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Europe: Georgeson published its 2022 European AGM Season Review
Each year Georgeson publishes an annual review of the European AGM season which covers the most important takeaways and developments across seven European markets as well as predictions for how shareholder priorities and expectations will change in 2023.
You will also read about instances where companies received higher opposition than their peers and why some investors chose not to support these resolutions.
‘Say on climate’ advisory votes on company plans and disclosures were put forward for the second consecutive year
Increasing spotlight on environmental and social resolutions
Three times as many companies put forward advisory votes on their climate action plans and disclosures compared with 2021
Proxy advisors maintained their strong influence on voting outcomes in 2022
Resolutions relating to the remuneration of executives continue to be the most contested resolution type across Europe
Global: Georgeson’s data was referenced in Bloomberg Law’s article titled “Conservative Shareholder Proposals Rise Amid Anti-ESG Rumbles”
“More conservative proposals were filed this proxy season by activists looking to bend the ears of CEOs on social issues, aligning with a political crusade to skewer “woke capitalism.” Conservative or anti-ESG proposals have doubled this proxy season, according to consulting firm Georgeson Inc., which counted 52 such resolutions filed this year—double the 26 filed 2021. The proposals, targeting issues including racial justice and corporate donations, run parallel to calls by Florida Gov. Ron DeSantis and other Republicans to fight the environmental, social and governance movement.”
Global: Georgeson’s Domenic Brancati, Don Cassidy, and Hannah Orowitz wrote a Governance journal entry titled “Shareholder engagement – a year-round activity”
“Shareholder engagement has expanded beyond the proxy season to become a year-round, cross-functional strategic effort as public companies increasingly seek to engage with investors on a growing variety of topics, including ESG issues. In recent years, ESG considerations have increasingly influenced investors’ proxy voting decisions, and investors of all types have become more active in their shareholder stewardship. Large institutional investors have become increasingly sophisticated in integrating specific engagement histories into their ongoing analysis of corporations. For example, Legal and General uses its LGIM ESG score to encourage change at portfolio companies as it deems warranted. Similarly, State Street’s proprietary ESG scoring system, R-Factor, evaluates companies’ ESG disclosure efforts relative to peers and market expectations.”
US: Georgeson’s Hannah Orowitz will be speaking at the CCRcorp’s 2022 Proxy Disclosure & 19th Annual Executive Compensation Conferences taking place between 12-14 October.
With new SEC rules, record numbers of shareholder proposals, and relentless regulatory & investor scrutiny, your proxy disclosures – and the actions that support them – are more important than ever. The Proxy Disclosure & Executive Compensation Conferences will inform you of what you need to know to protect your company and board. Get practical guidance about rule changes, staff interpretations, emerging disclosure risks, investor and proxy advisor positions, executive pay expectations, the board’s role, and more.
Our 2022 Proxy Disclosure & 19th Annual Executive Compensation Conferences will be fully virtual, October 12-14. We’ll provide you with the level of practical guidance and trusted expert knowledge that you expect from our in-person conferences through an engaging, interactive and safe platform.
US: Georgeson’s Hannah Orowitz was a guest on the interview series Net Zero Convserations on OETV ESG
“Sasha Chasen interviews Hannah Orowitz, senior managing director of Georgeson’s ESG advisory team, on how to maximize the value of relationships with investors and stakeholders, notable highlights from the 2022 Proxy Season, and what shareholder ESG proposals, voting, and passage rates indicate about company prioritization and focus heading into 2023.”
Italy: Georgeson’s Francesco Surace and Alberto D’Aroma will be presenting at the Climate Governance Initiative (CGI)’s Global Summit 2022: Ambition to Action
The Session that Francesco Surace and Alberto D’Aroma will be speaking at, titled “Should your board consider a say-on-climate vote at the next AGM?”, will take place between 5pm and 6pm CET on 12 October. “This session is helpful for board members who want to understand better the implications and relevance of an open vote on climate strategy at the Annual General Meeting. Investors are looking for more engagement on climate strategies and are becoming more active in analysing the transition to net zero. In parallel, an increasing number of companies in Europe have submitted their climate strategy to the vote of the 2022 AGM. We will review the key dynamics around say-on-climate vote in Europe based on research by Georgeson, including results, proxy advisors’ policies and positions, emerging trends. We will then discuss with board members, investors and corporations their perspectives, motivations and lessons learned.”
Switzerland: Georgeson’s Matthias Nau will be talking about the ESG Challenges that Swiss companies are facing at a Computershare event on 11 October.
