Monthly Roundup – December 2022
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Georgeson publications
Global: Institutional Investor Survey Insights Report

Investor focus on transparency and action around how companies are managing ESG risks and opportunities to create growth and long-term value continues to escalate. In the second edition of Georgeson’s Institutional Investor Survey Insights Report, you will read about how investors currently view emerging ESG trends, and what is driving engagement, voting and investment decisions.
UK & Europe: Memo on the Updates to ISS’s 2023 Voting Guidelines

Georgeson has published a memo covering the ISS European voting guideline updates for 2023. ISS’s new voting guidelines can be accessed through their website.
UK & Europe: Memo on the Principles for Responsible Investment (PRI) Conference and an Outlook for 2023

This memo provides insight into the key takeaways from the PRI 2022 in-person conference and the ESG trends which we may continue or begin to see in 2023. These insights come from the panels, workshops and discussions our team members had with asset owners, asset managers and stewardship teams who attended the conference during networking sessions.
Italy: Remuneration Study on the FTSE MIB in the 2022 Proxy Season

Georgeson’s study on remuneration in FTSE MIB 2022 proxy season analyses issuers’ voting results and remuneration practices in 2022, as well as proxy advisors’ and investors’ behaviours and concerns. In particular, it is divided into four sections: (ii) Quorums and voting results of remuneration items in Italy (ii) Proxy advisors and market issues (iii) Alignment between proxy advisors’ recommendations and institutional investors’ votes on remuneration items (iv) ESG and executive remuneration.
UK & Europe: Memo on the Updates to Glass Lewis’ 2023 Voting Guidelines

Georgeson has published a memo covering the Glass Lewis European voting guideline updates for 2023.

Georgeson in the media
US: Georgeson’s Edward Greene is quoted in the IR Magazine’s article titled “Governance in 2023: Value(s) added”

“Governance professionals expect shareholder proposals to be filed this coming proxy season on both sides of the abortion rights debate. Edward Greene, managing director at Georgeson, predicts there will be a lot of post-Roe proposals relating to human capital management and employee benefits. […] Another reason companies may find themselves in the crosshairs on this and other values-based issues is the recent spike in anti-ESG shareholder proposals in the social and environmental spaces. Research from Georgeson finds twice as many proposal submissions that were critical of the ESG landscape in 2022 (52) as in 2021 (26). In many cases, these anti-ESG proposals appear at face value to be similar to pro-ESG resolutions, but their supporting statements reveal very different intents.”
Georgeson events
Europe: Georgeson’s Daniele Vitale spoke at a Diligent Webinar titled “AGM Season Review: Trends, Key Topics & How Boards Should Prepare for 2023”

