shortages (e.g. when extracting from wells fed by local groundwater);
• introduction of systems to reduce water consumption per product unit, showing the volume of water used to supply the product ;
• promotion of low water consumption technologies, particularly in terms of intensive agricultural production, industrial production and hydroelectric use;
• development of a Water Footprint Assessment in accordance with ISO 140046 guidelines or other recognised standards.

More specifically, for public or private companies that manage water resources for human use:

• disclosing policies for controlling pricing levels;
• recognising and guaranteeing the right to water (40/50 litres per day per person guaranteed by law) and the application of progressive pricing systems by consumption bands, differentiated by use (e.g. food or individual);
• detailing and setting out in financial statements and reports the investments made in the management of the complete water cycle (e.g. the maintenance of water pipelines, water quality and consumption reduction policies);
• promotion and support of water consumption reduction and environmental protection campaigns;
• promotion of participation by consumers and workers (e.g. through stakeholder forums) when defining company water management policies;
• setting tariffs for vulnerable social groups.

Shareholders are increasingly concerned about the potential effects of greenhouse gases emitted by companies and their products on climate change.

Etica Sgr aims to discuss, inter alia, the following issues (and to vote in favour of any shareholder motions in that respect):

• emissions reporting;
• setting emission reduction targets (preferably science-based)^[1];
• investing in a low-emission economy;
• monitoring emissions of CO₂ and other climate-changing gases and commit to their rapid and significant reduction (e.g., Etica Sgr recommends participation in the “CDP Climate Change” questionnaire);
• publication of eventual strategies to respond appropriately to the growing pressure from legislators, competitors and the public to reduce emissions;
• linking the remuneration of managers to the achievement of environmental objectives;
• disclosure of eventual programmes for the use of energy from renewable sources and for increasing the energy efficiency of facilities and products in order to achieve a significant reduction in consumption;
• provision of information on environmental certification of facilities and publication of any certification plans;
• disclosure of progress in reducing the quantity of materials used, for the same production volume (dematerialisation);
• calculation of the carbon footprint in terms of tonnes of CO₂ associated with a specific company product or service.

[1] emission reduction targets are science-based if they are aligned with the decarbonisation targets necessary to keep the rise in global temperatures below 2 degrees compared with pre-industrial temperatures, as set out in the Paris Agreement of 2015.

According to the United Nations, forests are disappearing by the minute, at a rate of 33 football pitches and 112,600 km² per year (Source: FAO, The State of the World’s Forests, 1999). Endangered forests are home to 50 per cent of animal species, 200 million indigenous people worldwide, and millions of trees that absorb carbon dioxide and mitigate the effects of climate change.

Etica Sgr aims to discuss, inter alia, the following issues (and to vote in favour of any shareholder motions in that respect):

• reporting on the impact of the company’s activity in terms of deforestation;
• in relation to palm oil production, tracing the supply chain;
• in relation to palm oil, setting procurement targets from RSPO (Roundtable on Sustainable Palm Oil) certified suppliers;
• introduction of policies prohibiting the marketing of products containing materials originating from protected ancient forests;
• assessing and reporting on the impact of the supply and use of raw materials on deforestation and human rights;
• introducing or making more effective sustainable forest management policies (e.g. based on FSC (Forest Stewardship Council) standards).

Producing GMOs for non-medical purposes can present environmental risks related to the cultivation of these species (e.g. environmental pollution, changes in traditional cultivation methods and the threat to local biodiversity) and social risks, especially in developing countries (e.g. expropriation of land from local farmers by producer companies ).

Etica Sgr aims to discuss, inter alia, the following issues (and to vote in favour of any shareholder motions in that respect):

• transparency on the use of food ingredients from genetically modified plants or animals;
• reporting on the environmental and financial costs, risks and benefits associated with the production and consumption of products containing genetically modified ingredients;
• development of a system for tracing raw materials/ingredients, constantly monitoring suppliers and commercial partners.

Etica Sgr respects life in all its forms, taking into consideration both the single nature and the diversity of living beings.

Although it believes that the use of animals for testing drugs cannot be ruled out, Etica Sgr also believes that pharmaceutical companies must ensure maximum transparency for shareholders.

Etica Sgr aims to engage in dialogue, inter alia, on the following issues (and to vote in favour of any shareholder motions in that respect):

• transparency in the publication of data on animal testing;
• extension of any policies on the use of testing to all laboratories, regardless of geographical location;
• adoption of specific policies to improve the conditions of animal husbandry along the supply chain, protecting animal and human health.