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6.4 KNOWTHECHAIN CONTEXT AND OBJECTIVES In May 2018, the EEP International joined a group of institutional investors supporting the KnowTheChain (KTC) campaign. KTC is a partnership between the NGOs "Humanity United", "Business & Human Rights Resource Centre", "Vérité" and the research company Sustainalytics. The partnership aims to promote transparent and responsible supply chains by comparing the practices of different companies. By identifying best practice in responsible supply chain management, the group hopes that these practices will gradually be adopted by as many companies as possible and that they will manage the risks associated with forced labour in their supply chains. KTC has been conducting assessments since 2016, focusing on the information and communication technology (ICT), food, beverage, and textile sectors. By the end of 2023, 108 institutional investors with assets under management of USD 7’000 are supporting this campaign. ACTIONS AND RESULTS IN 2023 • In 2023, Ethos continued its role as lead investor in Puma and Associated British Foods. • Email exchanges took place with both companies regarding the provisional benchmark results to be published in 2024. • A conference call was also held with Associated British Foods. • Ethos participated in an online panel at the benchmark launch event in the food sector. 6.5 EXTENSION OF THE "ACCORD ON FIRE AND BUILDING SAFETY IN BANGLADESH” CONTEXT AND OBJECTIVES Following the Rana Plaza tragedy in 2013, textile companies with supply chains in Bangladesh created the Accord on Fire and Building Safety in Bangladesh (the Accord). Local producers, trade unions and textile companies agreed to improve the safety of local factories, including through the creation of works councils and the implementation of independent inspections. Thanks to their engagement, the EEP International and a group of institutional investors succeeded in getting textile companies to sign up to the agreement. In addition, the investors have obtained several extensions of the agreement in Bangladesh. In 2021, the signatories reached a new phase in their partnership by creating the International Agreement for Health and Safety in the Textile and Clothing Industry (International Agreement). This agreement is still legally binding and was taken over by Pakistan in December 2022 due to its success; it once again covers the clothing sector and will be in force for an initial period of three years. ACTIONS AND RESULTS IN 2023 • In November 2023, it was announced that the future of the international agreement was assured for the long term. The Agreement will automatically be extended by three years beyond its current duration. It will therefore continue until the end of 2029. • The Pakistani agreement began in 2023 with the implementation of the national programme and was signed by 88 brands at the end of 2023. 6.6 WORKFORCE DISCLOSURE INITIATIVE (WDI) CONTEXT AND OBJECTIVES In April 2018, the EEP International joined a group of international investors supporting the Workforce Disclosure Initiative (WDI) campaign. The aim of the campaign is to improve transparency on how large multinational companies manage their human capital as well as the quality of the jobs they provide both at group level and throughout their supply chain. The WDI is modelled on the CDP and uses existing reporting standards. The data it asks companies to publish concerns the composition of their workforce, employee development and employee involvement. At the end of December 2023, the WDI was supported by 65 institutional investors managing assets of over USD 11’500 billion. ACTIONS AND RESULTS IN 2023 • 166 companies took part (out of 1’000 contacted). • Ethos contacted some of the Swiss companies listed on the Swiss Market Index (SMI). Five of them responded to the questionnaire in 2023. • Ethos also contacted 10 international companies. 30
ENGAGEMENT POOL INTERNATIONAL SUMMARY OF 2023 ACTIVITIES 6.7 PLATFORM LIVING WAGE FINANCIALS CONTEXT AND OBJECTIVES In January 2022, the EEP International joined an investor campaign on the Living Wage in the textile industry. The engagement is aimed at around 30 companies that are analysed annually by participating institutional investors on their progress in introducing a Living Wage in the supply chain. The EEP International participates in the platform as a supporting entity. ACTIONS AND RESULTS IN 2023 • At the end of 2023, the platform was supported by 20 financial institutions with assets under management of USD 6’900. • Ethos coordinated a statement with other investors calling on Nike to pay unpaid wages and severance pay in two cases in Thailand and Cambodia. The statement generated considerable interest, but Nike did not respond. • Of the 31 companies analysed, 15 improved their score in the annual assessment. • One of the reasons for this is that companies are increasingly carrying out studies on the impact of non-payment of living wages and providing evidence of responsible purchasing practices. 6.8 ENVIRONMENTAL AND SOCIAL ISSUES IN RARE EARTH SUPPLY CHAINS CONTEXT AND OBJECTIVES Following a study on rare earths carried out by SfC, the EEP International, in collaboration with SfC, sent letters to 12 relevant companies in the automotive, chemicals and energy sectors in June 2020. These companies are active in low-carbon technologies such as renewable energy, energy storage and energy efficiency. Companies are asked to ensure appropriate environmental and social practices in their supply chains, both in terms of the health and safety of workers and the negative consequences of extraction, in particular deforestation, soil erosion, groundwater pollution and toxic mining waste. This engagement has aroused keen interest among the companies concerned and has enabled rapid progress to be made. The engagement to five companies was successfully completed by the end of 2020. The engagement continued with the remaining seven targeted companies in 2021. Ethos is the lead investor in Siemens Gamesa Renewable Energy (SGRE). The first phase of the engagement was successfully concluded in 2021. ACTIONS AND RESULTS IN 2023 • A report published by SfC at the end of 2023 gives an overview of the progress made over the four years of the engagement campaign. • For the targeted companies in the wind energy sector, the campaign has achieved positive results for Siemens-Gamesa and Orsted. • Progress was made in auditing suppliers beyond level 1 and in Siemens-Gamesa's efforts to recycle rare earths and metals. The company also improved transparency on the results of supplier assessments. • The campaign was completed this year. 6.9 IMPROVEMENT OF THE RESULTS OF THE CORPORATE HUMAN RIGHTS BENCHMARK (CHRB) CONTEXT AND OBJECTIVES The EEP International and a group of institutional investors, coordinated by the Investor Alliance for Human Rights (IAHR), sent an investor statement to 50 banks in March 2020 to urge them to close the gaps identified by the NGO BankTrack. The updated statement was signed by 48 institutional investors in August 2023. Despite some isolated positive events since joining the campaign, which show that banks are increasingly applying human rights due diligence obligations, there is still a lot of ground to make up. ACTIONS AND RESULTS IN 2023 • At the end of March, Banktrack published its 2022 annual report. • The investor statement, published in August, contains five urgent recommendations on how the banking sector can meet its human rights responsibilities. • The year 2023 marked the 20th anniversary of the Equator Principles. As the banks have not yet set up a complaints mechanism for these rules, BankTrack has created an online mechanism specifically for this purpose. 6.10 IMPROVING PERFORMANCE ON THE CORPORATE HUMAN RIGHTS BENCHMARK (CHRB) CONTEXT AND OBJECTIVES 31
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