Proxy voting and company engagement

Across Betashares’ range of ethical and impact ETFs¹, we voted at 89 meetings in the quarter ending 31 December 2022 on 1,113 individual proposals. We voted FOR 588 times, AGAINST 509 times, and ABSTAIN nil times. We WITHHELD our vote on 16 proposals, all in relation to the election of directors in the United States where the option to vote AGAINST was not available.

We voted WITH management 638 times and AGAINST management 475 times.

Among other votes, we supported shareholder resolutions at Sysco Corporation in favour of an audit of civil rights and an independent assessment of human rights in its supply chain. We also supported a resolution at Cisco Systems calling for the company to prepare a report on tax transparency consistent with the Global Reporting Initiative’s Tax Standard.

Engagement activity² over the quarter tended to focus on human rights. Russia’s unlawful invasion of Ukraine raised issues on which we engaged, and we also followed up with one company on the ethical treatment of animals.

We engaged with Adidas to better understand how they are protecting worker rights to fair pay and working conditions and freedom of association in their supplier factories. Adidas was the subject of a week of civil action and protests globally over the company’s refusal to take responsibility for workers’ rights in its supply chain. In more than a dozen countries, including Pakistan, Cambodia, Italy, the US and Canada, unions and workers’ rights groups protested at Adidas supplier factories and stores. Adidas claim they are committed to ensuring legal compliance in terms of pay and benefits for all workers, and that they track the working conditions in every factory throughout their global supply chain.

We contacted Stockland to better understand how they are engaging with Traditional Owners and descendants of Aboriginal people on the protection of their land and cultural heritage, following reports that Stockland and several other developers had begun work on the former Deebing Creek Aboriginal reserve in Queensland. Indigenous protesters claim ancestral bones are buried on the site and that an unrecognised massacre took place there. Around 2,300 houses are planned to be built on the former Aboriginal reserve over the next 10 to 15 years.

We wrote to Raiffeisenbank AS, UniCredit SPA, Credit Agricole Group and Citigroup Inc, after a report was published by NGO Banktrack that identified commercial banks with significant operations in Russia at the start of the war, that had yet to complete their exit from the country. Bankwatch alleges that by staying in Russia, banks are failing to implement the standards of human rights due diligence required in the context of armed conflicts and are profiting from war.

A German consumer group is suing Deutsche Bank’s asset management unit, DWS, for allegedly misrepresenting a fund’s green credentials in marketing materials. The suit comes as German and US officials have been investigating reports and whistle-blower allegations that DWS had exaggerated the sustainability of investments it sold. We wrote to Deutsche Bank to better understand how they are responding to these allegations of greenwashing and what procedures they have in place to ensure the accuracy of ESG claims on investments.

We commenced engagement with HelloFresh on the ethical treatment of animals in its supply chain. An investigation by People for the Ethical Treatment of Animals (PETA) has accused HelloFresh of the unethical and cruel treatment of monkeys in its supply chain for coconut milk. According to PETA, two of HelloFresh’s suppliers in Thailand use monkey labour. They allege that monkeys are chained, whipped, beaten, and forced to spend long hours picking coconuts. HelloFresh claim they have written confirmation from all their suppliers that they do not engage in these practices. We have written to HelloFresh to understand the due diligence process applied to verify the ethical treatment of animals in their supply chain.

We engaged with Infineon Technologies following the publication of analysis conducted by the Ukrainian military intelligence and Independent Anti-Corruption Commission (NAKO), which found that the majority of components in Iranian drones used by Russian military forces are manufactured by companies from the US, Europe, and Japan. The analysis named Infineon as one such company. An Infineon representative stated they were generally not doing business in Iran, but that aside from direct sales, there are difficulties controlling consecutive sales throughout the entire lifetime of a product. Infineon has instructed their customers, including distributors, to only conduct consecutive sales in line with Infineon’s rules and applicable law.

1. Being Betashares Global Sustainability Leaders ETF (ASX: ETHI), Betashares Australian Sustainability Leaders ETF (ASX: FAIR) and Betashares Climate Change Innovation ETF (ASX: ERTH).

2.Engagement activity includes the ethical ETFs noted above as well as Betashares Leaders Diversified Bond ETF Currency Hedged (ASX: GBND).