Monthly Roundup – November 2022
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Georgeson publications
Denmark: Georgeson has published its Danish AGM Season Review in collaboration with Computershare

The analysis provides insight into the highlights of the AGM season and key trends in European investor voting patterns - both the general trends and the specific issues that characterised the season. Georgeson's local client support, in-depth investor engagement and market expertise enable it to highlight issues and trends that will be of interest to both issuers and investors.
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 between July and September of 2022. During the period, 89 FTSE 350 companies held their AGM. Eight of these issuers received more than 20% opposition on their remuneration reports. 
Georgeson in the media
Italy: Georgeson’s Lorenzo Casale is quoted in Il Sole 24 Ore’s article titled “Proxy advisor, the silent prompter who decides the meetings” (“Proxy advisor, il suggeritore silenzioso che decide le assemblee”)

"There is a catch. Because if it is true that the majority of large funds conform, the residual share of proxies (around 20% of the total) goes in the opposite direction. "They are autonomous subjects, which assess and decide not by conforming," adds [Lorenzo] Casale. Here there is room for issuers to obtain a reasoned vote, untied from proxies, and this inevitably leads to reflection on the need for careful engagement." 
Spain: Cinco Días reports ‘Brussels to limit potential conflicts of interest for proxy advisors’ (“Bruselas acotará los posibles conflictos de interés de los asesores de voto”)
"The European Commission intends to monitor the transparency of proxy advisors as part of a review of the implementation of the SRD2 (Shareholder Rights Directive 2). To this end, the European markets supervisor (ESMA) is going to draw up a preliminary report, which is currently out for public consultation, aimed at investors, issues, intermediaries and proxy advisors. ESMA thus seeks to tackle potential conflicts of interest on the part of proxy advisors, given that, according to market sources, in addition to offering this activity, some have other additional consultancy services that may lead to conflicts that impact on the reliability of their advice, such as the consideration of ESG criteria to improve their rating.
US: Georgeson’s research was referenced in a Corporate Secretary article titled “Governance professionals guide on preparing for 2023”

"The recent spike in anti-ESG shareholder proposals has been primarily – though not exclusively – seen in the social and environmental spaces. Research from Georgeson found twice as many proposal submissions (52) in the 2022 proxy season that were from anti-ESG proponents as in 2021 (26). In many cases, such resolutions are similar or almost identical to pro-ESG proponents’ resolutions but their supporting statements sometimes indicate different motivations."
Georgeson events
Netherlands: Georgeson’s Ivana Cvjetkovic hosted a NEVIR webinar along with Daniele Vitale and State Street’s Aneta McCoy

Ivana Cvjetkovic hosted a webinar with panellists Daniele Vitale and Aneta McCoy. The Topic of the webinar was AGMs and Remuneration. The webinar looked at what the biggest takeaways were from the AGM Season from a Dutch perspective. The panellists were asked how they interpret the AGM results in the Dutch market and what they see are the trends moving forward.  
Germany: Georgeson’s Matthias Nau and Daniele Vitale presented at Computershare’s 2022 HV Management Seminar on 17 and 18 November
At the seminar, experts presented legal and technical developments around AGMs in Germany. Matthias Nau spoke about observations made during the previous proxy season and proxy advisor Trends in the DAX, as well as pan-European developments and effects on the 2023 season. Daniele Vitale outlined how corporates can achieve their ESG goals through developing an ESG-strategy, what expectations investors have and what to focus on during the implementation.
US: Georgeson’s Kilian Moote presented at a Mayer Brown webinar titled Preparing for the 2023 US Proxy and Annual Reporting Season

During this session, join Mayer Brown partners, Jennifer Carlson, Brian Hirshberg, and counsel Laura Richman, as well as Kilian Moote, Managing Director of ESG Advisory at Georgeson, as they discuss key issues companies should consider while preparing for the upcoming 2023 proxy and annual reporting season. Themes to be discussed include, among others: Compensation Agenda Items, Shareholder Proposals, Pay Versus Performance, Climate Change, Human Capital, Board Diversity, Director Expertise and Governance, Universal Proxy, Management’s Discussion and Analysis, Risk Factors, Russia/Ukraine Disclosures, EDGAR Submission of Glossy Annual Reports, Director and Officer Questionnaires.
