Annual ESG Reports

Through our Annual ESG report, we aim to demonstrate the work that we have undertaken around ESG issues over the past year. These reports include case studies of our work on individual companies, highlights of our company engagement and an update on what we as a firm are doing to improve our ESG credentials.

Annual ESG Report 2019-2020

Annual ESG Report 2018-2019

Quarterly ESG Reports

Our Quarterly ESG reports share highlights of our ESG-related activity alongside our Research team’s insights into timely ESG issues.

Quarterly ESG Report Q1 2021

Quarterly ESG Report Q4 2020

Quarterly ESG Report Q3 2020

Quarterly ESG Report Q2 2020

ESG Insights

A Healthy Balance
The rising demand for healthcare creates new pressures for the industry, forcing companies to balance profitability, productivity, the patient and public service.

Living the Dream
The urgent need to address climate change tends to inspire fear, even panic. Dr Gabrielle Walker, a recognised expert on the topic, argues that a more positive approach is required.

Opening Minds to Diversity of Thought
Diversity comes in many forms. One of the most influential is cognitive diversity, which ensures that teams include individuals with different views.

Setting Boundaries on Stewardship
Professor Peter Montagnon argues that shareholder’s rights and responsibilities are misunderstood.

Standards at the End of the Supply Chain
Investment Managers Alan Lander and Des Armstrong travelled to Vietnam and Bangladesh to revisit apparel and footwear factories in South-East Asia.

Supply Chains Trapped as Western Retailers Close their Doors
Retailers adaption to the Covid-19 crisis is not only impacting their employees, but just as stark workers at the end of the supply chain.

Talking ESG in Texas
Few issues energise environmental campaigners more than fracking. Investment Manager Des Armstrong recently visited Texas to see how one producer is working to improve its operations environmentally.

Engagement Case Studies

Engagement with companies is an integral part of our research process. It helps us to understand the particular strengths and vulnerabilities of a business, and the basis for its long-term strategy. Ongoing dialogue also allows us to raise concerns or encourage change across all aspects of a business, including ESG. We do not just accept well-rehearsed corporate messages; we listen, probe and then reach our own judgement.

Companies are chosen for illustrative purposes only to demonstrate our ESG Investment process and are not intended to be an indication of performance. This information should not be considered a recommendation to purchase or sell any security.


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In December, members of the Investment team had a governance-focused call with Cognizant’s Chair, Deputy Counsel, Head of IR and the non-executive director who acts as Chair of its Compensation Committee. The conversation centred on Cognizant’s board refreshment programme that began in mid-2019. The programme is not yet considered complete but has already brought three new board members, all of whom are women. These appointments have been made in line with a skills matrix, which matches the company strategy and is regularly updated.

The conversation also turned to remuneration and previous conversations between the Walter Scott team and management about incorporating metrics linked to the company’s digital transition into remuneration plans. The Chairman explained that this had been decided against as it became practically, and definitionally, very challenging. It was also felt digital success would be adequately captured in the existing revenue and EPS KPIs. In discussing the unavoidably complex decisions around the best way to reward executives, we put forward the downsides to stock-based and deferred compensation plans, but the Chair was clear that given the competition for talent across the technology industry these plans are an assumed part of any package. He also explained that whilst no remuneration plan is perfect, the Compensation Committee is very clear in its aim to attract and retain talent whilst making decisions based on defined policy and not discretion.

As previously, in this now established annual governance-focused call we appreciated the openness of the conversation and felt assured of the company’s current governance, and its approach to often complex decisions such as compensation. This was also another example of greater access to management this year, with restricted travel freeing diaries for calls. Whilst we would always expect a senior board member to be on this annual call, it was pleasing to have the chance to discuss these issues with two board members and a senior member of the legal team.