The presentation will be taking a look back at the 2022 proxy season in Switzerland with a focus on contested resolutions and challenges specific to ESG related proposals, including say on climate resolutions put forward by companies or requested by shareholders. In addition, Matthias will be covering potential ESG activism on a pan-European level.
Reuters reports that Environmental groups ask P&G investors to vote against CEO as board chair: “Environmental groups are asking Procter & Gamble Co (PG.N) investors to vote against re-electing its chief executive as board chair, and also opposing two other directors at the annual meeting next month, according to a filing that claims the company uses too much virgin wood pulp in its paper products.”
The Wall Street Journal argues for Breaking Up the ESG Investing Giants: “BlackRock, Vanguard and State Street effectively control each other—and their market competitors. The Clayton Act was made for situations like this.”
Bloomberg reports on ‘Hating ESG’: Advocates Are Looking to Replace the Label: “A number of sustainable investing champions say it’s time for the “ESG” label to be shelved and replaced by something less likely to draw attacks from both the political right and left. Robert Eccles, a professor who’s spent the past 12 years researching sustainability at Harvard Business School and now University of Oxford’s Said Business School, says the term ‘just doesn’t have value anymore. Let’s change the conversation’.”
The Financial Times argues Why BlackRock’s climate challenge is harder than it makes out: “A month after receiving a searing indictment of its approach to climate issues from a group of Republican state attorneys-general, BlackRock finally hit back this week. Far from delivering a knockout punch in this tussle, however, BlackRock’s letter merely underscored the increasingly uncomfortable position it faces along with other members of corporate climate alliances.”
The Financial Times reports on Don’t let auditors off the hook on climate votes, says asset manager: “As asset managers take a broader approach focused on routine pay and appointment votes, the pivot could put more pressure on auditors and company directors to take climate issues seriously ahead of next year’s voting season. The UK asset manager Sarasin & Partners updated its shareholder voting policy today with tougher criteria that holds auditors and directors accountable for a company’s reporting, auditing and target setting in relation to net zero goals.”
Reuters reports that HSBC fund arm thermal coal policy to curb climate change: “ HSBC Holdings Plc told Reuters on Thursday it will stop financing the expansion of thermal coal from funds it manages actively with immediate effect, marking an acceleration of a broader commitment it made last year.”
Institutional Investor asks What Happens When a Company Is a Climate Hero and a Governance Disaster? “In a paper titled “The Hidden ESG Risks of Feel-Good Companies,” Adam Fleck, Morningstar’s director of equity research in ESG, argued that investing in stocks with high impact in areas like clean energy or gender equality doesn’t preclude exposure to ESG risks. The paper is the first report under Morningstar’s new “Investable World” initiative, which aims to provide and analyze data for investors to better understand and engage with sustainable investing practices.”
ESG Today reports BlackRock Strikes Back Against Climate Activism Claims: “BlackRock has pushed back against allegations from Republican officials that it is pursuing a climate-focused agenda not aligned with its clients’ financial interests. In a letter to 19 state Attorney General, the investment giant argued that the claims are based on “misconceptions,” and that the politicians’ agenda may deprive investors of the ability to pursue compelling investment opportunities and impact their returns.”
Pensions&Investments reports BlackRock responds to anti-ESG movement, 'disturbed' by trend: “BlackRock defended its policies regarding climate risk in a response to a letter from 19 U.S. state attorneys general, and expressed concern over the politicization of public pension plans. The world's largest money manager released the letter Wednesday from Dalia Blass, senior managing director, head of external affairs, addressed to the 19 Republican attorneys general who had signed an Aug. 4 letter to CEO Laurence D. Fink accusing BlackRock of using "the hard-earned money of our states' citizens to circumvent the best possible return on investment" in its position on energy investments.”
The Best Practice Principles Group (BPPG) reported that Proxy voting advisory firms improve disclosures against best practices: “All five of the world’s leading proxy voting advisors have become more transparent about the way they operate, according to an analysis of their second year reporting of compliance against industry Best Practice Principles.”
Gladstone Place Partners posted a piece on the Harvard Law School Forum on Corporate Governance entitled Getting Out the Retail Vote: Targeting Reddit and New Social Tools in Proxy Solicitations: “The success of the get-out-the-vote campaigns for Nikola Corporation and Lucid Group shows that shareholder solicitation is not the same in the age of Robinhood and Reddit. Companies are using new communications strategies and channels to find retail shareholders and obtain their critical votes.”
