Monthly Roundup – April 2022
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Latest Georgeson publications
United States & Global: Setting and Assessing Corporate Climate Goals
“Investor focus on ESG has produced a significant uptick in support of ESG-themed shareholder proposals. Climate change remains at the forefront of topics addressed in these proposals, with investors increasingly asking for corporate commitments to disclose greenhouse gas (GHG) emissions reduction targets. As the 2022 proxy season continues, we expect heightened interest in climate issues to generate greater voting support for environmental shareholder proposals, particularly with regard to measures related to goal-setting of emissions targets”… “While expectations regarding climate goals vary by investor, company, and sector, most investors are moving in the same direction towards enhanced disclosure, interim targets, and more robust commitments to reduce GHG emissions.”
United Kingdom: Memo on Contested FTSE 350 Remuneration Report Votes

This memo provides an overview of FTSE 350 remuneration report votes that received more than 20% opposition during the first quarter of 2022. During the period January-March 2022, 39 FTSE 350 companies held their AGM. Seven of these issuers received more than 20% opposition on their remuneration reports. 
United States: Details from the SEC's proposed rule amendments for climate-related disclosures

“On March 21, 2022, the Securities and Exchange Commission (SEC) issued rule amendments that would require a domestic or foreign registrant to include certain climate-related information in its registration statements and periodic reports, such as Form 10-K. The proposed rules (see fact sheet, 3 pages and full proposal, 510 pages) are intended to enhance and standardize climate-related disclosures to address investor needs for more and consistent information about the impacts of climate-related risks on a company’s business. While much has already been written about the high-level points surrounding the proposed rules, there are several notable details to consider.”
Georgeson in the media
Global: Georgeson’s Kiran Vasantham was quoted in a Capital Monitor article entitled “How investors are stepping up scrutiny of climate plans”

“The 2022 AGM season marks the second year that companies will voluntarily propose Say on Climate resolutions, Georgeson’s Vasantham says. Usually, these proposals involve three areas: annual disclosure of greenhouse gas (GHG) emissions; disclosure of a company’s climate transition plan; and submitting the plan for advisory approval by shareholders at the annual general meeting. However, it’s no simple task for most asset owners to assess companies’ climate action plans.”
Spain: Georgeson’s Carlos Sáez-Gallego was quoted in a CincoDías article entitled “The shareholder rebellion reaches the Ibex 35”

"Companies that receive a wake-up call from investors require an action plan. They expect the following year's remuneration policies to be modified, in line with the demands of institutional investors. They talk to these funds to understand their protest vote and to get the company to change its policy," says Carlos Sáez-Gallego, head of Georgeson in Spain, one of the largest proxy solicitors.
Georgeson Events
Georgeson’s Arun Kelshiker joined a London Stock Exchange webinar on De-mystifying ESG Reporting

“It’s a subject rich in acronyms - an alphabet soup - so by touching on the ESG developments and trends from around the world we will explore how they have relevance to UK companies. Our panel of experts know what is most pertinent to investors when it comes to ratings and ESG strategies so they can truly shed light on the best way for a company to start in their sustainability journey.”
Georgeson’s Claudia Morante joined a webinar addressing: What is the format that Spanish companies are opting for when convening their AGMs in 2022? Virtual, face-to-face or hybrid?

