Monthly Roundup – February 2022
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Latest Georgeson Publications
US & Global: BlackRock Updates 2022 Proxy Voting Guidelines and Stewardship Expectations and Publishes Annual Letter to CEOs
Georgeson has published a memo covering the BlackRock updates to their 2022 Proxy Voting Guidelines and Stewardship Expectations as well as their Annual Letter to CEOs. 
Australia: AGM Intelligence Report 2022 Exploring the changing AGM landscape in Australia
Georgeson and Computershare have published our 2022 AGM Intelligence Report exploring the changing AGM landscape in Australia 2022. “During 2021, Computershare supported our Australian clients to successfully deliver over 900 meetings, 736 of which were AGMs. Throughout the year we witnessed a slight increase in the volume of in-person meetings, given certain states were unimpeded by lockdowns and restrictions as the year progressed. This trend was accompanied by shareholders continuing to use digital channels such as Proxymity and InvestorVote to lodge their votes online. Computershare and Georgeson continue to engage and foster relationships across industry, government and the broader market to provide leadership and promote change.
Georgeson in the media
US: Georgeson’s Don Cassidy and Rajeev Kumar were quoted in Agenda in an article entitled “Vanguard, State Street Zero In on Overboarding Policies”
“Institutional investors are urging nominating and governance committees to take a more direct oversight role in assessing director capacity.”
US: Georgeson’s Hannah Orowitz was quoted in Harvard Law School’s Forum on Corporate Governance
“To communicate your company’s ESG story and achievements while meeting investor expectations, you need effective investor engagement. Whether you’re hosting roadshows, investor days, issue-specific multi-stakeholder discussions or one-on-one engagements with investors or proxy advisors, you need to be transparent, accountable and prepared in order to build credibility with investors and gain support when it comes to voting.”
Spain: Georgeson’s Carlos Saez Gallego was quoted in Expansión in an article about “What issues will investors watch at 2022 meetings?”
“Climate change, CEO succession, diversity, remuneration and non-financial reporting , among the trends that will mark voting decisions. Nearly two years later, the pandemic continues to test corporate governance.”
Georgeson Events
Germany: Georgeson’s Matthias Nau spoke at Computershare’s Kompaktseminar HV 2022
“Live from the virtual Computershare compact seminar AGM with over 200 participants, 7 speakers, 5 presentations! Practical update on the virtual AGM season 3.0, shareholder identification according to ARUGII and Proxy 2022 with Shareholder Engagement Services - all important information around the most important topics 2022 compactly summarised.”
Spain: Georgeson’s Carlos Saez and Claudia Morante spoke at an event entitled “How to prepare for the 2022 AGM Season”
“On February 15 we published the 11th edition of ‘Corporate Governance and Institutional Investors. Preparing for the 2022 Shareholders' Meeting Season’, a guide jointly developed by Georgeson and Cuatrecasas to help Spanish listed companies prepare for their next general shareholders’ meeting, anticipating the possible demands of institutional investors and proxy advisors.” See the full report here. The report and presentation were covered in Expansión, Cinco Días, El Economista, Consenso del Mercado and Lawyerpress.
Shareholder Activism
  • The Financial Times reports that As Ukraine tensions mount, concerns rise over defence and ESG. “Now is not the time to desert companies we rely on for our security, warns Latvian deputy prime minister.”
  • The Economist reports about Who buys the dirty energy assets public companies no longer want? “The first law of thermodynamics states that energy cannot be created or destroyed, just transferred from one place to another. The same seems to apply to the energy industry itself. Pressed by investors, activists and governments, the West’s six biggest oil companies have shed $44bn of mostly fossil-fuel assets since the start of 2018. The industry is eyeing total disposals worth $128bn in the coming years, says Wood Mackenzie, a consultancy. […] But much of the time these outmoded units are not being closed down. Instead they are moving from the floodlit world of listed markets to shadier surroundings.”
  • The Financial Times reports that Climate targets oversight group under scrutiny over its own governance. “Science Based Targets initiative makes changes after complaint about transparency and potential for conflict of interest.”
