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Actively Engaging on Diversity Equality and Inclusion - a case study

While many of the fund managers that Moneyworks recommends label themselves as 'ethical, responsible or sustainable' fund managers along with the relevant certification, we have found that one of our fund managers who doesn't carry those labels is very actively engaged with their investee companies.

Moneyworks has recommended Magellan Global Fund to our clients since around 2008 and continues to recommend the fund as a core investment in our hybrid portfolios.  We like the style of the fund manager, their processes, communication (generically - great blog series, but also their one to one answers to our queries - they stand out with the quality of information they share with us), education, professionalism and their deep engagement with their investee companies.  

Magellan have provided us with the following example of an active engagement exercise that they undertook with Visa to share with you from 2022 

Visa – Improving access to financial products 

Magellan considers that a business has the responsibility to incorporate Diversity, Equality and Inclusion (DEI) within its organisation and support DEI in the communities in which it operates. As the largest global payments network, Visa is unusually well placed to improve access to payments across its huge footprint. Visa’s goal to improve ‘access to financial products’ is an extremely important one, particularly for the poor and uneducated, that benefits individuals, their communities and shareholders.

As long-term investors, our primary purpose in engaging with Visa on DEI is to ensure that they understand we consider excellence in DEI is beneficial to their business:

·       Improving their competitiveness by being an employer of choice and attracting the best diverse talent across the globe,

·       Growing the end market by lifting the unbanked and disadvantaged from a dangerous and rapacious informal financial system and into the modern, efficient, and safeguarded financial system,

·       Maintaining the strength of the brand by meeting the “social licence” expectations of the societies in which Visa conducts business.

The DEI initiatives by Visa improve overall quality and longevity of Visa within its communities, allowing us to have a higher degree of conviction in position sizing.

In our engagements and research, we monitor Visa’s programs and encourage their initiatives for less advantaged communities. Magellan has invested in Visa for over a decade. Over this time our ongoing engagement has sought to better understand risks, influence, and, importantly, provide support and encouragement to their initiatives that we support. As long-term stakeholders and investors, direct communication of our support for these initiatives is communicated to executive management and the board, ensuring that focus, resources and outcomes are monitored within the company.    Given the very broad, and perhaps immeasurable, nature of the “access to financial products” goal of Visa, we do not have explicit targets we expect Visa to meet by specific dates.  Rather, as noted earlier, our approach is one of monitoring, questioning and support.

Earlier in our ownership of Visa shares our discussions focussed on emerging economies. Since then, our discussions have evolved over time, with increasing focus on improving ‘access to finance’.  Our engagements and research in Visa have been pleasing on this topic. Visa in recent years have set multiple targets to improve access to finance. Visa reviews programs on an ongoing basis, disclosing progress via its website/blog and Sustainability Report:

·       In 2015, Visa made a 2020 commitment to provide access to 500 million unbanked or underserved people to Visa branded payments. Visa met the goal in 2019 and continues to invest and drive positive change amongst this cohort.

·       In 2019, Visa launched a 3-year partnership with Hand in Hand International, a global NGO focussed on developing economies in Africa and South Asia. The partnership was focussed on providing financial education and providing financial services.

·       In 2019, Visa launched its Practical Business Skills website. The program was initially focussed on the United States. In the first 5 months, the program reached more than 7,000 visitors via >40 modules. The program has since rolled out globally, and by 2020 the site had reached over 40,000 visitors and expanded to four languages.

·       In 2020, Visa announced a global commitment to digitally enable 50 million small and micro businesses by 2023.

In our most recent engagement with Visa’s Chief Sustainability Officer more colour was provided on how the Visa team are focussed on the “access to finance” goals and driving change. For example, Visa noted that the targets and programs are an evolution, the learnings from prior programs and business operations are used in new programs. To digitise small and medium sized businesses in emerging countries, Visa has ‘street teams’, where they visit businesses door to door. The Visa team have identified and prioritised 90 cities and reached over 200,000 businesses. Visa is providing education, signage, and ongoing communication to lift these businesses’ payments capabilities.

Enhanced understanding of Visa’s initiatives then permits us to cross-check, and perhaps leverage, Visa’s initiatives with other investments, such as Mastercard (and vice versa). We view that broader industry-wide initiatives can provide even greater positive impact on disadvantaged communities.

Overall, we are pleased with Visa’s efforts in improving access to finance. Visa provides regular news and blog updates regarding its efforts in the community. We will continue to monitor existing programs, discuss successes and challenges, and encourage continued investment in the community. 


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