Monthly Roundup – June 2022
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Latest Georgeson publications
US: Georgeson has published its Early 2022 US AGM Season Data
There has been a record-breaking volume of shareholder proposal submissions on environmental, social and governance (ESG) issues at the annual meetings of Russell 3000 companies so far this year, according to Georgeson. In its 2022 Early Proxy Season Review, the strategic shareholder services provider shows that shareholders submitted 924 ESG shareholder proposals at Russell 3000 companies between July 1, 2021 and May 16, 2022, compared to 837 during the 2021 season and 754 in 2020. This Georgeson publication has also been reported on by the media. You can read about it in the Financial Times, Politico, Axios and more.
UK: 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 in April and May of 2022. During the period, 157 FTSE 350 companies held their AGM. Ten of these issuers received more than 20% opposition on their remuneration reports. 

Spain: In conjunction the with Club de Excelencia en Sostenibilidad, Georgeson published the 7th edition of the Observatory on ESG Investment

For the seventh consecutive year, Georgeson and the Club de Excelencia en Sostenibilidad present a new edition of the ESG Observatory, whose objective is to identify the main trends in this field is to take stock of the main concerns of investors in this field. Georgeson’s Claudia Morante and Carlos Saez Gallego presented the report at the IE Business School in Madrid.

Georgeson in the media
Global: Georgeson’s Cas Sydorowitz is quoted in Reuters article titled Where have all the shareholder activists gone? Campaigns slow amid market turmoil.

"An activist isn't in the business to run proxy fights," said Cas Sydorowitz, global head at Georgeson, which provides shareholder engagement, proxy solicitation and governance services. "They are in the business to generate an outsized return for their clients." This year, few activists are doing that. Indeed, in the first five months of 2022, activists rank among the worst performers in the broader hedge fund industry, posting an average loss of 13% for the year through the end of May, according to data from Hedge Fund Research. More recent data has not been compiled yet.
US: Georgeson’s Brigid Rosati was quoted in the AP’s article titled California Sees Rapid Acceleration of Women on Boards Since Passage of SB 826

Another milestone in the path toward diversity is 358 companies had at least 40% representation of women on their boards by the end of Q1 2022, up from 256 companies in Q1 2021. “It’s encouraging to see the 40% growth in companies with more than 40% of women on their boards this quarter,” said Brigid Rosati, Managing Director, Business Development and Corporate Strategy, at Georgeson. “More U.S. companies are closer to achieving parity on their board this year.”
Spain: Georgeson’s Global Institutional Investor Survey is quoted in Expansión’s article titled 95% of Investors Support Linking ESG to Executive Compensation (“El 95% de los inversores apoya incular la ESG a los sueldos”)

“95% of institutional investors support linking ESG (environmental, social and governance) metrics to executive compensation, according to a survey conducted by proxy solicitor Georgeson. While there is still some way to go to achieve ESG-related compensation, respondents recognise the potential benefits of aligning executive pay to environmental, social and governance criteria.”
US: Georgeson’s Ed Greene is quoted in the IR Magazine’s Summer 2022 Issue: Why the Great Recovery is an IR reconnaissance?

“Edward Greene, managing director with Georgeson, is also not convinced that speedier Schedule 13D filing will have much of an impact on professional activists. He is more interested in an element of the proposal that would mean holders of certain cash-settled derivative securities are ‘deemed’ beneficial owners of the reference equity securities. This could limit activists’ ability to stay under the 5 percent threshold and may mean they appear earlier than previously, he points out.”
Georgeson Events
Europe: Georgeson is hosting 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. In 2021 and 2022 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 AUM in the UK, Europe and US about key ESG topics including climate escalation, social escalation, ESG metrics and investor initiatives. In this webinar, you’ll hear directly from investors including Vanguard, Robeco Asset Management and Invesco about their views on emerging trends and expectations moving forward.
Italy: Georgeson, in conjunction with Enel, is hosting a conference titled “From Interaction to Integration” (“dall'interazione all'integrazione”) on July 7

The agenda includes discussions on Say-on-Pay resolutions and the future links between ESG strategy and executive remuneration.
US: Georgeson is hosting a webinar titled Advance Your Company’s ESG Practices: Practical Guidance to Make Progress

