Monthly Roundup – July 2022
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Latest Georgeson publications
Spain: Georgeson’s Claudia Morante published an article with ESADE’s entitled “Closing the Proxy Season 2022: An Analysis of the Developments with Ibex-35 Companies” (“Cerrando la Temporada Proxy 2022: un análisis de lo sucedido en las compañías del Ibex-35”)

“The Annual Shareholders' Meeting season is over and it is a good time to take stock and take away some lessons learned from what we have experienced during these months, which will surely help us not only to have a better understanding of the trends in our market but also to better prepare ourselves for next year's meetings. Our contributor, Claudia María Morante, Head of Corporate Governance at Georgeson, analyses in her article the highlights of the season.” 
US: Georgeson’s Hannah Orowitz and Lee Anne Hagel wrote an article titled  “Early Trends from US 2022 AGM Season” for Governance

“So far this year, investors have cited climate change as a reason for opposing the election of a management-backed director at 225 U.S. companies, up from 157 in 2021 and 83 in 2020, according to shareholder disclosures. The preliminary 2022 data, which includes figures through July 7, was analyzed by Hannah Orowitz, U.S. head of environmental, social and governance at Georgeson LLC, which provides strategic shareholder services to corporations and shareholder groups.”

Georgeson in the media
US: Georgeson’s Hannah Orowitz is quoted in a Wall Street Journal article titled “More Investors Vote Against Corporate Directors Over Climate Change”

“So far this year, investors have cited climate change as a reason for opposing the election of a management-backed director at 225 U.S. companies, up from 157 in 2021 and 83 in 2020, according to shareholder disclosures. The preliminary 2022 data, which includes figures through July 7, was analyzed by Hannah Orowitz, U.S. head of environmental, social and governance at Georgeson LLC, which provides strategic shareholder services to corporations and shareholder groups.”

US: Georgeson’s Ed Greene is quoted in an IR magazine article titled “How to prepare for engagement with activist investors”

“Ed Greene, managing director of Georgeson, recommended IROs work across silos as part of their activist investor engagement strategy. ‘If your corporate secretary team or counsel team has had stewardship engagements with some of these groups, you’ve got to make sure the IR team knows that and vice versa,’ he said. ‘If someone asks a question after every earnings call, bring that back to the broader engagement team so people can know the different sides of the whole we’re talking about.’”

Italy: Georgeson’s data was used in Il Sole 24 Ore’s article titled “Historic overtaking on Piazza Affari: control of the increasingly listed funds” (“Sorpasso storico a Piazza Affari: controllo delle quotate sempre più ai fondi”)

The confirmation came from the last round of the shareholders' meeting: family groups are now in the minority, according to data provided by the consulting firm Georgeson

Georgeson events
Italy: Georgeson, in conjunction with Enel, hosted a conference titled “ESG: From Interaction to Integration” (“ESG dall'interazione all'integrazione”) on July 7

The agenda included discussions on Say-on-Pay resolutions and the future links between ESG strategy and executive remuneration. The presentations from the conference were covered by Il Sole 24 Ore, EticaNews, Il Giornale d’Italia, and among others.
Europe: Georgeson hosted a webinar about Institutional Investor Perceptions: A Temperature Check of How ESG Themes Are Influencing Voting and Engagement Decisions

The way institutional investors integrate ESG information into voting decisions has fundamentally shifted over the past few years. We have seen institutional investors rapidly sharpening their focus on everything from climate risk to gender diversity while companies scramble to adapt to evolving ESG requirements.

To help listed companies gain a clearer picture of investor ESG focus, Georgeson interviewed 20 global institutional investors representing $30.5 trillion assets under management in Europe, the UK and US about key topics including climate escalation, social escalation, ESG metrics and investor initiatives.

In this on-demand webinar, you’ll hear directly from investors including Vanguard and Robeco Asset Management about their views on emerging trends and future expectations.
Spain: Georgeson’s Claudia Morante presented the 5th edition of the Observatory on the Remuneration of Directors and Senior Managers in Listed Companies