“We note the first experiences and invite you to read the guide prepared by Georgeson and Cuatrecasas that analyzes the position of institutional investors and proxy advisors and their behavior in the Ibex35 and Top 40 Continuous Market meetings in 2021.
Shareholder Activism
Environmental & Social
European developments
  • The European Commission issued a press release entitled Green Deal: New proposals to make sustainable products the norm and boost Europe's resource independence: “The Commission is presenting today a package of European Green Deal proposals to make sustainable products the norm in the EU, boost circular business models and empower consumers for the green transition.”
  • Reuters reports that Investors warn European companies over climate accounting: “Thirty-four investors managing more than $7 trillion in assets have warned 17 of Europe's largest companies, including BP and Volkswagen, that they could challenge board directors over their accounting of climate risks. The move is the latest push by investors to pressure companies and their auditors, charging them with not moving fast enough to adapt to the world's transition to a low-carbon economy or being clear enough about the potential impacts. In letters sent between December and February and seen by Reuters, the investors told the companies their accounts did not reflect the fallout from climate change on their assets and liabilities. For example, some assets may depreciate faster in value while demand for certain products may fall.”
  • The Financial Times reports that Macron urges EU-wide executive pay curbs in campaign battle with Le Pen: “French president and far-right rival criticise €19mn package for head of carmaker Stellantis”
  • The Financial Times reports how the Dropping of the UK audit bill from Queen’s Speech comes under fire: “Government criticised after fresh delay to long-promised reform of accounting and corporate governance”
  • The Financial Times reports that Glencore suffers shareholder rebuke on climate plan: “Protest over director accountability comes as miner says trading arm is set for another bumper year.”
  • The Financial Reporting Council has published a report entitled Modern Slavery Reporting Practices in the UK: “FRC publishes ground-breaking report which finds Boardrooms must still do more to eradicate modern slavery”
  • ESG Today reports that the FCA to Require Companies to Disclose on Board and Executive Diversity:  “The Financial Conduct Authority (FCA), the conduct regulator for financial services firms and financial markets in the UK, announced today that it has finalised rules for listed companies to disclose on diversity and inclusion at the board and executive committee level, beginning from financial periods starting from April 1, 2022.” See the FCA announcement here:
  • The Financial Times reports that UK regulator to reclaim powers to strike off accounting firms: “Move aimed to bolster FRC’s control over auditors after sector criticised over failure to uphold standards”
  • The Times reports that Schroders plans to scrap non-voting shares “Schroders intends to scrap its two-tier share structure in a move that will loosen the founding family’s grip on the business, make share buybacks easier and improve its governance reputation. Non-voting shares will be converted to ordinary voting shares, while existing holders of voting shares will be given an extra three for every 17 they own to compensate them for the dilution of voting power, the company said.”
  • The Financial Times reports that FTSE 100 chief executive pay recovers to pre-pandemic levels: “PwC analysis reveals median awards of £4.1mn as investor scrutiny increases”
  • The Financial Times reports that Go-Ahead hastens renewal of audit contract after Deloitte probe announced: “Running tender three years early comes in wake of regulators starting investigation of firm’s work for bus and rail operator.”
  • The Financial Times argues Why German CEOs are a problem for the corporate sector: “The postwar governance structure has given stability but is now so ossified it hinders change”
  • Penguin Books will publish a book by Dan McCrum entitled Money Men: A Hot Startup, A Billion Dollar Fraud, A Fight for the Truth: “Money Men is the astonishing inside story of Wirecard's multi-billion-dollar fraud, Europe's biggest new tech darling revealed as a house of cards. Uncovering fake bank accounts, fake offices and possibly even a fake death, McCrum offers a searing exposé that will finally lay bare the truth.”
  • The Financial Times argues that Porsche’s IPO shows old ties are loosening in corporate Germany: “Until now, excluding Deutsche Bank from a leading role in a blockbuster listing had been unthinkable”
