BCI Responsible Investing Newsletter

BCI Responsible Investing Newsletter - July 2017

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7 bcIMC RESPONSIBLE INVESTING NEWSLETTER Case Study: Sourcing Phosphate in Western Sahara In 2015 and 2016 bcIMC supported a shareholder proposal calling on Potash Corporation of Saskatchewan Inc., one of the world's largest fertilizer companies, to conduct an independent human rights impact assessment of its sourcing of phosphate rock from Western Sahara, in line with the United Nations Guiding Principles on Business and Human Rights. While the shareholder proposal failed to pass in 2016, it received 31.6 per cent votes in favour (up from 6.7 per cent in 2015). A similar proposal was filed with another Canadian fertilizer company, Agrium Inc. While it only received 12 per cent of votes in favour in 2015, the shareholder proponent withdrew its filed proposal in 2016 following constructive dialogue with Agrium. Later in 2016, Agrium published an independent review of its human rights impacts. The report concluded that Agrium is not compelled by the UN Guiding Principles to end its supplier relationship with OCP/ Phosboucraa, sourcing from Western Sahara. Based on this result, Agrium could maintain its supplier relationship with Phosboucraa on the basis that the company is not causing or contributing to potential or actual negative human rights impacts. Furthermore, the report suggests that Agrium has leverage to mitigate potential or actual negative human rights impacts linked to the supplier relationship and to encourage compliance with internationally recognized human rights. The company should continue to monitor and engage with stakeholders. bcIMC communicated our support to the Agrium Board of Directors and commended them on the company's decision to conduct and make public an independent assessment of its human rights responsibilities. Furthermore, Potash and Agrium are currently in the middle of a merger and we encourage the merged entity, Nutrien, to leverage the work that Agrium has done on this matter. Proxy Voting Guidelines b c I M C b e l i e v e s t h a t s o u n d E S G practices contribute to the integrity of the public corporations that we invest in and to the creation of long-term value for our clients. We consider proxy voting to be an important shareholder right. We conduct all proxy voting activities in-house and vote all our Canadian, U.S. and the most significant global holdings based on market value. Through proxy voting we advocate for improvements on ESG where necessary to enhance company performance and shareholder value. We encourage boards and management to conduct analyses and adopt policies that are aligned with internationally r e c o g n i z e d b e s t p r a c t i c e s a n d frameworks and that appropriately a d d r e s s c o r p o r a t e r e s p o n s i b i l i t y matters relevant to their business. We believe it is prudent to apply a case-by-case approach to corporate responsibility, given the extensive list of social and environmental challenges a company may face.

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