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A call with the Chairman of Inditex in mid-September was positively summed-up by the stock champion as ‘unremarkable’, which is in fact pretty remarkable given the acute challenges that have faced global retailers this year.  This was our second call with the Chairman in three months and so we expected to hear that the company was in many ways operating as usual, but during the call we were also reassured that its commitment to suppliers remains part of that business as usual. Inditex was very much a leader back in March, signing-up to the International Labour Organisation’s Covid-19 call to action and trying to set an example by honouring all existing commitments with suppliers including full payment of any orders already placed. Clearly, the pressure on suppliers across the garment industry remains serious and so it was reassuring to listen to Inditex’s confident and unchanged message around the importance of long-term relationships with suppliers. Inditex is comfortable that its supplier base is in good shape and will continue to work to ensure that remains the case.

On other Covid-19 related activity, the Chairman explained that at the outbreak of the pandemic, Inditex helped the Spanish government secure PPE from Asia and then provided logistical help to get that equipment into the country. The Chairman also led efforts by a number of large Spanish organisations including Inditex, Iberdrola, Telefónica and Santander to make donations towards the purchase of equipment.

Novo Nordisk

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In May, the Research team had an upbeat call with Novo Nordisk’s CFO. The business has proven its resilience and management have taken conscious steps to ensure that the company does the right thing in a societal context. During the pandemic, the company did not take any financial assistance from the government and whilst its sales force was grounded the company retained all its sales staff with pay in line with target sales.

Novo’s access programmes also played an important public health role, especially in the US, demonstrating a commendable willingness to step up that will hopefully be remembered in time. Early signs in the US suggested an uptick in numbers accessing the programme for generic NovoLog reflecting the obvious importance in patients accessing the insulin that they need.

Engagement with patients has also changed. Like so many companies, moves into remote communication and enabled devices have accelerated.  Patients can monitor blood glucose on their phone, and then store that data, allowing those patients to do more independently without the need for a medical professional at every stage.


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The CEO and CFO of L’Oréal visited Walter Scott’s offices in early March. Whilst the conversation was unsurprisingly focused on the company’s approach, and actions to date, to the growing Covid-19 crisis as well as the company’s longer-term strategic direction and focus, time was also spent discussing ESG commitments.

Management was keen to remind us of that Chief Corporate Responsibility Officer, Alexandra Palt had been appointed to the company’s Executive Committee last year. That appointment recognised the importance of the role, a key part of which is to keep up the pressure on L’Oréal’s Executive to meet the extensive ESG targets set out to 2030.

In discussing those ESG commitments, they are justifiably proud of the fact that L’Oréal is the only company to have achieved Triple A scores under CDP for four years. The company proudly dates its ESG journey back to 2013, whilst also conceding there is much more to do, as reflected in its extensive 2030 targets.

For the team at Walter Scott, engagement takes many forms. We regularly speak to individuals within companies charged with implementing, planning or reporting on aspects of ESG. Those conversations are often very useful in understanding targets and initiatives, as well as challenging those commitments where they seem insufficiently demanding or opaque in terms of a quantifiable result. But, in a far more general sense, the importance attached to these issues by the most senior management is also noteworthy as we judge a company’s commitment to ESG. Of course, most CEO and CFOs will have a well-rehearsed script, but meetings such as this one with L’Oréal give us the opportunity to probe those soundbites. In a busy meeting such as this, some management teams might have tried to steer the conversation clear of ESG. In this case, we were reassured by the time taken, and more importantly the tone and conviction of the discussions.


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Company investor days are always a prominent feature of the Research team’s diary. These are carefully choreographed events but there is always something to be learnt from the particular focus and tone, especially when regularly attended over time. These events also often provide the opportunity to meet with lower tiers of management and those responsible for particular areas such as HR, R&D or sustainability. It is conversations like those that add an important element to our holistic research and that establish trust in a company’s operating ethos.

Speciality chemicals company Sika’s capital markets day in October was very much in line with those hopes. The day was valuably reassuring, with clearly stated growth and sustainability targets to 2023, as well as detail on how these targets are set and the path to meeting them. In terms of scope 1 and 2 emissions, the company is now committed to reduction in the CO2 intensity per tonne sold by 12% by 2023. Further, scope 3 emissions present a notable opportunity. Amongst the examples cited were the development of concrete admixtures that reduce the amount of concrete required for the same structural strength as well as admixtures with reduced water consumption. As an indication of culture, it was notable that employees from Parex, which was acquired by Sika earlier in the year, were well represented at the event at both senior and junior levels.