ESG considerations are a part of nearly every aspect of the corporate ecosystem and have reached the core of many strategic business decisions. With SEC rulemaking on the horizon, a divergence in ESG ratings and evolving investor policies, priorities and voting behavior, addressing ESG matters is imperative for every company. Join this webinar to hear a discussion of notable proxy season takeaways, a temperature check on what the analyst community is thinking and practical guidance that should be considered as companies tackle ESG integration. 
Germany: Georgeson’s Matthias Nau spoke at the DIRK Conference in Frankfurt on June 20 and 21

Matthias spoke about the changing ESG landscape, including its impact on executive remuneration, voluntary say-on-pay resolutions and shareholder proposals – from the point of view of investors and issuers.
Europe: Georgeson’s Cas Sydorowitz and Computershare’s Kirsten van Rooijen joined a Hogan Lovells webinar titled “2022’s Return of the Shareholder Spring: ESG Disruptors take hold of this year’s AGM” on June 15 

A wave of shareholder unrest has rocked this year’s AGM season for some companies, with activists disrupting order and ramping up pressure on boards to meaningfully tackle key ESG issues. Join us for our analysis and discussion of the AGM season so far when we will cover the latest global market activist trends and developments, discuss their practical impact on your AGMs and outline our predictions for the shape of the future AGM.
Asia: Georgeson’s Cas Sydorowitz featured in a Beyond the Boardroom podcast titled “What is trending in Asian Acitivism?”