  • MSCI has published a post about Say on Climate: Investor Distraction or Climate Action? “Management-sponsored say-on-climate votes emerged as a new avenue for investor engagement on climate change in 2021. The practice’s adoption may increase as more companies try to sell investors on their climate strategies. Most say-on-climate votes in 2021 (58%) were one-time events, with only 24% of votes set to have annual follow-ups. This may fuel concerns that say on climate could be a distraction or facilitate greenwashing. Say-on-climate votes in 2021 were mostly at companies with emission trajectories aligned with the Paris Agreement, but companies with less-aligned paths have set votes in 2022. Shareholders may use those to sound the alarm.”
  • The Financial Times reports that MSCI ESG indices’ outperformance needs scrutiny, experts caution. “The indices were not only aided by stock selection, but inclusion of oil and gas could confuse some investors.” 
European developments
  • The Commission Deutscher Corporate Governance Kodex has published for consultation and explained the proposed amendments to the Code concerning German listed companies. “Environmental and social sustainability must be considered when managing and supervising listed companies. The German Corporate Governance Code (the Code) wants to take this into account by making the respective adjustments. In addition, the German Financial Market Integrity Strengthening Act (Finanzmarktintegritätsstärkungsgesetz – “FISG”) requires further changes.” The consultation closes on 11 March 2022.
  • The Federal Ministry of Justice has published an announcement about the Continuation of the virtual shareholders’ meeting. “Due to the COVID-19 pandemic, the possibility was created to hold general meetings exclusively in virtual format. Against the background of the fundamentally positive experience and the ongoing digitization of stock corporation law, the virtual general meeting is to be introduced as a permanent regulation in the Stock Corporation Act (AktG). To this end, the Federal Ministry of Justice published a draft bill today and sent it to the federal states and associations.”
  • Fonds Professionell Online reports about Deka-ESG head: “Activists seize the sustainability issue”. “At AGMs, motions for more climate action are often rebuffed - even by asset managers who otherwise beat the drum for sustainability at every opportunity. How can this be? Deka top manager Ingo Speich answers questions from Fonds Professionell Online.”
  • The Financial Times reports that Former German chancellor Gerhard Schröder nominated to join Gazprom’s board. “Proposed appointment to Kremlin-controlled group comes as tension rises over Ukraine and gas supplies in Europe.”
  • The Bank of Italy says that it steps up its action on climate risks and sustainable finance. “To further boost its sustainability actions, the Bank of Italy has decided to set up a Climate Change and Sustainability Committee. The Committee, presided over by a member of the Governing Board, will contribute to defining the Bank's sustainable finance strategy. The Bank has also set up a Climate Change and Sustainability Hub, composed of experts on sustainable finance, which will monitor the debate on the subject, stimulate and coordinate analyses, and facilitate the sharing of information among the participants in the various national and international working groups. The Hub will also cooperate with similar units recently created at the European Central Bank and some other national central banks.”
  • Il Sole 24 Ore reports about ESG, why SMEs must push on with green transition. “According to an Euler Hermes study, 50% of Italian companies are in favor of changing in terms of ESG, as it’s a business accelerator.”
  • Teleborsa reports that On ESG, Intesa Sanpaolo presents a workshop for enterprises. “A €500 million plafond to local SMEs for sustainable development in support of the National Recovery and Resilience Plan.”
The Netherlands
  • The Dutch Corporate Governance Code Monitoring Committee has published a Proposal to update the Dutch Corporate Governance Code. “On 21 February 2022, the Corporate Governance Code Monitoring Committee submitted for consultation a proposal to update the Dutch Corporate Governance Code. The proposed updates will affect the Code’s guidelines regarding long-term value creation, diversity and inclusion, and adjustments due to changed law and regulations such as the introduction of the statutory cooling-off period and the new rules in the field of the remuneration policy and the remuneration report. The Committee announced an eight week consultation period until 17 April 2022. Taking into account the responses, the aim is to adopt the amended Code this year and send it to the cabinet with a request for the amended Code to be legally established. The Code could then enter into force from 1 January 2023.” 