For the fifth consecutive year, Willis Towers Watson, Georgeson and Cuatrecasas analyse the most topical issues in the remuneration of directors and senior executives of listed companies from the perspective of issuers, institutional investors and proxy advisors. In this edition we will pay special attention to the impact of sustainability on executive remuneration systems of listed companies.
Shareholder Activism
Environmental & Social
  • The Financial Times reports How women broke into the boardroom: “The 30% Club’s mentoring scheme, aimed at getting more women into board-level positions, is now 10 years old. How much has it achieved?”
  • Responsible Investor reports that Asset managers under fire over voting power on both sides of the Atlantic: “US lawmakers are seeking to strip managers of proxy voting powers for wokeness while UK funds push them on ESG standards. Managers also have concerns over split voting efforts on the other side of the Atlantic. Rebeca Coriat, head of stewardship at Lombard Odier Investment Management, said that split voting would dilute the firm’s engagement power.”
  • The Financial Times reports that HSBC installs Communist party committee in Chinese investment bank: “Lender is highly exposed to escalating geopolitical rivalry between China and west.” 
European developments
  • The Financial Times reports how the Audit watchdog to overhaul UK corporate governance code: “FRC lays out plans to make boards more accountable for fraud and company finances”. Read the FRC’s position paper discussing the new UK Code here: “In particular, the Position Paper sets out proposed changes to the UK Corporate Governance Code. This will provide a stronger framework for reporting on the effectiveness of internal controls and Board responsibilities for expanded sustainability and ESG reporting, and new guidance on enhanced resilience statements and fraud reporting by directors.”
  • The Financial Times reports how Pre-emption changes should force modernisation for London: “Aims of capital market review rely on a more fundamental overhaul and digitisation of market infrastructure”. Read the Government’s UK Secondary Capital Raising Review. “The UK Secondary Capital Raising Review, led by Mark Austin, was launched on 12 October 2021 to look into improving further capital raising processes for publicly traded companies in the UK.”
  • The Financial Times reports that the UK aims to set the pace for corporate net zero plans: “Policymakers want to make the country a world leader in green finance, but without scaring businesses away.”
  • The Financial Reporting Council publishes Guidance on running effective AGMs:  “With input from a wide range of stakeholders, the guidance gives practical advice to help companies ensure that their AGMs are well-run constructive forums for effective engagement. It covers key aspects such as board engagement with shareholders, communication of meeting arrangements, using proxies, and voting processes.”
  • The Financial Times argues The rising risk of ‘audit orphans’ in a dysfunctional UK market: “UK market Regulator Sir Jon Thompson flags the increasing chance that a large listed company is left without an auditor.”
  • The Financial Reporting Council announced that New research shows positive impact of revised Stewardship Code: “The research, which took evidence from 55 asset managers and owners, found that both groups are very positive about the impact of the Code and that there was strong evidence of material changes to practice in the areas of governance, resourcing, stewardship activities, outcomes and reporting.”
  • The Wall Street Journal argues that Porsche Is a Great Company. Shame About the Governance. “The German sports-car brand needs to reassure investors that it can act independently of its owner, Volkswagen.”
  • The Financial Times Reports Herbert Diess ousted as Volkswagen boss: “Volkswagen’s chief executive Herbert Diess, the architect of the German carmaker’s multibillion-euro push into electric vehicles, will leave the company within weeks after being forced out by union bosses.”
  • The Financial Times reports that Wirecard’s former top accountant admits forging documents for KPMG special audit: “Stephan von Erffa said fabricated payment authorisation was an isolated event. Wirecard’s ex-head of accounting has admitted to forginf documents requested by KPMG during a special audit, ahead of a trial that is set for later this year, according to people familiar with the matter.”
  • The Financial Times argues that the DWS woes put spotlight on the limits of its independence: “Asset manager is listed but German corporate structure allows parent Deutsche Bank to call the shots […] Unlike the process for most public companies, Hoops was appointed chief executive without the need to seek approval from the supervisory board because of the idiosyncratic German structure that Deutsche chose for the DWS listing, known as a KGaA. It combines elements of a limited partnership and a stock corporation. In effect, the influence of minority shareholders is small.”
North America
United States
  • SCMP reports that China’s new ESG disclosure guidelines need a forward-looking slant for international alignment, experts say. “A set of voluntary corporate sustainability disclosure guidelines launched in China last month has provided a good starting point for regulators to set future requirements, but more forward-looking disclosures will be needed for China to align with international norms, according to experts. The reporting guidelines, drafted by over 80 think tanks and companies and comprising 127 environmental, social and governance (ESG) metrics and 373 sub-metrics, is the first China-focused ESG disclosure standard. Nearly 40 per cent of the metrics pertain to environmental matters. Published by the China Enterprise Reform and Development Society (CERDS), a state-backed think tank, its metrics are mostly aligned with international standards.”