Shareholder Activism
Environmental & Social
  • Sustainable Views reports on the FCA to establish code of conduct for ESG data and rating providers: “The UK financial watchdog will establish a voluntary code of conduct while it awaits further action from the Treasury. The Financial Conduct Authority has announced it will develop a specific code for ESG data and ratings providers, albeit just on a voluntary basis, to bring greater market transparency.”
  • The Wall Street Journal report that Big Banks and U.N. Green Finance Group Clash in Alliance: “Miscommunication, infighting hamper coalition meant to direct trillions of dollars into energy transition”.
  • The Financial Times argues that The banking approach to net zero is just claptrap: “The numbers are hokum, the clients are left in the dark and the real world impact is negligible anyway”.
  • The Financial Times reports that Climate scientists criticise corporate emissions oversight body SBTi: “Arbiter of net zero plans fails to check accuracy of data reported by companies, says group”.
  • The Wall Street Journal asks Why Do ESG Ratings Vary So Widely—and How Can Investors Make Sense of Them?: “As investing based on environmental, social and governance factors continues to grow, investors are faced with a dilemma: Which ESG ratings are they to believe? After all, investors themselves have no idea which companies live up to ESG standards. They need to rely on outside ratings to determine which companies are worth their investment dollars. Yet ESG ratings vary substantially depending on which provider is doing the ratings—to a point where a company could be highly rated with one rating company and have a very low score with another. The correlation between ESG ratings from the six raters my colleagues and I looked at ranged from 0.38 to 0.71, on a scale from minus 1 (meaning total disagreement) to 1 (meaning full agreement). In other words, the six never all agreed on a company’s ESG rating, and in most cases there was little agreement among them.”
  • The Wall Street Journal reports that This Former BlackRock Executive Says ESG Investment Model Is Broken: “Terrence Keeley’s new book hints at a quiet debate within a firm that has embraced sustainable investing”.
  • Forbes reports The Corporate Proxy Ballot Takes Center Stage For ESG: “The surge of investment assets into environmental, social and governance (ESG) funds is empowering investors and activists to demand action from companies around the world. Increasingly, those demands are materializing as shareholder proposals designed to push companies to change business and disclosure practices related to a range of issues, from emissions and climate change to workforce diversity and inclusion.”
  • Bloomberg Law reports New SEC Rules to Shed Light on BlackRock, Vanguard ESG Votes: “New SEC requirements for BlackRock, Vanguard and other mutual fund companies to provide greater detail on their proxy voting records are poised to help socially conscious investors hold them accountable for their pledges on climate, diversity and other ESG priorities. The Securities and Exchange Commission on Nov. 2 adopted rules that direct funds to give more information about their votes on environmental, social and governance issues, executive pay and other proposals considered at companies’ annual meetings. BlackRock Inc. and Vanguard Group Inc., which have promoted ESG investing, generally supported the enhanced disclosure, though SEC Republicans questioned whether the regulations were necessary. Mutual funds have had to report on their proxy votes since 2003. But SEC Chair Gary Gensler has said those disclosures often vary among funds and can be of limited use to their investors. Under the new rules, funds must report their votes in categories like environment or climate and diversity, equity and inclusion, providing a more accurate view of their positions on hot-button corporate ESG issues like greenhouse gas emissions reductions and civil rights audits.”
  • The Economist reports on The tenacity of ESG investing: “A green-finance boom has not been followed by bust”.
  • Bloomberg reports that Asset Managers Hit by More Bad News on Top-Ranked ESG Funds: Industry estimates say the designation known as Article 9 could be removed from hundreds of funds in the coming months. There are now signs that investment clients are beginning to pull back as new data points to a significant slowdown in inflows. And on Thursday, a report indicated that some Article 9 funds hold assets that could violate UN and OECD standards, from bribery to environmental damage. Many fund managers “are trying their best and have spent millions in legal fees to make sure they’re taking the right approach,” but “results won’t be consistent across the industry,” and that “creates systemic risk,” said Hugo Gallagher, senior policy adviser of the European Sustainable Investment Forum, whose members represent around USD 20 trillion in assets under management. It’s a development that reveals gaps in an ESG regulatory framework that was once hailed as the most ambitious in the world. Since the Sustainable Finance Disclosures Regulation came into force in March 2021, the EU has had to make some clarifications. This includes telling the industry that all Article 9 funds must be fully sustainable, with some allowances for hedging and liquidity.
