Engaging for change

Issue

Water-related risks are increasingly material for the chemicals sector. Manufacturing processes can be water intensive, exposing companies to higher operating costs where water becomes scarcer or more expensive. Operations may also affect water quality through effluent discharges, and tighter regulation can raise compliance requirements and increase the risk of fines or operational disruption. Proactive water stewardship is therefore important to protect local water resources and strengthen long-term operational resilience.

Objectives:

• Set time-bound site-specific water withdrawal targets.
• Introduce a water stewardship strategy.

Action

In the second engagement meeting, we followed up on the points raised in 2024, with a particular focus on target setting, governance and progress towards defining site-specific water targets. We discussed how location-based targets can improve accountability and enable more meaningful measurement of performance, especially where risks vary materially by geography and production profile.

Outcome

Kemira demonstrated a clear maturity in its water strategy over the last 18 months. The company completed a double materiality assessment that identified water as a core risk, elevating water to a central pillar of its environmental strategy. Importantly, Kemira committed to set site-specific water targets that reflect local conditions, demonstrating clear progress towards the main engagement objective. Kemira also reported reductions in water consumption (down 7% since 2023) and continued expansion of its water-related solutions. We will continue engagement in 2026 to monitor implementation and encourage further ambition and disclosure.

Issue

In 2025, EdenTree launched a focused engagement to understand how UK financial issuers are identifying and closing inclusion gaps and how this connects to long-term financial resilience and fair consumer outcomes. We began with UK Building Societies as a pilot for this engagement due to their unique member-owned model and strong presence in savings and mortgages, core channels through which inclusion outcomes are delivered, while offering a relatively comparable peer set for establishing baseline expectations and disclosures.

Objectives

• Confirmation of positive contribution to financial inclusion and accessibility in the UK.
• Confirm role in/support of the BSA’s efforts around financial resilience and the Government’s growth agenda.

Action

The pilot centred on structured dialogue and information requests with a focus on accessibility, while also touching on affordability and resilience. This approach is intended to be scalable, with learnings used to extend engagement to other UK financials over time. Alongside the pilot, we reviewed the Government’s newly launched Financial Inclusion Strategy, which sets out six focus areas: digital inclusion and access to banking, savings, insurance, credit, problem debt and financial education.

Outcome

The pilot phase indicated that building societies often demonstrate a clear customer and community orientation, but disclosure and outcome measurement are uneven. For example, there was limited information available from the majority around how inclusion initiatives translate into measurable customer outcomes, and limited evidence around support for groups facing persistent barriers (e.g., accessibility needs, mental health-related vulnerability, or economic abuse).

Going forward, we hope to refine a clear set of issuer expectations aligned to the Strategy’s pillars, deepen dialogue with pilot participants to improve transparency and scale the engagement to a wider set of UK financial issuers (e.g., banks and specialist lenders), embedding insights into our ongoing credit analysis and stewardship priorities.

Issue

Lloyds Banking Group made adjustments to its strategic climate and diversity objectives, which we deem to be less ambitious. Specifically, this included the removal of business travel from the operational emissions reduction target, and the gender and ethnic representation objective was narrowed from senior roles to the executive level only.

Objectives:

• Ensure accountability mechanisms are in place following the bank’s decision to remove underlying elements of its sustainability targets, or explore alternative options.

Action

We engaged with Lloyds to gain further insight into the rationale behind the decision to remove key components of its targets. In addition, we provided feedback on our views on why the changes to the bank’s sustainability targets signal a weaker level of ambition.

We also wanted to encourage transparency around accountability to ensure robust governance of the bank’s targets; especially as a UK-based institution operating in an environment that remains supportive of strengthening diversity and inclusion.

Outcome

Lloyds emphasised that the amendments to its targets serve only to align older targets with the bank’s updated forecasts. Since setting its decarbonisation targets, the need for international travel has increased due to operations opening in new regions.

Lloyds further noted that amendments to its diversity targets increased the bank’s ambition but focused it at the executive level. Despite these amendments, Lloyds remains a leader on a range of sectoral issues, and we will continue to monitor its position and governance going forward.