AGMs are an essential part of the business calendar, but they can be the cause of tension between investors and boards as well as headlines in the news. They are a moment for investors to air their views and for boards to test their policies. The 2022 season has been no different. And while overall dissent has dropped, it has intensified over sustainability issues and remained high on executive pay. Boardroom diversity simmers at the edge of every AGM with the advent of new rules. In a free webinar from Diligent and Board Agenda our expert panel will identify the key themes of the 2022 AGM season, look ahead to what boards can expect from next year and identify how they can prepare.
Shareholder Activism
Environmental & Social
  • Fortune argues that Pro-ESG and anti-ESG activist investors have more in common than you might imagine: “What do an environmentally-minded activist investor and an anti-ESG activist investor have in common? More than you would think, if Bluebell and Strive are examples to go by.”
  • Pensions & Investments reports MSCI outlines ESG factors, risks that investors should focus on: “An analysis by MSCI ESG Research noted 32 factors and risks that institutional investors and companies should consider for 2023 and beyond when evaluating the space. The risk considerations were split into seven different categories: changing corporate governance, responses to regulation, supply chain innovation, work life changes, turning points for ESG assets, expansions in emissions tracking and new types of investments in ESG.”
  • The Financial Times reports that Vanguard quits climate alliance in blow to net zero project: “World’s second-largest asset manager cites investor ‘confusion’ amid increase in criticism from Republicans”.
  • The Financial Times reports that Fewer companies gain top score for environmental disclosures in 2022, report shows: “Businesses struggle to meet demands for more information from regulators and investors.”
  • The Financial Times reports that Norwegian oil fund to vote against companies without net zero targets: “Nicolai Tangen says $1.3tn sovereign wealth investor will also look at groups that overpay executives.”
  • Bloomberg reports Ex-Tabloid Reporter Who Coined ESG Label Says Backlash Is Good: “It may be hard to imagine that ESG, now a hotly debated topic in American politics, traces its roots back to a former UK tabloid reporter and a 45-minute meeting in a fifth-floor office in Geneva. There, he and a small team of United Nations staffers coined in 2004 what’s now become one of the most controversial acronyms in finance. Their aim was to get investors and bankers to weigh key risks such as the earth’s rising temperatures, labor disputes and corporate malfeasance, and determine their impact on profits. ”
  • Bloomberg reports Fund Managers Brace for ESG Correction With $4 Trillion at Stake: “Asset managers are trying to digest new regulatory proposals that have the potential to upend Europe’s biggest ESG fund category. A plan by Europe’s markets watchdog, ESMA, to set quantifiable ESG and sustainable investing standards is forcing portfolio managers to rethink how they design and market an ESG fund class known as Article 8. Morningstar Inc. estimates that only 18% of Article 8 funds, which hold about $4 trillion of assets, currently meet the watchdog’s proposed threshold for sustainable investments.”
  • Pensions & Investments reports BlackRock's proxy votes reveal a nuanced stance: “BlackRock Inc. is being publicly eviscerated by some pension funds, other investors and politicians for its stance on environmental, social and governance factors. But a closer inspection of the world's largest manager's ESG investments, votes and internal practices show that they are not all that revolutionary.”
  • Bloomberg reports that Funds Bet Asia ESG Stocks Will Bounce Back on Policy Tailwinds: “Investors are becoming more bullish on shares linked to sustainability in Asia, betting on a comeback next year due to attractive valuations and trends such as China’s reopening and policy support. Nikko Asset Management, M&G Investments and BNP Paribas Asset Management are among those investing in environmental, social and governance themes, predicting that the build-out of renewable energy supply chains in economic powerhouses such as China and India, and the transition of “dirty” businesses regionally will feed through to stock performance.”
  • The Wall Street Journal reports that FTX Founder Sam Bankman-Fried Led Yearslong Fraud at Company, SEC Says: “Founder diverted customer funds from start of crypto exchange to support his hedge fund, regulator’s lawsuit says”.
  • The Financial Times reports that Nervous auditors re-examine crypto clients after FTX collapse: “Collapse of Sam Bankman-Fried’s company highlights risks in industry where accounting rules are only half-formed”.
  • The Financial Times reports on Hubris and the risks of over-mighty tech bosses: “How can investors tell when a lack of accountability becomes a problem?”
  • Reuters reports that EY sees other Big Four firms mirroring its proposed split: “Andy Baldwin, global managing partner, said EY was holding roadshows to explain a "compelling case" for the company's third attempt to split into two - if partners across the world give their backing in votes during in the first quarter of next year.”
  • The Financial Times reports on The tech ‘nepo babies’ are coming: “Dual-class shares are ensuring founder families can control companies indefinitely”.
  • The Financial Times asks Doesn’t anyone do due diligence anymore?: “Theranos and FTX show a broad failure by investors to ask enough questions before handing over cash”.
European developments
  • The Financial Times reports that the EU looks to exclude banks and funds from sustainability rules: “MEPs and campaigners say ‘incomprehensible’ carve-out for financial sector weakens Brussels’ ESG goals”.
  • Reuters reports that the EU strikes deal on world-first carbon border tariff: “After all-night negotiations, the European Union struck a political deal on Tuesday to impose a carbon dioxide emissions tariff on imports of polluting goods such as steel and cement, a world-first scheme aiming to support European industries as they decarbonise.”
  • The Monitoring Committee announced a Sustainable vision for long-term value creation key in updated Corporate Governance Code: “Companies should focus on sustainable vision for long-term value creation with regard to strategy and decision-making. They must also consider the interests of stakeholders. In addition, companies should draft diversity and inclusion policies for the entire company. The updated Corporate Governance Code further e.g. requires companies to report annually on the effects of their actions on people and the environment, the involvement of stakeholders and the extent to which they have achieved the formulated objectives. The updated Code takes effect on 1 January 2023. This means reporting about FY 2023 will need to account for compliance with the updated code for the first time.”