Alimentation Couche-Tard

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Engagement plays a central part in our decisions on proxy votes. Our proxy voting policy guides decisions on items such as excessive dilution, political donations or unacceptably vague proposals. But for us, proxy voting must be more than a straightforward cross reference against a policy statement. Analysis and judgement are also required. Engagement has always been part of that information-gathering process and an important component in voting decisions. We also believe it is important to undertake and judge engagement over time. Different tactics can be employed over time and change can also be recognised.

In that context, a positive development at Alimentation Couche-Tard’s AGM was the inclusion on the agenda of its first advisory say-on-pay proposal. Towards the end of 2018, we engaged with management regarding shareholder proposals put forward for its AGM, one of which was regarding an advisory vote on pay. We made it clear to the company that we consider an advisory vote on executive pay as a positive step. We decided to vote in line with management – against the shareholder proposal – on this occasion, but we stated to the company that we would consider supporting a similar shareholder proposal in the future. The shareholder proposal was withdrawn prior to the 2018 AGM. We were pleased to see the addition of a say-on-pay resolution on the agenda for the 2019 AGM and voted ‘for’, in line with 99% of votes cast.


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We met with the chief financial officer of Google’s parent company, Alphabet. During our meeting, we spent considerable time discussing the reputational and operational challenges facing the company. These include shareholder misgivings around governance, and employee discontent about conditions and treatment, as well high-profile concerns around privacy and unsavoury online content. To some extent, the company’s position at the forefront of a rapidly evolving industry makes some of these challenges unavoidable. However, management could do much more to address the concerns of stakeholders; a view we expressed during our meeting.


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EssilorLuxottica is the product of a 2018 merger between the French lens maker Essilor and the Italian eyewear group Luxottica. At a meeting in March, we raised a number of concerns around the cultural differences between the two companies. Those differences appeared central to the fact that integration plans were not yet agreed and that the search for a new CEO for the combined group was expected to take almost two years. Only days later, a number of press reports published clear details of governance conflicts between the two businesses.

Following our meeting, we concluded that over the longer term, the combined group may well be a powerful player in the strong growth market of corrective eyewear. However, we also agreed that management’s current behaviour was of material concern. From our perspective, the risk that cultural and management misalignment might have a negative operational impact on the company overall could not be ignored.


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There are very few businesses that don’t have an ESG narrative to share. In a meeting with the chief financial officer of 3M, it was made clear that its customers aren’t just talking about wanting sustainable products anymore, they’re now demanding them. And 3M, is only too happy to oblige! In EVs (electric vehicles), 3M provides myriad products and solutions that go into the design and creation of an electric vehicle. For instance, there is a significant and growing number of cameras in EVs. 3M offers solutions to hide the cameras. It also develops vital components in EV batteries and produces sealants that bind plastic car parts together. By 2030 more than half the cost of building a car will come from electronic components, and 3M has a broad range of solutions for both component makers themselves, and for the assemblers.


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We enjoyed a wide-ranging discussion with a number of Colgate-Palmolive’s senior managers. Among other subjects, the conversation touched on director skills and qualifications, sustainability, preferred shares and priorities for use of cash. Colgate has a well-structured board in terms of gender, independence and a good mix of tenure. Furthermore, all members of the audit committee are financial experts. The company’s 2018 proxy statement also provided more disclosure around the qualities sought in board members and the rationale for each quality. The listed qualities are business operations, industry, regulatory and public service, information technologies, international, corporate governance and diversity.

We also discussed Colgate’s stated sustainability commitments and progress with its 2015-2020 plan. The aims of this plan range from reaching 1.3 billion children with the company’s ‘Bright Smiles, Bright Futures’ programme, to partnering with local and global organisations to bring clean water to under-served parts of the globe. Colgate has been awarded an “A” score for both water and climate by the CDP and it is committed to 100% recyclables (reusable, compostable) in all categories, and 25% recycled content for plastics by 2025.