Vinci
Vulcan Materials
Engagement: Call with Social Innovation and Human Rights Manager
Engagement: ESG Engagement Call with Investor Relations, External Affairs, Human Resources and General Counsel leaders
Key ESG Issue(s): Labor management policies mitigating risks of modern slavery
Key ESG Issue(s): Emissions reduction targets
Next Steps: Monitor for continued tightening of labor policies and practices
Next Steps: Review feasibility of Scope 1 and 2 emissions reduction targets to be published in upcoming ESG report
Chris Hillsdon Senior Portfolio Analyst, Infrastructure Strategies Simon Ong Portfolio Manager, Infrastructure Strategies
Adam Meyers Analyst – Energy
Vinci operates half of France’s toll road network under longterm concession agreements, a growing portfolio of airport concessions and a global contracting business. In June 2021 ClearBridge infrastructure team members Simon Ong and Chris Hillsdon proactively reached out to engage Vinci on policies and practices to prevent and manage risks of modern slavery at Vinci and through the supply chain following claims of violations of rights of migrant workers employed to build the infrastructure for the 2022 FIFA World Cup in Qatar. Allegations there concerned workers working more than 12 hours a day and in extreme heat. As a result of our discussion comfort increased regarding Vinci’s broader process and policies in place to materially reduce the risk of modern slavery. Our takeaway was there are multiple layers of risk management practices and policies in place, including on-site auditing and supply chain auditing. As the legal dispute on the Qatar case is ongoing and the outcome uncertain, we will follow up again with the company once a decision has been rendered. We will look to see if Vinci will continue to tighten its policies and practices as a result.
ClearBridge is a top 10 holder of Vulcan Materials, a large aggregates company in the materials sector. In February 2022 Adam Meyers held a call with Investor Relations, External Affairs, Human Resources and General Counsel leaders of Vulcan Materials on several ESG topics. We asked when we could expect the company to announce GHG emission reduction targets similar to its peers and what main levers it has to lower those emissions. The company shared that it will disclose its first Scope 1 and 2 emissions reduction targets (on a per-ton basis) in its upcoming 2021 ESG report and added that reporting will be in line with TCFD and SASB going forward, a development we found encouraging. In terms of actions to achieve reductions, Vulcan Materials cited establishing targets for renewable energy consumption, which currently stands at 10% of electricity consumed. The company also mentioned use of solar arrays on top of facilities as well as electric loaders, though adoption would be gradual and dictated by cost. Vulcan Materials is one of the leading recyclers of concrete and asphalt in the U.S.; we asked why this was not more publicized. The company shared that its 20+ year recycling program will continue to grow, although there are limited applications for use of recycled concrete and asphalt and vertically integrating the program in operations remains difficult, given its use of different equipment and crews. Nevertheless, we were encouraged by the company’s interest in understanding the relative economics of recycling versus new production, which the company believes could be aided by an eventual Build Back Better Bill.
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