Lynch Group: Diversity, climate change and modern slavery

Nov 2022

The issue

The company was not meeting our minimum requirements when it came to climate change and board diversity, which would have resulted in a vote against directors at the AGM.

The issue

The company was not meeting our minimum requirements when it came to climate change and board diversity, which would have resulted in a vote against directors at the AGM.

Engagement type One-to-one

Our engagement

We engaged with the chair of Lynch group on ESG issues multiple times during 2022. During a meeting with the Chair he confirmed that they are working with the University of Western Sydney to provide disclosure on emissions and on providing a sustainability statement in FY23. He also communicated they were adding an additional independent female director to the current board, which will increase representation from 25% to 40%, thus meeting our 30% threshold.

During past meetings, we had also flagged our concerns about the company’s exposure to modern slavery risks through their supply chain and suggested that the company should address this issue by putting in place a chief sustainability officer or equivalent to manage all ESG risks in their operations and supply chains. The company has not been able to meet those requirements but has put in place stronger governance around modern slavery related risks

The outcome

As Lynch Group has demonstrated they were improving their disclosures and board diversity, we changed our vote and supporting management,

In regards to the company's management of ESG risks relating to modern slavery and supoly chain, they explained they were currently not in a position to place a chief sustainability officer, as it has been facing headwinds due to cost of energy and other factors; however, there were a few ‘non-negotiables’ for its sustainability committee, including modern slavery. As a result, we expect to see better disclosure about the work it is undertaking during 2023.