Kieran Poole is joined by Cas Sydorowitz of Georgeson and Alicia Ogawa of Columbia Business School as well as Insightia's Rebecca Sherratt to discuss our latest report, Shareholder Activism in Asia 2022. Cas is global head of Georgeson and responsible for its global activism and M&A practice, while Alicia Ogawa is the director of the Project on Japanese Corporate Governance and Stewardship at Columbia Business School’s Center on Japanese Economy and Business.
Shareholder Activism
Environmental & Social
  • Bloomberg reports that Deutsche Bank, DWS Raided Over Allegations of Greenwashing: “Deutsche Bank AG and its asset management unit had their Frankfurt offices raided by police, adding to the legal headaches facing Germany’s largest lender. Law enforcement officials on Tuesday morning entered the twin towers where Germany’s largest lender is headquartered, as well as the nearby premises of DWS Group, according to a statement from the prosecutor that confirmed an earlier Bloomberg report. The search is related to accusations of greenwashing against the asset manager.” Separately, the Wall Street Journal reports that the SEC Is Investigating Goldman Sachs Over ESG Funds: “Regulator’s civil probe focuses on bank’s mutual-funds business, according to people familiar with the matter.”
  • The Financial Times reports that Regulators take aim at ESG ratings in fight against greenwashing: “Governments and watchdogs focus on transparency, conflicts of interest and validity of metrics”.
  • IPE reports on Stuart Kirk and the ‘fault line in the ESG debate’: “ESG investing has been coming under intense scrutiny recently. Last year there was Tariq Fancy’s attack on ESG and greenwashing, for example, and then news broke about investigations of alleged greenwashing by DWS.”
  • Reuters reports that Corporate America looks for leeway on U.S. climate disclosures: “Groups including the U.S. Chamber of Commerce, the Bank Policy Institute, the National Association of Manufacturers (NAM) and the American Petroleum Institute (API) asked the Wall Street regulator for more discretion in the details they provide to investors, according to public correspondence sent to the agency.”
  • ESG Today reports Over 70% of Execs Lack Confidence in Their Own ESG Data Reported to Stakeholders: “For the report, “ESG Reporting Global Insights 2022,” Workiva commissioned a survey of 1,300 senior decision makers at businesses with over 250 employees, across a broad range of sectors and 13 global markets. Each respondent to the survey participated in their organizations’ ESG reporting and strategy.”
  • ESG Clarity reports SEC’s climate disclosure proposal hits nerves: “The SEC’s ambitious plan to make public companies report their climate risk is getting mixed reception from the investing world, with Scope 3 emissions disclosure among the most controversial aspects.”
  • Corporate Knights reports Mastercard ties ESG to all employee pay: “In response to heavy lobbying by institutional shareholders who see climate change as an existential risk, some 25% of U.S. public companies now include some form of environmental or social metric as part of their executive incentive plans, says proxy advisory firm Glass Lewis & Co. That’s up from just 16% two years earlier.”
  • The Financial Times reports on The war on ‘woke capitalism’: “Rightwing populists and industry sceptics are mounting a backlash against a vision for business that looks beyond profits.”
  • The Responsible Investor reports that BlackRock opposes racial justice audits at McDonald’s and Chevron: “Investment behemoth discloses opposition, despite committing to undergo a similar audit and supporting a racial audit proposal at Johnson & Johnson last year.”
  • IPE published an article titled Ahead of the curve: tie executive pay to climate targets: “AllianzGI and Cevian Capital take very different approaches to how we manage equity portfolios, but we are both long-term and active owners of companies. Following a series of conversations about how to best implement ESG criteria in our portfolios, we have found a common perspective.”
  • Trym Riksen posted piece on LinkedIn titled ESG in Practice: Small is ugly:  “Big is beautiful. That is the clear message from the ESG rating companies. On average, bigger companies get higher ESG ratings than smaller companies”.
  • The Financial Times reports on the The holes in holistic ESG indices: “Choices over inclusion in benchmarks of goodness are dubious in nature”
  • The Financial Times reports that Glencore and BHP say methane from ‘gassy’ open-cut coal mines cannot be captured: “Satellite imagery suggests emissions may exceed what mining companies have been reporting”.
  • The Wall Street Journal reports that Investors Balk at Tough Climate Proposals: 2022 Proxy Voting Roundup: “Votes on environmental and social issues increased by more than a third while those on racial-justice reporting more than doubled”.
  • Financial Times reports that Asset managers told to clean up greenwashing and net zero claims: “Financial regulators clamp down on companies misleading investors by overstating the greenness of their funds”
  • The Financial Times reports that Stakeholder capitalism is ‘not woke’, says JPMorgan’s Jamie Dimon: “Chief executive pushes back against criticism of corporate America’s environmental and social agenda.”
  • Reuters reports that BlackRock extends AGM vote choice to more equity index clients: “BlackRock (BLK.N), the world’s biggest asset manager, said on Monday that clients owning nearly half of its $4.9 trillion in equity index assets were now free to control how votes are cast at the annual meetings of the companies in which their funds invest. The move marks an expansion of BlackRock's 'Voting Choice' programme, launched last October by the New York-based company, which manages around $10 trillion in assets, and which aims to offer institutional clients more say on topics that matter to them. The programme comes during a tumultuous period for the asset manager as it faces criticism in the United States and elsewhere over the way it votes on behalf of clients on issues including climate change, diversity and executive pay. Since launch, clients holding $120 billion of assets have opted to take control of the voting process, taking total assets covered by the programme, including clients in segregated mandates, to $530 billion, it said.”