The Financial Reporting Council published the list of signatories to UK Stewardship Code: “The Code sets high standards of stewardship for those investing money on behalf of UK savers and pensioners, and the continued growth in the number of applicants and successful signatories shows the value that investors and their clients and beneficiaries in the UK and beyond give to the Code. This supports the findings of the FRC’s recent report on the impact of the Code on the stewardship practice of asset managers and owners.”
The Financial Times reports that the FCA warns firms on ‘poor’ ESG benchmarking: “Last week the Financial Conduct Authority became the latest global regulator to issue a public warning about ESG benchmarking. The move comes as market regulators remain suspicious of benchmarks following the long-running Libor scandal, and the European Union has floated the idea of its own ESG benchmark (please refer to Kenza’s piece on the topic from earlier this month). Now, the FCA has weighed in as well.”
The FTAdviser reports how the FCA sounds alarm over ESG benchmarks “The FCA has warned of the risks of ESG benchmarks and will be scrutinising how they are constructed and labelled. In a “Dear CEO” letter released last week (September 8), the FCA’s director of infrastructure and exchanges, Edwin Schooling Latter, said the regulator has concerns over the benchmarks.” The full letter from the FCA can be read here.
The Times reports on Peter Cowgill: Ousted JD Sports boss stays onside with £5.5m deal: “Peter Cowgill, who will also be eligible for an annual bonus, ran the sports retailer from 2004 until his ousting in May this year after a series of own goals that fuelled City concern over the dual role he had held as executive chairman since 2014.”
The Financial Times reports on 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?”
Intelligent Investors reports on The case for greater shareholder activism “Für einen stärkeren Aktionärsaktivismus”: “Some general meetings are legendary. Contradiction paves its way and board members are criticized. In this respect, no farewell event. And yet there are clear differences in the design and ultimate exercise of shareholder rights. The editor-in-chief of INTELLIGENT INVESTORS followed up with Oliver Schmidt, Deputy Chief Investment Officer, Metzler Asset Management GmbH, who (together with Ulf Plesmann, Head of Global Equities) recently presented a brief analysis on ‘Commitment as a key driver on the way to climate neutrality’”.
DSW issued a statement titled HELLA GmbH & Co. KGaA: DSW demands preservation and concretisation of shareholder rights in future virtual general meetings “HELLA GmbH & Co. KGaA: DSW fordert Erhalt und Konkretisierung der Aktionärsrechte in zukünftigen virtuellen Hauptversammlungen”: “The invitation to the Annual General Meeting of HELLA GmbH & Co. KGaA, which will take place on 30 September 2022 as an attendance meeting, contains a proposed resolution that is intended to authorise the general partner for the next five years in a blanket manner and thus without concrete specifications to convene the Annual General Meeting as a virtual Annual General Meeting. HELLA is thus one of the first companies to make use of the new option created by the Act on the Introduction of Virtual Annual General Meetings of Public Limited Companies.” Proxinvest’s Chief Governance Officer, Loïc Dessaint, weighed in on the statement here.
The Comisión Nacional del Mercado de Valores (CNMV) publishes its reports on Corporate Governance Reports and Directors’ Remuneration Reports (“La CNMV publica sus informes sobre los informes de gobierno corporativo y de remuneraciones de los consejeros de las sociedades cotizadas 2021”): “Both documents reflect, in an aggregated and summarised form, the main conclusions on both issues that the companies have sent to the CNMV during the year. Among the main highlights: (i) Compliance with the recommendations of the Code of Good Governance was 86.4% in 2021 (83.7% in 2020) and five companies reported 100% compliance. (ii) The presence of women on boards increased by 3 points compared to the previous year, reaching almost 29.3%, almost reaching the recommended level for 2021 (30%). (iii) This year was the first year in which companies had to make comparisons between directors' remuneration, consolidated results and average employee remuneration. Concluding that, remuneration of executive directors, excluding extraordinary items, was on average 32 times the average remuneration of employees of listed companies. These figures show, in any case, a high dispersion between companies.”
Milieudefensie (Friends of the Earth Netherlands) published an Urgent letter to accountants about climate obligations and risks (“Dringende brief aan accountants over klimaatverplichtingen en -risico's”). The letter was sent “to the accounting firms of 29 companies that were earlier targeted by Milieudefensie and included in their Climatecrisis-Index, i.a. ING, Ahold, Schiphol, BAM Group and Unilever. In the letter accountants were reminded of their responsibility in combating climate change. "Accountants should identify dangerous climate change as a core issue in the audit of financial statements. In doing so, they are obliged to act when large companies take insufficient action against it," said Donald Pols, director of Milieudefensie.”