The Netherlands
North America
United States
  • Debevoise & Plimpton published a memo on AI Oversight Is Becoming a Board Issue: “As more businesses adopt artificial intelligence (AI), directors on many corporate boards are starting to consider their oversight obligations. Part of this interest is related to directors’ increasing focus on Environmental, Social and Governance (“ESG”) issues. There is a growing recognition that, for all its promise, AI can present serious risks to society, including invasion of privacy, increased surveillance, carbon emissions and perpetuation of discrimination. But there is also a more traditional basis for the recent interest of corporate directors in AI: as algorithmic decision-making becomes part of many core business functions, it creates the kind of enterprise risks to which boards need to pay attention.”
  • Bloomberg Law reports that Twitter’s Poison Pill Began With Marty Lipton’s Valuable Memo: “It’s rare that a 90-year-old corporate lawyer captures the attention of Twitter users, but Marty Lipton did this week. He’s a founding partner of the most profitable major law firm today—Wachtell, Lipton, Rosen & Katz. His career is so remarkable there is an archive of his work. And within that Lipton Archive is one of the most valuable legal documents a lawyer in private practice ever wrote. The memo, distributed to clients on June 20, 1983, spells out the ‘poison pill’ defense to a hostile corporate takeover. Twitter on April 15 employed the maneuver to try to fend off Elon Musk’s effort to purchase the company. Google searches for ‘poison pill’ and ‘Marty Lipton’ skyrocketed after the move.”
  • Corporate Secretary reports that Boards’ ESG discussions increase amid investor interest in oversight, survey finds: “Globally, 80 percent of governance and sustainability professionals surveyed say there has been a slight or large increase in the frequency with which their company’s main board is discussing ESG issues compared with two years ago. Sixty percent report a large increase compared with three years ago. Just 1 percent say there has been any kind of decrease in the frequency of discussions.”
  • IR Magazine reports that IROs warned ESG is Trojan Horse for activists: “Attendees were called on to be prepared to talk about all kinds of ESG metrics. No longer is it just about climate change or greenhouse gases. IROs need to be ready to answer questions about executive compensation, diversity and inclusion metrics, too.”
  • The Wall Street Journal reports that Big Stock Sales Are Supposed to Be Secret. The Numbers Indicate They Aren’t: “Share prices fall ahead of 58% of large sales, a WSJ analysis finds. Regulators are investigating.”
  • MSCI reports argues that Companies May Not Be Ready for SEC Climate-Disclosure Rules: “In response to growing demand from investors, the U.S. Securities and Exchange Commission proposed requirements for U.S.-listed companies to disclose certain climate-related risks, beginning in 2024. The proposed rule, which is modeled in part on the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD), would require companies to disclose information relevant to assessing financially material risks posed by climate change.”
  • The Financial Times reports that US executives reap record pay as historic income gap with staff widens: “Post-pandemic stock market rally delivers larger windfalls to bosses than to employees.”
  • The Guardian reports that Elon Musk poised to collect $23bn bonus as Tesla beats targets: “Electric car giant’s CEO says he is not in talks on new bonus scheme after completing 2018 deal early.”
  • reports that Canada Mandates TCFD for Banks: “The Canadian government unveiled its federal budget last week, with an entire chapter devoted to climate. As US companies assess the SEC’s climate disclosure proposal and shareholder demands, this requirement by our neighbor to the north is another sign that regulators and investors are losing patience with voluntary disclosures about emissions and climate risks to companies, and moving towards mandates for comparable info. Among other things, Section 3.4 of the budget calls on the investment industry and federally regulated financial institutions to support the “transition economy” on the path to net-zero emissions.”
  • The Financial Times reports that Canadian banks double financing of highly polluting oil sands: “Funding comes as financial institutions face growing investor pressure to step up the fight against climate change.”
  • The Financial Times reports that Shopify plans stock split and seeks to preserve chief’s voting power: “Canadian ecommerce group joins tech companies moving to boost investor access to shares.”
Hong Kong