  • Reuters reports that Pension investors launch campaign against dual-class share structures: “Leading UK and U.S. pension investors managing more than $1 trillion have launched a campaign to stop companies using dual-class share structures that concentrate voting power in the hands of certain shareholders at the expense of others. Launched by British railways pensions scheme Railpen and the non-profit Council of Institutional Investors (CII), others backing the Investor Coalition for Equal Votes (ICEV) include the New York City Comptroller's Office and the Washington State Investment Board. Companies with dual-class structures have two or more types of shares with different voting rights - usually one with greater voting rights for founders or early investors, and another for other shareholders with less voting power. The imbalance means most investors have less control over how the company is run and can make it harder to collectively push back on issues such as executive pay and corporate strategy.”
  • The Economist argues Why Proxy advisers are losing their power: “The golden age for ISS and Glass Lewis is over”.
  • The Financial Times reports that EY plans global audit spin-off in drastic Big Four shake-up: “Sweeping overhaul would allow firm to escape conflicts of interest with consulting business that dog the industry.”
  • The Wall Street Journal reports on The 70 BlackRock Analysts Who Speak for Millions of Shareholders: “The firm’s investment stewardship team votes $4.6 trillion worth of shares for passive investors; ‘it can feel like a lot of power’”.
European developments
  • The DCGK announced that New German Corporate Governance Code in force: “Following the latest reform, the Code puts particular emphasis on sustainable corporate governance. The management board shall systematically identify and assess the opportunities and risks for the company associated with social and environmental factors, as well as the environmental and social impacts of the company's activities. Also, environmental and social goals shall be taken into account in corporate strategy and planning.” The English version of the Code can be found here and the German version can be found here.
  • The German Bundestag reported on the Disagreement on bill on virtual general meetings (“Uneinigkeit über Gesetz entwurf zur virtuellen Hauptversammlung”): “The coalition factions want to permanently establish the so-called virtual general meeting of stock corporations introduced in the course of the pandemic . A corresponding draft law […] was discussed in a public hearing in the Judiciary Committee on Wednesday, June 22, 2022. The opinions of the experts differed: while investor associations rated the draft positively, business associations saw problems for listed companies. Lawyers and legal scholars emphasized the need for a legal basis for virtual general meetings, but saw room for improvement in the submission. In the subsequent rounds of questions in the hearing, chaired by committee chairwoman Elisabeth Winkelmeier-Becker (CDU/CSU) , the topics of shareholder rights and legal certainty were in the foreground.” 
  • The Financial Times reports on The Swiss blogger with the market-moving story of the week: “Tale about an unlikely combination between State Street and Credit Suisse left many looking credulous”. Read the original blog post here.
  • RTS reported on how the Ethos Foundation was a “UFO” when it started 25 years ago (“La Fondation Ethos était un "ovni" à ses débuts il y a 25 ans”): "In the early days of the Ethos Foundation 25 years ago, 'the German-speaking Swiss called us communists', recalled its director Vincent Kaufmann on Sunday's Forum programme. Since then, the socially responsible fund has made things happen, particularly with regard to the holding of multiple executive positions. On 2 February 1997, two Geneva pension funds, one public (CPEG) and the other private (CPPIC), joined forces to create the Ethos Investment Foundation. At the time, the aim of the foundation was to 'promote socially responsible investment', explains its director, Vincent Kaufmann, on the Forum programme. At the beginning, the criteria were more ethical, but quickly shifted to sustainable development," he adds.
North America
United States
  • Reuters reports that China's central bank accepts Ant's application for financial holding company: “China's central bank has accepted Ant Group's application to set up a financial holding company, three people with knowledge of the matter said, a key step in finishing a year-long revamp of Jack Ma's fintech business and reviving its stock market debut. The People's Bank of China's (PBOC) expected approval of the plan is the latest sign that Ant, a tech giant with financial businesses stretching from payments to wealth management, is poised to emerge from a regulatory crackdown. Chinese authorities abruptly pulled the plug on Ant's IPO, set to raise $37 billion in the world's biggest listing, in November 2020, soon after tech billionaire founder Ma gave a speech accusing financial watchdogs of stifling innovation. Ant had been valued as a tech firm for its IPO, but the forced change to a financial holding company will make it subject to capital requirements and regulations similar to those for banks.”
  • SCMP reports on How China’s new complaints procedures can prevent ‘green’ ESG investments from harming local communities. “On June 1, Beijing issued green finance guidelines for Chinese financial institutions. Notably, Chinese banks and insurers are asked, for the first time, to establish grievance mechanisms to manage clients’ environmental, social and corporate governance (ESG) risks. This comes amid a global backlash against ESG investors, who are under fire for making hollow commitments amid increased regulatory and public pressure. Increasingly, investors are adopting grievance mechanisms to help them understand the impact and prevent harm, as a response to the pressure to show ESG integrity, and because certain industry standards now require them.”
