Vestas & Xylem

WHEB’s Investment Advisory Committee

Objective

Information gathering exercise to understand what corporate best practice is in supporting the well-being of employees in sensitive areas like reproductive rights.

Background/issue

In light of the Roe v Wade ruling form the US Supreme Court, we considered how best to approach key public social issues, especially where they are contentious and have become politicised. We therefore raised this issue with the Investment Advisory Committee in July 2022.

Actions

After a discussion in the committee meeting, it was decided that, in potentially contentious areas like reproductive rights, for example, we should encourage businesses to be sensitive to differing views within the employee base whilst encouraging companies to adopt practices that clearly support the well-being of all employees. We decided to initially undertake an information-gathering exercise to understand what corporate best practice is in supporting the well-being of employees in sensitive areas like reproductive rights. Following the committee meeting, two opportunities arose to discuss reproductive rights with investee companies: Vestas and Xylem.

• After voting at Xylem’s AGM, we wrote to the company to explain our reasons for voting against management’s recommendations, as per our policy. As is often the case, this led to a dialogue with the company management and we were able to raise this topic, amongst others. Specifically, Associate Fund Manager Victoria MacLean enquired about whether there had been a discussion internally on how the recent overturning of Roe v Wade impacted Xylem’s workforce and whether there had been any subsequent changes to benefits. The company stated it has introduced new and reiterated exisiting measures that support employees whose choices about whether or not to have a child may have been influenced by Roe v Wade. Measures include access to increased travel and accommodation allowances to support out-of-state care; increased short-term disability salary cover from 75% to 100% (providing additional support to those needing down time to recover after an abortion); and increased parental leave from four to eight weeks.
• Similarly, a letter written to Vestas following our voting at the company AGM sparked a conversation with the company’s Investor Relations Team. Senior Analyst Claire Jervis shared examples of company action on employee care in response to Roe v Wade. Vestas clarified that medical plans in the US covered abortion and that travel coverage had been expanded to cover out-of-state abortion costs for employees and covered dependents. As with Xylem, Vestas has a comprehensive approach to critical ESG issues, and we are pleased to see that company management is supporting a healthy and diverse workforce

Outcomes

Successful and ongoing

The benefits of a healthy and diverse workforce are well known. It is WHEB’s view, therefore, that investee companies should look after their employees and support diversity. This is evidenced by our long history of engaging with companies on internal social issues, such as diversity and inclusion, employee safety and labour rights, all of which are well-established as valid aspects of the ‘ESG’ agenda. As stated, we are pleased to see that investee companies with a US footprint are taking appropriate measures in light of the overturning of Roe v Wade. We continue to build a picture of best practice and will share this with companies as appropriate.