  • Cinco Días reports that AENOR launches the first Good Governance certification in Spain. “Prosegur and its listed subsidiary, Prosegur Cash, have been the first entities to be certified, followed by Banco Santander and CaixaBank, both financial entities present in the IBEX 35. In this way they show their interest in advancing in corporate values ​​and in strengthening governance. These companies are an example of the interest shown by large corporations and listed companies in the first certification on this subject in Spain, which AENOR launched just a few months ago.”
  • highlights the War between the CNMV and the Government for the use of spies to shield the Ibex. “The draft reform of the National Security Law contemplates the creation of an information structure linked to the Government that the sources consulted by MERCA2 indicate will become “ a kind of economic CNI to monitor and recommend actions on the shareholding of companies Spanish companies considered strategic”. An intervention that some consider a serious attack against the free market and that, with the excuse of protecting national security, institutionalizes the interference of public powers in the ownership of companies.”
  • Consenso del Mercado report that The Ibex-35 companies have made progress in the management and reporting of ESG risks -especially those related to good governance and the environment- but they still have a long way to go. “The Report indicates that the percentage of Ibex-35 companies that have a specific committee with responsibilities in matters of sustainability on the Board of Directors has gone from 44% to 76% in one year, and that 35% already incorporates specialist profiles in ESG to this body. In addition, 44% have already incorporated ESG criteria in the remuneration of their governing bodies and 94% have a short-term sustainability strategy. But it also indicates that the strategy chapter is “ probably the aspect in which there is still more work ahead for IBEX-35 companies, since only 26% report their long-term risks and 35% mention having with a long-term ESG strategy”. In this sense, it is noteworthy that the new European Union Corporate Sustainability Reporting Directive (CSRD), of April 2021, which will be mandatory from fiscal year 2023, imposes a prospective approach to sustainability reports.”
  • Cinco Días reports that the BBVA hires the former European commissioner Connie Hedegaard for the board and increases the presence of women to 40%. “The Board of Directors of the financial institution will increase the number of female directors from five to six, out of a total of 15 members, and will thus reach its goal of having at least 40% women before the end of 2022, according to with its Selection, Suitability and Diversity Policy. In addition, it will maintain a majority of independent directors (66.67%) and 40% international directors.”
North America
United States
Hong Kong
  • The Wall Street Journal reports that Elliott Management to Sell Stake in Hong Kong Bank, Ending Activist Campaign. “A deal, if concluded, would follow years of tense relations and a long slide in Bank of East Asia’s stock price. One of the longest-running shareholder activism battles in Asia is coming to an end.”
  • The South China Morning Post reports that In a first, Hong Kong to issue green bonds worth US$768 million to city’s retail investors. “Hong Kong will issue retail green bonds worth up to HK$6 billion (US$768.8 million) beginning March 1, allowing residents to participate in the sustainable development of the city, the government said on Tuesday. The bonds, which will have a tenor of three years, will make an interest payment every six months based on the average rate of the consumer price index over that half-year period, with a guaranteed minimum payment of 2 per cent.”
  • The South China Morning Post reports that How lack of insurance for SPAC directors threatens to derail M&A deals under Hong Kong’s new listing regime. “The Hong Kong stock exchange, a latecomer to SPACs, allowed their listing in January. This came after a broad consultation that resulted in some of the most stringent requirements compared with other markets such as the US, UK and Singapore. The dearth of insurance that protects directors of special purpose acquisition companies (SPAC) from legal liability could hold back mergers and acquisitions and prove to be a setback for Hong Kong’s new listing regime, according to sponsors and insurance players. The lack of so-called directors and officers (D&O) liability insurance in Hong Kong has been cited as a risk factor by sponsors of SPACs – shell companies that raise funds through a share sale and use the proceeds to buy assets within a limited period of time. Only a few insurers provide such coverage and those that do charge a high premium, which could make it difficult for SPAC sponsors to fulfill their ultimate goal of delivering a return to investors through mergers with target companies, according to several SPAC applicants pursuing listings in Hong Kong.”
  • Lexology reports that Deadlines looming for SFC ESG and climate-related requirements. “The Securities and Futures Commission's (SFC) enhanced disclosure guidelines for SFC-authorized units and trusts and mutual funds that identify themselves as ESG funds i.e. incorporate ESG factors as their key investment focus and reflect such in the investment objective and/or strategy came into effect 1 January 2022. Superseding its 2019 equivalent, the rules apply to management companies of SFC-authorized unit trusts and mutual funds.” 