  • Reuters reports that China's draft cybersecurity rules pose risks for financial firms, lobby group warns: “China's proposed cybersecurity rules for financial firms could pose risks to operations of western companies by making their data vulnerable to hacking, among other things, a leading lobby group has said in a letter seen by Reuters. The latest regulatory proposal comes at a time when a string of western investment banks and asset managers are expanding their presence in China, either by setting up wholly-owned units or by taking a bigger share in existing joint ventures. The China Securities Regulatory Commission (CSRC) released the draft Administrative Measures for the Management of Network Security in the Securities and Futures Industry on April 29, and offered a month-long public consultation on the proposals. The draft rules seek to make it mandatory for investment banks, asset managers, and futures companies with operations in China to share data with CSRC, allow regulator-led testing, and help set up a centralised data backup centre.”
Hong Kong
  • Cross-Agency Steering Group announces launch of information and data repositories and other progress in advancing Hong Kong’s green and sustainable finance development: “Established in May 2020, the Steering Group is co-chaired by the Hong Kong Monetary Authority and the SFC. Steering Group announced progress made and the way forward to advance Hong Kong’s leading position in green and sustainable finance (GSF) and help the financial ecosystem’s transition towards carbon neutrality. At the same time, it also announced the launch of the GSF Data Source Repository to support the financial sector in locating data sources for climate risk management and other GSF-related analysis and research.”
  • SCMP reports on Climate-change: BlackRock votes against fewer directors as more companies adopt TCFD framework for risk disclosures, panel hears: “In Hong Kong, a cross-agency regulatory steering group led by the Hong Kong Monetary Authority and the Securities and Futures Commission announced in December 2020 that it aims to align listed firms’ climate-related disclosures with TCFD recommendations by 2025. More companies in Asia are adopting a rigorous international framework for disclosing climate risk, resulting in fewer companies seeing the world’s largest asset manager, BlackRock, vote against re-election of their directors, its regional head of investment stewardship said during a panel discussion. The move towards the globally comparable TCFD (Task Force on Climate-related Financial Disclosures) framework is a welcome one, said Amar Gill, managing director and head of investment stewardship in Asia-Pacific for BlackRock. BlackRock has been looking at whether companies are reporting according to the TCFD framework, released by the Basel-based Financial Stability Board in 2017, since last year. TCFD requires scenario planning for different levels of global warming, as well as the disclosure of both medium and long-term emissions targets.”
  • SCMP reports that Hong Kong poised to help China reach its climate change goals: “Many cities are taking action to be environmentally friendly and Hong Kong was an early starter and is among the front-runners in Asia, that proactive stance puts it in a strong position to be the premier green finance center for the Greater Bay Area and region. With the continued investment by the government and companies and sustainable lifestyles of Hongkongers, local goals can be met and a significant contribution made towards attaining national targets. Financial Secretary Paul Chan Mo-po, in his keynote address, laid out the investments and achievements to reduce the city’s carbon footprint and contribute to the global target of limiting global warming to within 1.5 degrees Celsius of pre-industrial levels. Power plants are cutting back on fossil fuels, electric vehicles are more prevalent and waste -to-energy and waste-to-resources facilities are rising in number. Decarbonization efforts have achieved laudable results, emissions being down about 20 per cent in 2020 on 2005 levels. That puts the city in good stead to attain a target of carbon neutrality by 2050, 10 years ahead of the national aim.”
  • The Australian reports that ASIC warns of crackdown on greenwashing: “ASIC is closely watching ESG cases winding their way through the court as the regulator moves to lift its focus on greenwashing.”
  • The Financial Standard Sustainability reports on how the Industry reacts to ASIC greenwashing guidance: “The Australian Securities and Investments Commission's (ASIC) recently released information sheet on greenwashing is a good first step in setting the regulator's expectations, but experts say there is more to be done to improve disclosure on the full gamut of ESG investment products.”
  • The Australian Business Review reports that BCG says: Detail ESG, climate actions to win positive market response: “ASX-listed companies need to give detailed statements about their planned actions on climate change and sustainability if they are to get a positive response from shareholders.”
  • The Australian Financial Review reports that Kean to publish corporate heroes and laggards list on gender equality: “The NSW government will begin publishing an annual list of the state’s best and worst companies on gender equality as part of a raft of budget measures to drive up women’s economic participation.”
  • The Financial Standard Sustainability reports on Calls for transformation, climate skill in AGL board renewal. “The pending departure of the CEO and chair and other AGL board members highlights an urgent need to bring both climate change and company transformation experience to the refreshed board, according to recruitment and governance experts.”
  • The Financial Standard Sustainability informs HESTA pushes legal alignment to UN Declaration of the Rights of Indigenous People: “Super fund HESTA says aligning Australian law to the United Nations Declaration of the Rights of Indigenous People (UNDRIP) would enhance outcomes for Indigenous Australians as well as stronger long-term returns for super fund members.”
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