IR Magazine reports on Understanding the impact of the SEC’s amended proxy rules: “New proxy rules introduced by the SEC now require the use of a ‘universal proxy card’ in all non-exempt director election contests, dramatically changing the proxy contest landscape at public companies. Making it significantly easier for shareholders to nominate dissident candidates for election means companies are increasingly likely to face dissident nominations (or nomination threats) from activists known to seek proxy contests, as well as new shareholders for which the barrier to entry has been lowered.”
Legal Dive reports SEC pay-vs-performance rule called a chance to shape company story: “The stepped-up executive pay disclosure required by the Securities and Exchange Commission (SEC) in a rule it released last week won’t be new to companies that already provide data on pay-to-performance to proxy advisory firms, but it could give them a chance to better control the narrative about how they’re doing, a corporate strategy advisor says.”
Insightia reports that China Shenghai CEO nominates 3 directors: Hong Kong-listed seafood company China Shenghai Group will hold a vote on electing three new directors after its chief executive and top shareholder asked it to do so. Precisely Unique, an entity controlled by China Shenghai Joint-Chairman and CEO Liu Rongru, proposed Lin Yiyang and Liu Zhengping as new executive directors as well as Deng Yujia as an independent non-executive board member, according to a statement filed by the company earlier this week.
Financial Times reports that Naspers confirms move of Tencent shares to Hong Kong clearing system “South Africa’s Naspers internet group has moved a $7.6bn chunk of its stake in Tencent to Hong Kong’s clearing and settlement system in order to smooth future sales of the shares to fund a stock buyback. Naspers, Tencent’s biggest shareholder, said in a statement that it had moved the block of 192mn shares “to enable market trading of such shares, in an orderly way . . . over time”, and that it had sold 1mn of the shares on Thursday, reducing its stake to below 28 per cent. The move comes two months after Prosus, the company’s Amsterdam-listed international investment arm, abandoned its pledge not to sell stock in one of China’s most valuable companies, in order to fund an open-ended buyback to support its own struggling share price. Global investors are cutting their holdings in Chinese technology stocks following a government crackdown and regulatory onslaught that has bruised the sector. The S&P China Tech 50 index, which tracks the 50 largest Chinese companies in the sector, is down 36 per cent over the past 12 months.”
SCMP reports that PwC Hong Kong, KPMG China are first firms to host US regulator for audit inspections of mainland firms, sources say: PwC Hong Kong and KPMG China are the first accounting firms that will help a US regulator carry out inspections of the audit work of US-listed mainland companies, part of a historic process that aims to head off mass delisting of Chinese companies from US exchanges. The two firms have received notice that the Public Company Accounting Oversight Board (PCAOB) picked them for inspections of several of their audit clients, two sources familiar with the situation told the South China Morning Post.
Insightia reports that Giordano takeover collapses after activist criticism: “Hong Kong billionaire Henry Cheng has failed in his HK$2.56-billion ($326 million) bid for apparel retailer Giordano International, an offer activist David Webb said was “far below” fair value. Giordano said in a late Tuesday statement that Cheng’s HK$1.88 per share offer was accepted by shareholders owning about 22% of the company. Cheng, who started the tender offer already owning 24.5% of Giordano’s share capital, had targeted a minimum of 50% of the company. The offer carried an 18% premium on Giordano’s unaffected share price but that was not enough for Webb, a retired investment banker turned activist investor. In late June, Webb argued that a formal sale process would yield a better proposal.”
SCMP reports that Enrolments for ESG courses surge in Hong Kong amid exponential demand for staff with requisite skills. “Providers of environmental, social and governance-related certifications and accreditations have seen rising enrolments for their courses amid “exponential demand” for ESG-related jobs in Hong Kong and Asia, according to headhunters. Registrations for the CFA Institute’s certificate in ESG investing, which familiarises professionals with ESG principles and portfolio management, hit an all-time high in Hong Kong in July. Registrations topped 160, a 77.8 per cent increase compared with 90 in September last year when the course was first rolled out globally, according to the latest figures from the institute. Hong Kong has recorded about 1,100 registrations, accounting for around 8.5 per cent of the 12,800 globally since last September. The city also remained the top market in Asia for registrations, ranking just behind the UK and US globally. “ESG investing is evolving quickly, and will clearly be a key part of the investment future,” said Nick Pollard, managing director for Asia-Pacific at the CFA Institute.”