  • The Monitoring Committee published the report on compliance with the Code in 2021 on the 20th of December 2022: “The 2022 Report builds on the previous report that focused on meaningful reporting on compliance with the Dutch Corporate Governance Code. This year research was focused on the quality of reporting by companies on three themes: long-term value creation, culture and diversity. At first sight, research showed high compliance rates on the monitored best practice provisions. However, in terms of meaningful reporting, improvements can be made with regard to the insights into the actions taken, the dilemmas that arise in the process of that actions, the trade-offs that are made, and the outcomes and impact it has on the company. Furthermore, the research states that only 46% of the companies (112 in total) thoroughly address ESG aspects in their account of the vision for long-term value creation and the strategy to achieve this. Besides, this year the Committee sent a letter to 16 companies with areas of focus to improve their reporting for FY2022.”
  • Ethos publishes the 22nd edition of its voting guidelines: “Each year, the Ethos Foundation updates its voting guidelines based on recent developments in corporate governance and sustainability, as well as changes in the legal framework. This document, published in three languages, is essential as all analyses and voting recommendations made by Ethos to its clients are based.”
  • The Financial Times reports on A close Suisse shave: “Credit Suisse’s rollercoaster rights issue shows risks even for a Justice League of underwriters”.
North America
United States
  • Pensions & Investments reports SEC Commissioner Peirce criticizes climate disclosure proposal: “SEC Commissioner Hester M. Peirce said the agency's climate disclosure rule proposal would overstep and interfere with companies' decision-making processes.”
  • Teneo reports on the Four Potential Consequences of “Pass-Through” Voting for Companies: “Earlier this year, Republican Senators introduced the “INDEX” Act that would require passively managed funds to vote proxies in accordance with the instructions from their clients.”
  • The Financial Times reports on Corporate concentration: boardroom rosters plagued by same old faces: “Biden administration wants to prevent rivals colluding to push up prices or stifle competition”.
  • The National Association of Corporate Directors (NACD) issued a press release announcing the release of their 2023 Governance Outlook report: “The 2023 Governance Outlook report captures insights and guidance on environmental, social, and governance (ESG) oversight, new and proposed US Securities and Exchange Commission (SEC) regulations, trends in D&O insurance, human capital oversight, third-party risk, and more. It includes partner contributions from Broadridge Financial Solutions, Deloitte, FGS Global, Woodruff Sawyer, and WTW, along with data snapshots from the latest NACD Board Trends and Priorities Survey of more than 300 directors nationwide. The 2023 Board Trends and Priorities Survey revealed economic headwinds, supply chain disruptions, and increased competition for talent among the top concerns for directors.”
  • Harvard Business Review asks Does Your Board Need an Executive Chair?: “On February 2, 2021, Jeff Bezos announced that he would “transition to Executive Chair of the Amazon Board and Andy Jassy will become CEO.” While this change marked a major corporate governance shift for Amazon, executive board chairs have become increasingly common.”
  • Biztech news reports that FTSE Russell, Ping An jointly launch China ESG indexes: “The fissure could widen as Beijing promotes corporate governance with Chinese characteristics, with President Xi Jinping strengthening Party control among state-owned enterprises (SOEs). The Chinese government has in recently months been promoting its ESG disclosure framework for listed SOEs. More harmony with the West is seen around environmental issues. In August, China raised the bar for issuances in the country’s green bond market, taking a major step towards adopting global standards. ‘The environment has been a great consideration and concern in China, which is not at all at odds with an international perspective,’ FTSE Russell’s Fung said. Rival index publisher MSCI said in its 2023 ESG trend report that, following reopenings globally from COVID, focus ‘quickly shifted back to tackling climate change and attention there grew substantially, especially in China.’”
  • Global Times reports that Quality of Chinese listings steadily improves as nation shifts toward higher-quality devt: officials at key forum: “China has made substantial headway in improving the quality of listed firms, a microcosm of the economy's shift toward higher-quality development and its restructuring toward tech- and innoation-oriented growth, securities regulatory officials, bourse heads and business executives told an influential financial forum in Beijing on Tuesday. Citing robust statistics that point to a surge in listings and a structural transition to weigh toward emerging high-tech firms, they are betting on an improvement in regulatory supervision and revised listing rules to accommodate more innovative and growth businesses amid the national push for self-sufficiency in technology. The securities regulator has over recent years gone all out to push for reforms and trials of a registration-based IPO system, with continued optimization of IPO standards, tremendously boosting the appeal of the capital markets for premium firms, Li Ming, director of the Department of Listed Company Supervision of the China Securities Regulatory Commission (CSRC), said on Tuesday at a panel discussion of the Financial Street Forum 2022.”
Hong Kong
  • Bloomberg reports that Hong Kong and Singapore Spar for Green Finance Supremacy in Asia: “Hong Kong and Singapore have long squared off to be the preeminent finance hub for Asia. That battleground is now shifting to the ESG space, with potentially trillions of dollars at stake. From green bonds to carbon trading and asset management, both cities are angling to be the regional base for sustainable finance as governments and companies ramp up investments to fight climate change. Combined ESG assets could soar to $53 trillion by 2025, with Asia sparking the next leg of growth, according to Bloomberg Intelligence.”
  • Pension and Investment reports that Japan to ramp up scrutiny of ESG data providers with new guidelines: “Japan will soon be the first country to issue guidelines for ESG data and ratings providers as global regulators step up scrutiny of firms that measure companies on their environmental, social and governance practices. The Financial Services Agency is finalizing its draft code of conduct this month after receiving industry feedback, the regulator said. The draft guidelines, first published in July, outline voluntary principles to ensure the quality of the data and processes backing these ratings. "We hope that the code of conduct will improve the transparency and fairness of ESG data and assessment services, as well as the development of the ESG market," Hideki Takada, director for strategy development at the FSA, said in an interview.”
  • The Financial Times reports on Lessons from one woman’s ascent to a CEO job in Japan: “Makiko Ono’s rise at Suntory shows how much more is needed to correct gender imbalance”.
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