News from the Investment Manager

Annual Review 2024

Our annual review shows some of Stewart Investors’ activities in 2024 including:

• Our ongoing collaborative engagement with other investors and manufacturers – including semiconductor companies – to address the problem of ‘conflict minerals’ in supply chains.
• Reviewing our climate targets to simplify them and ensure their alignment with our investment philosophy, using measures that we believe more closely reflect companies’ real-world emissions performance.
• Commissioning research to enhance our understanding of the use of animal testing in the healthcare sector and the potential alternatives.
• Initiating a research partnership with the Access to Medicine Foundation, whose Generic & Biosimilar Medicines Programme we are helping to fund and which aims to increase access to affordable medicines worldwide.
• Refining our human development pillars, which provide a framework for assessing whether companies contribute to positive social outcomes.

Please click here to access information on the human development pillars, climate change solutions, harmful or controversial products, services or practices, engagement and voting, and climate data for the Trust. 

Collaborative engagement update: tackling conflict minerals in semiconductor supply chains

 “Demand for critical minerals has been dubbed the ‘gold rush of the 21st century’ due to their importance in emerging technologies”¹.

Stewart Investors’ engagement on conflict minerals began in 2020 when we identified the issue as a serious human rights risk. This risk is frequently overlooked by governments, companies, investors and consumers. Tantalum, tin, tungsten and gold, collectively known as ‘conflict minerals’, are vital materials for the semiconductor industry and are powering the green transition. Poor traceability along complex supply chains can lead to the inadvertent financing of armed conflict and the abuse of human rights.

Reports from governments², non-government organisations (NGOs) and the media highlight that mining minerals to produce semiconductors and other electronic and industrial components continues to result in displacement and death. This can have serious reputational and legal consequences for the companies involved.

Apple accused of using conflict minerals

“The Democratic Republic of Congo (DRC) has filed criminal complaints in France and Belgium against subsidiaries of the tech giant Apple, accusing it of using conflict minerals”. Lawyers for the DRC allege that tin, tantalum and tungsten is taken from conflict areas and then “laundered through international supply chains”³. 

Over the years, we have engaged with a number of companies by highlighting the possible reputational risks that arise from the way they procure minerals. The discussions we have had with CEOs often highlight a lack of knowledge of the regulations and of the risks within their own supply chains. Many companies’ supply chain departments are under resourced, leaving them ill-equipped to perform the due diligence checks that are called for by the Organisation for Economic Co-operation and Development (OECD) guidance (and enshrined in US and European regulation). We also found that these departments are frequently considered to be ‘cost centres’ and therefore subject to cuts at times of financial pressure. This may be the main reason why, to date, little progress has been made.

Geopolitical tensions and tariffs on trade may prompt companies to reshape their supply chains

As investors, we consider it our duty to question senior management about reputational risk and frailties in their supply chains. We have therefore been impressing on them the need to allocate more resources to supply-chain management as well as to industry bodies, such as the Responsible Minerals Initiative (RMI) and the Initiative for Responsible Mining Assurance (IRMA), to ensure that best practice is followed and that risks are mitigated.

Understandably, some manufacturers may respond to heightened geopolitical tension and tariffs on trade by repositioning their supply chains. As they do, our fear is that companies might inadvertently overlook the importance of human rights. Accordingly, while there has been pushback against investor engagement, we feel it is necessary to engage companies on this topic. Conflict minerals present a clear, present and ongoing reputational and legal risk to companies that ignore this topic.

We advocate joining industry bodies to make engagement more effective

We would encourage investors to explore and join these bodies to help with more effect engagement:

• The Initiative for Responsible Mining Assurance (IRMA) membership, for the upstream. Further information on our involvement is available here.
• The Responsible Minerals Initiative (RMI) Investor Network, for the downstream. Further information on our involvement is available here.

We recently hosted a meeting on behalf of IRMA. It was attended by seven like-minded investment firms, all of whom were impressed by the progress that IRMA has made and by the professionalism it exhibits: it is the gold standard of independent mining audit and assessment. For example, Mercedes Benz insists that suppliers use IRMA audited mines. IRMA has also just announced Google as a new purchasing member. A list of members can be found on IRMA’s website.

While there are costs of membership, we believe these are outweighed by:

1. Connectivity. These organisations provide powerful connections to supply-chain managers and buyers in the automotive, electronics and industrial sectors. This allows investors to assess company culture and commitment to responsible supply chains at a different level from typical investor meetings. For example, at the OECD Forum on Responsible Mineral Supply Chains in Paris in May and at the Investing in African Mining Indaba Conference in Cape Town in February, we had the opportunity to meet the supply chain managers of Apple, Intel, Microsoft, Cisco, BMW and Mercedes.

2. Regulatory updates. The RMI is a good source of information about changes in regulation and their impact on supply chains. For example, recent (February 2025) amendments to the Corporate Sustainability Due Diligence Directive (CSDDD) appear to deepen legal complexity. This may have consequences for companies and investors. RMI membership helps us to keep abreast of such changes.

3. Help with engagement. Because membership of IRMA and the RMI is not obligatory for companies, it is a useful signal that their managers have chosen to adopt best practice. We note many companies – particularly in Asia – claim participation but are not paying members and are not active participants in industry conferences or discussions. Membership of the RMI provides access to their membership list. This makes it easier for investors to determine which companies are leading in their appreciation of the risks in their supply chain – and which are lagging. At this time of supply-chain disruption and repositioning, this could be a source of insight and comfort for investors.

Conclusion: progress takes patience

This initiative is complex and needs to be approached with patience and a long-term perspective. There will be no quick wins – sudden improvements in human rights – here. But this does not deter us. We will continue to advocate best practice as determined by IRMA and the RMI and to highlight the power and importance of correct procedure and independent assessment. And we will continue to raise this topic in meetings with upstream and downstream companies where it is relevant.

We have found that interest in collaboration on sustainable issues has decreased over the past year. But we have no intention of stopping our engagement on this important topic.

Future Asset – careers insights day and impact report

We were delighted to support Future Asset and their careers insight day in June. Investment analyst Sarah Sheard explored the pros and cons of different companies from a sustainability perspective with groups of schoolgirls and alumnae. It was fantastic to see the enthusiasm and participation in the investment workshop.

During 2024, Future Asset engaged with over 2,700 students. Every year, the opportunities Future Asset provides to students continues to grow. Read more in their 2025 Impact Report.

Footnotes

[1] The White House. President Trump takes immediate action to increase American mineral production. 20/3/25, https://www.whitehouse.gov/fact-sheets/2025/03/fact-sheet-president-donald-j-trump-takes-immediate-action-to-increase-american-mineral-production/

[2] US Government Accountability Office, 07/10/24. Conflict Minerals: peace and security in the Democratic Republic of the Congo Have Not Improved with SEC Disclosure Rule, https://www.gao.gov/products/gao-25-107018.

[3] US Government Accountability Office, 07/10/24. Conflict Minerals: peace and security in the Democratic Republic of the Congo Have Not Improved with SEC Disclosure Rule, https://www.gao.gov/products/gao-25-107018.