Engaging for change

Issue

As digital connectivity is ever growing, so too is the demand for water to cool data centres and power the AI revolution. Technology companies have a significant water footprint, from manufacturing semiconductors to cooling data centres. As Alphabet has amped up its AI capabilities, its water usage has increased. As such, Alphabet is a target company for the Valuing Water Finance Initiative, which calls on companies to adhere to its expectations for valuing water.

Action

We are co-leading the Valuing Water Finance Initiative engagement with Alphabet and have requested a meeting to discuss its water management practices. As part of the coalition, we have made specific asks around the company’s management of water in data centres.

Outcome

We were pleased to receive a response from Alphabet and have commenced a dialogue with the company. Over the course of the last year, we provided feedback on Alpabet’s disclosures, calling on the company to disclose water usage in its supply chain and report more detail on how it intends to meet its water replenishment targets. In 2024, Alphabet chose to increase its water disclosures, which we welcomed. We will continue to engage with Alphabet on the topic, given its increasing importance.

Issue

The climate crisis requires the rapid expansion of renewable energy capabilities. Yet it is crucial the energy transition does not harm people, workers or communities. As an offshore wind farm construction company, Cadeler faces specific elevated health and safety rights risks, which must be managed appropriately.

Action

In 2024, we added Cadeler to our thematic engagement on the topic of human rights as a key player in the offshore wind farm market. Cadeler has a material offshore labour force, an area often characterised by heightened human rights risks.

Outcome

We had a constructive first conversation with Cadeler. The company has areas of elevated risk – in particular, its offshore employees and Asian shipbuilding activities – but the company was able to point to strong processes to uphold health and safety and human rights. We were pleased to hear that nearly all of Cadeler’s offshore employees are now directly employed and of its plans to carry out a human rights impact assessment to better determine where to focus its efforts.

We also discussed governance best practice, providing feedback on areas where Cadeler could improve. We will continue to engage with Cadeler and look forward to updates on its human rights impact assessments and improvements to corporate governance.

Issue

We believe pay packages should be fair balanced and aligned with the company’s strategy and long-term value creation, as well as the sustainable growth of the business. We voted against Hollywood Bowl Group’s 2023 Remuneration Report at its AGM due to high vesting at threshold. Under its proposals, 30% of overall pay would be awarded for threshold-level performance, i.e. simply doing the job, which we are not in support of.

Action

Following our vote against its remuneration report, the management team reached out to consult on the drafting of its 2025 remuneration policy. We shared our concerns around the overreliance on absolute performance measures in the company’s long-term incentive plan, as well as the considerable vesting opportunity for threshold performance.

We also used this opportunity to share our feedback on other notable vote decisions from the meeting. We provided further information on why we abstained from voting on the election of the Chair in light of excessive tenure and shared the rationale behind voting against the chair of the nomination committee due to concerns around independence.

Outcome

We were pleased to see that Hollywood Bowl’s new remuneration policy met our key asks by improving the vesting levels and adding a relative performance measure. As such, we chose to support its 2025 remuneration policy.