  • Bloomberg Law reports SEC Pans Generic Workforce Disclosures Amid Push for New Rules: “The SEC is discouraging companies from giving only boilerplate information about their workforces in their public filings, as the agency works to beef up reporting rules, a senior official said Thursday.”
  • Pensions & Investments reports BlackRock's Larry Fink outlines expansion of proxy-voting program in letter to investors: “BlackRock, the world's largest asset manager and a firm facing Republican-led divestment from several state funds, is expanding the eligibility for its 1-year-old proxy voting platform, Voting Choice. In a letter sent late Wednesday to BlackRock clients and corporate executives, CEO Larry Fink acknowledged complaints lobbed at the company's investment stewardship and told investors that BlackRock is continually working to help investors engage in proxy voting more directly.”
  • ETF Stream reports Vanguard to pilot voting rights for retail investors in challenge to passive ‘emperors’ narrative: “Vanguard has launched a pilot scheme for US retail investors to decide how their votes are cast, just a year after BlackRock gave institutional clients the power to vote their shares, in a move which directly challenges the view that large asset managers hoard power through the trillions of dollars they manage through passives.”
European developments
  • Reuters reports that Credit Suisse overhaul draws scrutiny from some investors, proxy adviser over governance: “Credit Suisse's (CSGN.S) recent decision to exit certain investment banking activities is drawing scrutiny from at least two investors and a proxy adviser who told Reuters they are worried about how the Swiss bank managed potential conflicts of interest of two directors. The move to break up the lender and spin off the investment banking business was seen by analysts as a way for Credit Suisse to focus on its more profitable wealth management franchise. But the investors are questioning how some of the decisions were taken.”
  • Ethos announced that Members of Ethos Engagement Pools validate the topics for 2023: “The annual meetings of Ethos' shareholder dialogue programmes – the Ethos Engagement Pool (EEP) Switzerland and the EEP International – were held on Thursday in Bern. Engagement strategies are a credible way to address the sustainability issues of companies held in portfolios. As such, they are being adopted by a growing number of pension funds. EEP Switzerland welcomed 14 new members in 2022 and now has 167 members with over CHF 359 billion in assets under management. EEP International has added 17 new members since the beginning of the year and now has 100 members (CHF 285 billion in assets).”
  • The Swiss Confederation announced that the Federal Council brings ordinance on mandatory climate disclosures for large companies into force as of 1 January 2024: “Large companies' transparency on the climate impact of their activities is a key aspect for the markets to function well and for climate sustainability in the financial sector. To date, Switzerland has lacked clear and comparable climate-related disclosures. The Federal Council intends to make that possible with the new ordinance, which provides for the binding implementation of the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) by large Swiss companies.”
North America
United States
  • The Telegraph reports that Sacked Twitter executives at risk of being denied $90m payout by Elon Musk: “Billionaire reportedly dismissed top staff including chief executive 'for cause', suggesting they will not be entitled to golden goodbyes.”
  • The Financial Times reports that FTX collapse puts its auditors in the spotlight: “Armanino and Prager Metis face scrutiny over Bankman-Fried’s bankrupt crypto empire”.
  • The Financial Times argues that Disney should not be so reliant on one man: “The company is not moving with the times when it comes to corporate governance best practice”.
  • SEC Adopts Rules to Enhance Proxy Voting Disclosure by Registered Investment Funds and Require Disclosure of “Say-on-Pay” Votes for Institutional Investment Managers: “Washington D.C., Nov. 2, 2022 —The Securities and Exchange Commission today adopted amendments to Form N-PX to enhance the information mutual funds, exchange-traded funds, and certain other registered funds report about their proxy votes. The amendments will make these funds’ proxy voting records more usable and easier to analyze, improving investors’ ability to monitor how their funds vote and compare different funds’ voting records. The rulemaking will also newly require institutional investment managers to disclose how they voted on executive compensation, or so-called “say-on-pay” matters, which fulfills one of the remaining rulemaking mandates under the Dodd-Frank Wall Street Reform and Consumer Protection Act.”
  • Corporate Secretary reports More US companies holding in-person AGMs: “Almost two thirds (63 percent) of US companies’ AGMs were held in person in the six months to June 30 – an increase from 55.9 percent last year, according to new research. The report from Computershare also notes that no US companies used a hybrid format for their AGM this past proxy season, unlike their peers in other global regions.”