  • Reuters reports that Chinese tech giants vow to stop NFT secondary trading -state media: “Chinese tech giants including Tencent Holdings (0700.HK) and Ant Group have signed a pact to stop the secondary trading of digital collectibles and ‘self-regulate’ their activities in the market, Chinese state media reported on Thursday.”
  • Reuters reports that China IPO applications jump, bucking global trend, as COVID curbs ease: “A spike in listing applications from Chinese companies in June has nearly doubled China's IPO candidates to almost 1,000, the highest in at least three years, potentially making the country a bright spot for bankers as equity offerings slow in other markets.”
  • The Financial Times reports Overseas investors mired in fight for control of Chinese developer Nam Tai: “Feud casts rare spotlight on challenges for outsiders navigating country’s property industry.” 
Hong Kong
  • SCMP reports that Hong Kong Securities and Futures Commission CEO Ashley Alder to leave post in January to join UK regulator as chairman: “Ashley Alder, the CEO of Hong Kong’s Securities and Futures Commission since 2011, will leave his post to join UK regulator Financial Conduct Authority (FCA) in January 2023, the commission said on Friday morning. The government will undertake a global search for a replacement. Alder, whose contract was set to end in September 2023, is the commission’s longest serving CEO.”
  • SCMP reports that Hong Kong’s listed firms set for more climate risk reporting, with roll out of new consolidated ISSB standards on the horizon: “Financial executives at listed companies in Hong Kong should brace themselves for more climate risk reporting duties, with a new set of international standards expected as soon as next year. The International Sustainability Standards Board (ISSB), a new body set up late last year to consolidate various standards for environmental, social and governance (ESG) reporting, is conducting public consultations on its proposed standards until July 29.”
  • SCMP reports that Hong Kong to benefit as China’s carbon neutral goal and urbanisation drive commodities in post-pandemic era, HKEX CEO says: “China’s 2060 carbon neutrality goal and urbanisation will be key drivers of demand for commodities globally in the post coronavirus pandemic era, creating huge opportunities for Hong Kong, according to Nicolas Aguzin. ‘As the world recovers from the pandemic, the London Metal Exchange [LME] has seen increasing participation by clients from China,’ Aguzin, CEO of bourse operator Hong Kong Exchanges and Clearing (HKEX), which owns the UK exchange, told the LME Asia Metals Seminar 2022 on Tuesday.”
  • The Wall Street Journal reports that After 91% Drop, Hong Kong’s IPO Market Shows Signs of Life: “Hong Kong’s equity capital markets are perking up, after a punishing first half for what has long been one of the world’s largest venues for stock issuance. A recovery in initial public offerings and other share sales would be welcome news for the many companies eager to tap investors in the city for funds. It would also be a boost for global investment banks, after a lean period in which they have brought fewer companies to market, often via much smaller deals than in the good years.”
  • Bloomberg reports that UK Politicians’ Concern Over HSBC China Communist Committee: “British politicians have criticized HSBC Holdings Plc after a report that a Chinese communist party committee was set up at its local investment banking arm. Chris Bryant, a former Labour government minister and member of the UK parliament’s foreign affairs committee, said the development should ‘worry’ HSBC. Bryant’s concerns were echoed by Alistair Carmichael, a British lawmaker in the Liberal Democrat party. ‘For a group that is headquartered in the UK to be accommodating the Communist Party of China in this way shows a woeful lack of governance and a woeful lack of judgement in the boardrooms that authorize this,’ said Carmichael, who chairs a UK political group focused on Hong Kong.
  • Institutional Investor Advisor Services argues that India Inc’s remuneration levels needs to be reined in: “Early signs in 2022 suggest that once again, the growth in remuneration will outpace revenue and profit growth. Compensation levels are increasing, and remuneration disclosure levels are decreasing. Nomination and Remuneration Committees are unable to build tangible contours for compensation, resulting in runaway payments.”
  • Mint reports on All that shareholders need to know before attending an e-AGM: “It is the annual general meeting (AGM) season. And, shareholders of listed companies can take part in these meetings from the comfort of their homes now. The ministry of corporate affairs has allowed companies whose AGMs are due in 2022 to conduct such meetings through video conferencing or other audio-visual means (OAVMs) till 31 December.” 
  • The Telegraph reports Ben & Jerry's forced to end Israel boycott: “Unilever has blocked Ben & Jerry's from boycotting Israel by selling the ice cream brand’s operations in the country to a local manufacturer. Consumer giant Unilever slapped down efforts by Ben & Jerry's to take a political stance in the region, saying it "rejects completely and repudiates unequivocally any form of discrimination or intolerance". Last summer, Ben & Jerry’s had claimed selling into occupied Palestinian territory was "inconsistent with our values" and said that it would not be renewing its licence agreement with its franchise partner in Israel. However, owner Unilever on Wednesday said it had overruled its subsidiary and sold the ice cream maker's local operations, following consultation with the Isreali government.” 
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Head of Governance UK and Europe

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