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Georgeson
Georgeson Monthly Roundup – January 2021
Activism
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europe
north america
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australia
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Latest Georgeson publications

Georgeson memo on ESG resolutions in Europe

ESG-related activism is a growing trend that during 2020 has led to a significant number of Environmental & Social (E&S) shareholder proposals being put forward at European AGMs. Leading examples include ShareAction’s proposal at the Barclays meeting and the agenda items requested by Follow This at the Royal Dutch Shell and Equinor meetings. In Spain, for the first time in Europe, two environmental resolutions initially proposed by The Children’s Investment Fund (TCI), introduced an annual advisory vote on climate plan at Aena and received more than 96% support following management buy-in.

If you would like to receive a copy of the memo, please email daniele.vitale@georgeson.com.

Georgeson and Computershare published their Insight into AGMs held in 2020 in Australia

Events of 2020, including devastating bushfires and a global pandemic, have had reverberating effects on corporate Australia and this was reflected in the 2020 AGM season.

Virtual shareholder meetings became the safest way to hold AGMs with issuers taking advantage of the regulatory relief provided by the Treasurer. Despite the shift to online meetings, the loud voices of activists and shareholders were clearly heard across the season on a variety of environmental, social and governance (ESG) issues.

Read the full publication here.

In the media

Georgeson is #1 Proxy Solicitor Advisor Europe and Asia Pacific

We’ve been reconfirmed #1 Proxy Solicitor Advisor Europe and Asia Pacific on both company and activist side by Bloomberg’s Global Activism Market Review FY2020. What a great start to the New Year!

Download the full ranking here.

Funds People article on Four months of application of the Shareholders' Rights Directive In Europe (in Spanish)

The article presents the vision of Pedro Saá, Managing Director of Computershare for Spain and Portugal, and responsible for the strategy and implementation of the SRDII for the Computershare Group in Europe, in relation to the so-called Shareholders Rights Directive II (SRDII) and its first effects on issues related to the exercise of political rights and shareholder transparency.

Read the full article here.

Greenbiz article on The coming ESG explosion

Georgeson’s Hannah Orowitz was featured in GreenBiz’s GreenFin Weekly Newsletter article “The coming ESG explosion.” Orowitz is quoted saying “Companies need to take stock of what investors are telling them and devoting their time and energy to enhancing their ESG reporting […] This needs to be done before completing a sustainability report and keeping in mind that ESG factors are now directly influencing investors’ proxy voting decisions.

Read the full article here

Shareholder Activism
  • The Harvard Business Review has published an article by Lucian A. Bebchuck titled Don’t Let the Short-Termism Bogeyman Scare You: https://hbr.org/2021/01/dont-let-the-short-
    termism-bogeyman-scare-you
    “If the prospect of an activist intervention discourages managerial slack and underperformance, all the company’s investors are rewarded.”

  • The Financial Times reports that ESG might prove the UK activists’ best friend: https://www.ft.com/content/bf00aa87-fda8-43ff-a868-74391defa4c1 “Investors still questioning the value of ESG metrics should try reading the stock screens from the bottom up, because that’s what the activists will be doing.”

  • The Harvard Law School Forum on Corporate Governance published a piece on The ESG/TSR Activist “Pincer Attack”: https://corpgov.law.harvard.edu/2021/01/26/the-esg-tsr-
    activist-pincer-attack/
     “Companies need to prepare for a new strategic threat: a two-front “pincer attack” from environmental, social and governance (ESG) activists, on the one side, and financial total shareholder return (TSR) activists, on the other. An ESG activist attack presents an opportunity for TSR activists to pile on, free-riding on the ESG arguments that many institutional investors support. This is a new twist on “wolf-pack” activism that provides new opportunities for activists to drive a wedge between a company and its key stakeholders. The risks of these pincer attacks are complicated by the proliferation of ESG metrics and inconsistent reporting expectations (despite current promising convergence and rationalization efforts) alongside evolving investor-side voting policies, all of which leave companies vulnerable to attack.”

  • Barron’s reports that ESG Activists Focus on a New Front: Diversity: https://www.barrons.com/articles/esg-activists-diversity-stock-51610725619 “For activists, pivoting toward ESG and diversity isn’t just about feeling good, it’s also good business.”

  • The Financial Times reports that Activists eye targets in weak and vulnerable corporate UK: https://www.ft.com/content/86ab653e-380b-462e-8dbc-4e2bfb516504 “Corporate Britain is a top target for activist investors in 2021, with funds looking for opportunities in the relatively weak stock market and pandemic-ravaged economy.”

  • The Wall Street Journal reports that British Hedge Fund Billionaire Takes Climate Fight to S&P 500: https://www.wsj.com/articles/british-hedge-fund-billionaire-takes-climate-
    fight-to-s-p-500-11611842401
    “Christopher Hohn’s campaign targets Alphabet, Union Pacific, Monster Beverage, Booking Holdings and others.”

  • The Korea Herald reports that New Korean equity fund bets on ESG momentumhttp://www.koreaherald.com/view.php?ud=20210127000897 “South Korean investment firm Truston Asset Management said Wednesday that it is establishing a fund to invest in companies that have room for improvement in their environmental, social and governance standards, and to make changes through shareholder activism if necessary.”

  • The Financial Times reports that HSBC targeted by shareholders over fossil fuel financinghttps://www.ft.com/content/9063f7c0-574c-4d82-825f-44e00add2818 “HSBC is under fire for financing the fossil fuel industry after a group of investors including Amundi and Man Group filed a climate resolution.”