  • HR Dive reports Slowly but surely, S&P boards are diversifying: “S&P 500 boards are slowly becoming more diverse, according to an annual study by executive search and advisory firm Spencer Stuart. Of the 395 new independent board directors appointed in 2022, 74% came from outside executive ranks. Of these, 72% came from historically underrepresented groups, including women, underrepresented racial and ethnic groups and members of LGBTQ+ communities. Nearly one-fifth (18%) are age 50 or younger. However, due to persistently low boardroom turnover, the transformation of overall board composition is happening slowly. Consistent with prior years, new directors account for only 7% of all S&P 500 directors, the study found.”
  • The Financial Times reports that Corporations can no longer remain black boxes: “New regulation on pay transparency in the US should force openness in other areas too”.
  • The Financial Times reports that Meta shareholders vent anger at Zuckerberg’s spending binge: “CEO seems intent on using majority control to push ahead with big bet on metaverse despite Wall St scepticism”.
  • The Wall Street Journal reports that Elon Musk’s Influence Over Tesla’s Board in Focus as Tesla Compensation Trial Kicks Off: “Musk, along with other current and former Tesla directors, is expected to testify over his multibillion-dollar pay package”.
  • The Wall Street Journal reports that U.S. Audit Watchdog Looks to Strengthen Rules on Quality Controls: “Audit firms would have to report once a year to the Public Company Accounting Oversight Board and their clients’ audit committees on how effective their systems are”
  • The Wall Street Journal reports that Audit Regulator Steps Up Enforcement Under New Leader: “PCAOB is significantly increasing penalties but faces constraints”.
  • The Wall Street Journal reports Companies Look for Ways to Bring New Directors Up to Speed Quickly: “Companies are looking for new ways to get their directors up to speed—fast. In a rapidly changing political and business environment, board members have much more on their plates these days. They must figure out the impact of a host of novel challenges, everything from the Russia-Ukraine war to economic uncertainty to a heightened focus on environmental, social and governance issues. They often need and want specialized training to integrate into board dynamics and stay up to speed on the issues.”
  • Thomson Reuters reports Companies Already Have Implementation Questions on SEC’s New Pay vs. Performance Rule: “The Securities and Exchange Commission’s Division of Corporation Finance (CorpFin) staff has already been getting implementation inquiries about the commission’s so-called pay versus performance rule, which was adopted less than three months ago.”
  • The Financial Times reports on Collateralised fund obligations: how private equity securitised itself: “Stakes in hundreds of buyout groups’ companies have been bundled into investments with strong credit ratings.”
  • The Economic Times reports that the Top 500 NSE-listed companies have 18% women directors, says study: “ Gender diversity in boardrooms is picking up, though at a slower pace, with women accounting for nearly 18 per cent of the directorships in the top 500 NSE-listed companies at the end of March this year, according to a study.”
  • IiAS reported on Corporate India: Women on boards: “Institutional Investor Advisory Services (IiAS) has published the third edition of its study on “Corporate India: Women on boards.” APG has partnered IiAS in this study. Gender equality is one of the seventeen sustainable development goals (SDGs) set by United Nations. Securities and Exchange Board of India (SEBI) has also mandated gender diversity disclosures under its Business Responsibility Reporting requirements. Appointment of at least one independent woman director is mandatory for India’s top 1000-listed companies by market capitalisation. Research studies often link higher diversity on boards with improved financial reporting. Women representation brings in a different perspective, intuitiveness, and a more collaborative style of leadership into corporate boardrooms. These factors, combined make gender diversity an important benchmark for IiAS while assessing India Inc for overall corporate governance.”
  • The Guardian reports on the Adani port protests: more than 80 wounded in latest clash to halt project in India’s Kerala: “Police and protesters injured as fishing community fights $900m Vizhinjam port project, saying it erodes the coastline and costs them their livelihoods.”
  • The Financial Times reports that MSCI investors at risk of exposure to Xinjiang allegations, report says "China has come under renewed international pressure over its treatment of Uyghur Muslims."