  • The South China Morning Post reports that New Zealand to lower barriers to Chinese investment under upgraded trade deal. “In a brief statement on Tuesday, the Chinese Ministry of Commerce said the two nations had completed domestic approval procedures and the deal, effective from April, would ‘further promote trade and investment exchanges’ and ‘jointly promote the development of economic and trade relations to a higher level’. The ratification of the new version of a deal first agreed in 2008 comes after five years of negotiation. It covers new areas including e-commerce, public procurement and competition policies, as well as measures on environmental protection that are believed to be the strongest China has committed to in any free-trade agreement (FTA). The agreement with New Zealand also includes a pledge by China to further open up its aviation, construction, shipping and finance sectors.”
  • Asia Financial reports that China Poised to Boost Global ESG-Labelled Bond Issuance. “ESG-labelled bonds are likely to become bigger features of emerging world sovereign and corporate debt markets. After two years of subdued activity, China’s pledge to reach carbon neutrality by 2060 has prompted a surge in green bond issues from non-financial Chinese corporations and financial institutions in 2021. Green bonds are those of which the proceeds are used to finance eligible green projects such as renewable energy, energy efficiency and pollution control.“Analysis from IIF and Pictet Asset Management investment teams reaffirms our view that there is set to be a silent revolution in fixed income markets that will benefit investors, the environment and society.”
  • ISS has published a post about The Governance of Banking Boards in Israel. “Israeli banking rules appear to encourage competition for board seats at banks without controlling shareholders. Banks often have unique status as the trustees of public wealth and investments. Consequently, Israel’s major banking regulator, the Supervisor of Banks, imposes particular rules, especially upon banking boards. Most notably, the board of directors must comply with Regulation 301 of the Code of Proper Conduct of Banking Business, which lays out a number of standards for individual directors’ qualifications and independence.” 
  • The Australian Financial Review highlights It will be business as usual in proxy status quo. “What we will instead get is a return to the status quo. Proxy advisers will go back to providing an important but moderately influential source of accountability for financial markets.”
  • The Financial Standard Sustainability says Proxy adviser reforms overturned by Senate. “On a vote of 29 votes to 25, the Senate disallowed the new regulations that were announced by Treasurer Josh Frydenberg in December without consultation to stakeholders including the impacted proxy advisory firms.”
  • The Australian Financial Review informs Big emitters shun new carbon reduction program. “Some of Australia’s largest carbon emitters won’t sign up to the Clean Energy Regulator’s voluntary scheme to monitor a company’s carbon emissions on the path to net zero emissions by 2050, saying they already report their efforts to shareholders.”
  • The Australian Financial Review reports ASIC expands insider trading investigation into super. “The corporate regulator has almost doubled the size of its investigation into the superannuation sector as it examines the investment switches made by 127 retirement fund executives and considers launching four insider trading cases.”
  • The Financial Standard Sustainability says CFOs see ESG action as central: Deloitte. “A strong majority of Australian CFOs say that ESG activities are driven by investor or shareholder demands, but say that measuring return on ESG action is a top barrier to doing more, according to research from Deloitte.”
  • The Australian Financial Review reports Businesses are underestimating net zero timeline: EY’s Blair Comley. “Carbon credits will become “scarce and expensive”, says one of the architects of Australia’s emissions offset scheme, Blair Comley, who warns that high-polluting businesses cannot afford to delay critical decisions about their industries.”
  • The Wall Street Journal reports that Report commissioned by company finds nearly half of workers have experienced bullying, 28% of women have been sexually harassed. “The misconduct was detailed in a report commissioned last year by Rio Tinto and published on Tuesday. The report found that 48% of employees had experienced bullying and that 11% of staff had been sexually harassed. In both instances, women were disproportionately affected. The report by former Australian Sex Discrimination Commissioner Elizabeth Broderick followed surveys filled out by 10,000 employees online, more than 100 group listening sessions, 85 confidential individual sessions and close to 140 individual written submissions.”
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