  • Nikkei Asia reports that Hong Kong Stock Exchange takes aim at boardroom ‘boys’ club’: “Now, Hong Kong's stock exchange is moving to change what critics deride as corporate China's "boys' club" by requiring that its more than 2,500 listed companies have at least one female board member by 2024. But those planning to list on the bourse after July 1 must immediately comply with the new rules or their share sales will not get off the ground. The exchange accounts for about 80% of mainland Chinese companies' market capitalization.”
  • International Financing Review reports how Hong Kong outlines green future: “The Hong Kong Special Administrative Region is to turbo-charge the sovereign retail green bond market, shrugging off both the UK’s feeble sales of a similar instrument and February’s pandemic-driven postponement of its own deal by unveiling revised plans for a huge debut “Bond with a Green Future” offering of up to HK$20bn (US$2.55bn). The three-year new issue is set to go on sale to individual investors in the Chinese-controlled territory soon. “Given the epidemic situation is gradually subsided, we will relaunch the issuance shortly,” financial secretary Paul Chan wrote in an official blog. The deal will combine the HK$6bn (US$750m) that the government sought to raise in February with some or all the volume allocated to the product in the new financial year which began on April 1.Its initial size will be HK$15bn (US$1.9bn), Chan said. This could rise as high as HK$20bn depending on demand. The inflation-linked deal’s 2% floor has also been raised to 2.5% to reflect “the hiking interest rate environment”. This structure mimics Hong Kong’s non-green “iBond” and “Silver Bond” retail bonds. They are also three-year instruments with floored inflation-linked payouts based on the SAR’s composite consumer price index, calculated from the government’s household expenditure survey – though only the former is tradeable like the listed “Bond with a Green Future”.”
  • South China Morning Post reports that Hong Kong’s first retail green bond offer to finally launch on April 26 after Covid-19 delay: “Hong Kong’s first retail green bond opens for subscription on April 26, with the government more than tripling the offer size for the three-year note to HK$20 billion (US$2.56 billion), indicating the city is returning to normal as the fifth wave of the coronavirus outbreak subsides. The government had initially planned to sell HK$6 billion worth of green bonds from March 1, but it was delayed as infections started rising, reaching a peak of over 50,000 cases the same month. With cases trending lower, social-distancing restrictions, which have been in place for months, will be eased in phases from April 21.“As the fifth wave of the epidemic gradually subsides, we are relaunching the subscription arrangement of the inaugural retail green bond,” Financial Secretary Paul Chan Mo-po said. He said the increased offer size will help the government reach its bond issuance targets for the current and previous financial years, and also save costs and administrative work.”
  • South China Morning Post reports that Singapore SPACs still draw investor interest despite ‘challenging’ environment, says exchange executive: “Singapore and Hong Kong both introduced new rules last year to allow the so-called blank cheque companies to go public on their bourses amid a fervour for the listings among investors and sponsors that saw more than US$162 billion raised by the vehicles globally in 2021.However, the uptake on both exchanges has been somewhat muted this year as fundraising globally has slipped to less atmospheric levels. There have been only three SPAC IPOs in Singapore – the biggest being Temasek Holdings-backed Vertex Technology Acquisition Corp – and one Hong Kong-listed SPAC, Aquila Acquisition, to debut since the beginning of the year. “The reason why we came out with the SPAC framework was to solve a unique problem in the Singapore ecosystem, which is that of valuations, especially for our growth companies,” he added. “We believe having the SPAC framework in place will actually go some way towards bridging the gap in valuations that we see today.” SPACs are shell companies created to raise financial war chests and buy assets within a limited period of time, usually 18 months to 24 months.”
  • Cyril Amarchand Mangaldas has published a blog post titled Bombay High Court’s Judgment in Invesco v Zee – A major boost for shareholders’ rights in India: “In the Impugned Order, the Ld. Single Judge had concluded that the resolutions proposed by Invesco sought to bring about an “illegality”, which would result in a situation where Zee is in violation of multiple statutory compliance requirements. As per the Ld. Single Judge, the issue was not about the interpretation of the expression ‘valid requisition’ in Section 100(4) of the Act, but about the Court’s power to invalidate such requisitions, which were purportedly ‘illegal’.”
  • Pension & Investments find that China’s net-zero vow may create opportunity for more energy independence: “Home to 1.4 billion people, China will need to expand its renewable energy production to support its vast population and economy. While China's policymakers have pledged to become carbon neutral by 2060, they need innovation from the private sector to achieve this ambitious goal. The good news is that entrepreneurs in China have forged new ground in areas such as solar and wind energy production, battery storage technologies and greener transportation systems, including electric vehicles.”
  • Fortune reports that Beijing is scrambling to keep the U.S. from kicking Chinese firms worth $1.4 trillion off Wall Street. But Congress is in no mood for compromise: “The U.S. Securities and Exchange Commission (SEC) started making good on that ultimatum last month when it published a provisional list of firms that would be kicked off of U.S. exchanges if the companies refused to comply. The list of 11 firms—which includes Chinese giants like internet behemoth Baidu, digital brokerage Futu, and fast-food chain Yum China—is valued at a combined $110 billion. For 20 years, Chinese companies listed on U.S. stock exchanges—which now number 261—have existed in a state of limbo. They are subject to U.S. rules requiring they show their books to U.S. regulators, but Beijing has denied inspectors access, casting the two sides into a decades-long impasse. Washington had largely let Chinese firms’ noncompliance slide so American investors could tap into the riches of some of China’s most successful enterprises. But now U.S. lawmakers are demanding an end to the standoff with a law that would boot $1.4 trillion worth of Chinese stocks from American exchanges if Beijing continues to keep regulators at bay. That prospect wiped hundreds of billions of dollars from the value of U.S.-listed Chinese firms and spooked Beijing. Earlier this month, China’s securities commission announced that foreign regulators may “request to investigate…or inspect” overseas-listed Chinese firms and their auditors. The obscure accounting matter had turned into a test of wills, and Beijing had blinked.”
  • The Financial Times reports the Big Four under growing pressure as Chinese developers delay audits: “Major accounting firms resign from indebted property groups as postponed results raise threat of hidden debt“
  • The Australian Financial Review reports that Proxy advisers back Rio board, climate vote:  “Two major proxy advisers have told Rio Tinto shareholders to avoid a spill of the company’s board and to support the miner’s climate plan on the back of changes made in the past year to remuneration structures, board make-up and emissions targets.”
  • The Sydney Morning Herald reports on The unsustainable secret of almost half of Australia’s ‘sustainable’ funds:  “Morningstar analysed the assets of 155 sustainable funds and found 74 of them had fossil fuel investments. Unlike Europe, there is no ‘green taxonomy’ in Australia, meaning there is no accepted list of sectors that responsible investors are permitted to include in sustainably branded funds. This has allowed the ‘ethical’ tag to be slapped across some of the most environmentally degrading tactics, such as drilling in the Arctic Ocean”.
  • The Australian Financial Standard Sustainability reports on Calls to strengthen Modern Slavery Act: “Australia's Modern Slavery Act is under review for impact and effectiveness, and investors have a role to play in both potentially strengthening the statutory obligations as well as impacting on an issue that is getting worse globally.”
  • The Australian Financial Standard Sustainability argues that Biodiversity risk goes to heart of finance: “Biodiversity is a quickly emerging risk and opportunity for investors and companies, but addressing the materiality of ecosystem and dependencies is complex and goes to the heart of finance, according to a panel of experts.” 
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