  • Reuters reports that Auditor exodus at embattled China property firms triggers governance concerns: Auditors of at least 14 Hong Kong-listed Chinese property firms have exited this year, securities filings showed, raising governance concerns about the debt-ridden developers several of whom are yet to publish long-pending financial results. Embattled developers including Sunac China (1918.HK), Shimao Group (0813.HK) and Kaisa Group (1638.HK) are among those whose auditors have parted ways in recent months. In many cases, firms outside the Big-Four accounting firms have been roped in as replacements. The trend, which accelerated earlier this year, has seen auditors, including the world's top auditing firms PricewaterhouseCoopers (PwC) and Deloitte, resigning from their roles.
  • Fund Selector Asia reports that APAC investors look to China long term for ESG:  Asia Pacific investors are looking at China, rather than the US or Europe, as their most favoured destination for ESG investments over the long term, according to a survey from JP Morgan Asset Management (JPMAM). JPMAM conducted 2,400 online interviews with professional advisers, including 1,400 in Asia Pacific. The interviewees comprised local and global retail banks, insurance companies, private banks, retail securities firms and financial advice firms. When asked which regions offered the best investment opportunities over the next 12 months, 40% said the US, 36% said Europe and only 22% said China. However, when asked which regions offered the best investment opportunities over the next five years, China leapfrogged the other regions at 40% followed by 31% for the US and 27% for Europe. JPMAM noted that this was in part because China is on course eventually to become the largest economy in the world and the expectation is that stock market returns will be a lot higher there over the next 10 to 15 years compared with other markets.
Hong Kong
  • SCMP reports that China and Hong Kong firms see greatest growth in whistle-blower reports in Asia-Pacific, but fail to act adequately, Baker McKenzie survey shows: Mainland China and Hong Kong firms have seen the greatest growth in whistle-blower reports but have failed to respond adequately, a survey of five major Asia-Pacific markets by law firm Baker McKenzie has found. Employers without the mindset and tools to navigate whistle-blowing complaints will become more vulnerable to risks such as regulatory sanctions, reputational damage and employee disengagement or claims, according to the law firm’s recent “Asia-Pacific Whistleblowing Landscape” report. “[Companies] have to encourage a ‘speak-up’ culture. Part of that means that if somebody does raise complaints, you need to actually investigate,” Mini vandePol, Baker McKenzie’s head of investigations, compliance and ethics group in the Asia-Pacific region, said in an interview. Some 74 per cent of mainland firms, and 61 per cent from Hong Kong, saw an increase in whistle-blowing complaints over the past year, compared with an average of 41 per cent in the region, according to the survey of 523 senior executives polled across five major markets, the others being Singapore, Japan and Australia.
  • SCMP reports that HKEX launches voluntary carbon-trading platform to position city in climate-change fight: Core Climate, which launched on Friday, is an international marketplace for the trading of carbon credits to support the world’s net-zero transition, HKEX said. The platform allows participants to source, hold, trade, settle and retire credits sourced from certified carbon projects around the world.
  • Reuters reports that HSBC top shareholder Ping An urges aggressive cost cuts, renews spin-off push: HSBC Holdings' largest shareholder Ping An on Friday urged the lender to aggressively reduce costs by cutting jobs and divesting peripheral non-Asian businesses, the first such public call by the Chinese financial conglomerate. The London-headquartered bank, which makes the bulk of its sales and profit in Asia, has been under pressure from Ping An Asset Management (Ping An AM), to explore options including listing its Asian business to boost returns.
South Korea
  • The Korea Herald repots that Korean state pension fund’s growth hindered by gov’t intervention: South Korea’s state pension fund, the country’s main retirement plan, is in need of a major reform centered on cutting off excessive government intervention, an insider said Monday. Jeong Woo-yong, a member of the National Pension Service’s Fiduciary Liability Committee, pointed out that the fund’s key decision-making bodies consist of “too many” government officials and lack economic experts. This hinders the fund’s growth, as it increases the fund’s vulnerability to being abused in different government projects with a lack of experts -- leading to lackluster profitability, he explained.
  • Asia Insurance Review reports that Singapore: MAS launches ESG Impact Hub: “The Monetary Authority of Singapore (MAS) has launched the ESG Impact Hub to spur co-location and collaboration between ESG fintech start-ups and solution providers, financial institutions and real-economy stakeholders. The hub will also anchor industry-driven sustainability initiatives such the Point Carbon Zero Programme and KPMG’s ESG Business Foundry. The establishment of the hub seeks to capitalise on the strong industry interest in Project Greenprint and expedite the growth of Singapore’s ESG ecosystem on three fronts.”
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