SCMP reports that Hong Kong seeks to lure global fintech, ESG talent with cash grants and easy immigration, minister says “The Hong Kong government is seeking to support the fintech and ESG market, according to an «SCMP» interview with Financial Services and the Treasury Christopher Hui Ching-yu. The benefits lined up include HK$10 million ($1.3 million) in fintech proof-of-concept cash subsidies as well as easier immigration for individuals with a bachelor’s degree in ESG and relevant experience, with no local offer required and dependents allowed to join. The government will also dedicate resources toward developing local ESG talent through training. Hong Kong is facing a myriad of challenges as a financial hub including a widening talent gap. The latest benefits are in line with a recent survey by Google that found 64 percent of fintech companies in the city were facing a «severe talent gap» with 80 percent hoping for more supportive policies from the government such as fintech hiring subsidies.”
Reuters reports that China Vanke unit Onewo to raise $783 million in Hong Kong's largest IPO of 2022. “Developer China Vanke Co Ltd's property services arm has launched Hong Kong's largest initial public offering (IPO) of 2022, aiming to raise up to $783.5 million in a deal that will be a key test for investor appetite. The subsidiary, Onewo Space-Tech Service, has set a price range of HK$47.1 to HK$52.7 a piece in the public offering of 116.74 million of its shares, which represent 10% of the company's share capital, according to a deal term sheet. Vanke, which is China's second-largest property developer by sales and is listed both in Shenzhen and Hong Kong, owns 62.9% of Onewo and is its biggest customer, regulatory filings showed. The deal is likely to reveal how much appetite investors have for buying into the services and management sub-sector associated with China's cash-squeezed real estate market, which has lurched from one crisis to another over the past year. The two largest equity deals in Hong Kong this year - China Tourism Duty Free Corp's $2.1 billion share sale and one by Tianqi Lithium's worth $1.7 billion - were secondary listings. Both firms were already listed in mainland China.”
SCMP reports that SPACs underwhelm in Hong Kong and Singapore in first year, as listings lapse and applications peter out. “Special-purpose acquisition companies (SPACs) have received a cooler than expected response in both Hong Kong and Singapore, with some launches from early in the year fizzling and few new applications emerging in recent months. Hong Kong, where SPACs launched in December 2021, has seen no new filings in the past two-and-a-half months. The most recent prospectus, that of TechStar Acquisition, was filed on June 24, according to the Hong Kong stock exchange website. Previously, the market saw four applications in January, four in February, two in March, one in April and none in May. In Singapore, no new SPACs have appeared since three such listings emerged in January, after the SPAC listing regime took effect in September 2021. Neither Hong Kong nor Singapore has seen a successful de-SPAC – when the selected company merges with the listed SPAC – this year.”
The Chief Executive Women reports ‘2022 CEW census an urgent wakeup call – CEO gender balance 100 years away: “The progress on women reaching the most senior leadership roles in corporate Australia is going backwards, according to the 2022 Chief Executive Women (CEW) Senior Executive Census, and at this rate it will take 100 years for women to make up at least 40% of all CEO positions on the ASX200.”
The Renew Economy informs NSW to be first state to regulate CO2 as pollutant under sweeping new proposals: “New South Wales will become Australia’s first state to regulate C02 and other greenhouse gases as pollutants under sweeping new environmental policies, effectively establishing emission cutting targets for industrial polluters and potentially creating a template for broader national policies to combat climate change.”
The Australian Financial Review reports ANZ urged to push top 100 emitters harder on transition: “ANZ Banking Group said more than half of its 100 biggest emitting customers had either not publicly disclosed plans to transition to net-zero or were just starting to develop their plans as of a year ago, as analysts pushed for updated disclosures about conversations with clients on the transition.”
The Australian Financial Review informs Billion-dollar blowout looms over bank carbon bills: “The disclosure that Commonwealth Bank’s scope 3 emissions are several times larger than thought highlights the billions of dollars in potential liabilities facing the big four banks.”
The Australian Financial Review says IFM boss warns of 40pc slump without climate action: “The chief executive of $200 billion fund manager IFM Investors will turn the screws on Australian airports, ports, roads and hospitals to slash their carbon emissions to avoid a 40 per cent collapse in asset values..”