  • Bloomberg reports that Exxon Faces Proxy Fight After Activist Nominates Directors: https://www.bloomberg.com/news/articles/2021-01-27/exxon-faces-proxy-
    fight-after-activist-nominates-four-directors
    “Exxon Mobil Corp. is heading for a proxy showdown after activist investor Engine No. 1 formally nominated four directors to the board of the energy giant, which is facing growing calls to change its strategy.”
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Global
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Europe
Pan-European developments
    UK
    France
    Germany
    Netherlands
    Italy
    Switzerland
    • Pestalozzi Law reports on Switzerland to adopt new ESG reporting obligations despite Swiss voters' rejection of the Responsible Business Initiative: https://pestalozzilaw.com/en/news/legal-insights/switzerland-adopt-new-
      esg-reporting-obligations-despite-swiss-voters-rejection-responsible-business-initiative/
      “After a controversial debate, Swiss voters rejected the Responsible Business Initiative (Konzernverantwortungsinitiative) in a public vote on 29 November 2020. The initiative aimed to impose additional due diligence and indemnification obligations on Swiss companies for damage caused abroad by subsidiaries under their control when violating internationally recognised human rights and international environmental standards. As a consequence of the rejection, environmental, social and governance (ESG) reporting rules and some limited due diligence obligations will now come into force based on an earlier, government-backed counterproposal to the Responsible Business Initiative, which was approved by the Swiss parliament in June 2020.”
    Spain
    • Europa Press reports that Inditex, reconocida con el Premio Manuel Olivencia al Buen Gobierno Corporativo por su gestión durante el Covid-19 (“Inditex, recognized with the Manuel Olivencia Award for Good Corporate Governance for its management during the Covid-19”) (in Spanish): https://m.europapress.es/epsocial/responsables/
      noticia-inditex-reconocida-premio-manuel-olivencia-buen-gobierno-corporativo-
      gestion-covid-19-20210120131102.html
      “The Cuatrecasas Foundation has decided to award Inditex with the Manuel Olivencia’s Award for Good Corporate Governance for its management during the Covid-19 health crisis. In the third edition of the Award, the aspects related to good governance during the crisis caused by the pandemic have been valued in a singular way, without neglecting the monitoring of other corporate governance practices.”

    • Compromiso Empresarial reports on Inditex, Mercadona and Seat, the most responsible and with the best governance during the pandemic (“Inditex, Mercadona y Seat, las más responsables y con mejor gobierno durante la pandemia”) (in Spanish): https://www.compromisoempresarial.com/transparencia/buen-gobierno-
      transparencia-2/2021/01/inditex-mercadona-y-seat-las-mas-responsables-
      y-con-mejor-gobierno-durante-la-pandemia/
      “In 2020, the three most responsible companies with the best corporate governance in Spain according to the Merco ranking are Inditex, Mercadona and Grupo Social Once. Likewise, on the occasion of the 10th edition, the 20 most responsible companies with the best corporate governance in the ten years of Merco R&GC evaluation have been honoured, with an accumulated ranking headed by: Mercadona (1st), Inditex (2nd) and CaixaBank (3rd).”

    • El Economista reports that Qatar Investment ranks among the three largest investors in the Ibex (“Qatar Investment se sitúa entre los tres mayores inversores en el Ibex”) (in Spanish): https://www.eleconomista.es/economia/noticias/11011258/01/21/
      Qatar-Investment-se-situa-entre-los-tres-mayores-inversores-en-el-Ibex.html
        “BlackRock, Qatar Investment and Norges Bank were the three largest investors in the listed companies of the Ibex-35 in 2020, with a portfolio of 58,180 million euros, which is equivalent to 13.8% of the capitalization of the Spanish selective at the end of the year, according to data from the National Securities Market Commission (CNMV) compiled by the newspaper Expansión.”

    • Expansión reports that Activist funds relaunch their offensive in Europe after the Covid pause (“Los fondos activistas relanzan su ofensiva en Europa tras la pausa del Covid”) (in Spanish):
      https://www.expansion.com/empresas/2021/01/24/600d3c08e5fdea8f718b4656.html “The Covid pandemic caused a drastic slowdown in the rise in influence of this type of investor in the spring of last year, due to, among other things, the uncertainty about the future of many sectors, as well as the generalised rejection that could be generated by the fact that these investors unleash campaigns against companies in the middle of a crisis in which they were fighting for their survival. In the last quarter, in Spain, funds such as TCI, Amber Capital or Oceanwood have taken a more active role in some of the companies where they hold capital.”
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    North America
    United States
    Canada
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    Asia
    Japan
    Hong Kong
    China
    • Bloomberg reports that UN Agency’s statement about China Overtook U.S. in Foreign Direct Investment: https://www.bloomberg.com/news/articles/2021-01-25/
      china-overtook-u-s-in-foreign-direct-investment-un-agency-says
      “China overtook the U.S. as the largest recipient of foreign direct investment in 2020, a year in which overall global flows cratered by 42% as a result of the coronavirus pandemic, a United Nations trade agency said. Flows fell to an estimated $859 billion from $1.5 trillion in 2019, according to the UNCTAD Investment Trends Monitor. It was the lowest level since the 1990s and 30% below the investment trough that followed the 2008-09 global financial crisis.”

    • The Financial Times reports that BlackRock and Vanguard face heavy burden of US sanctions on China: https://www.ft.com/content/f68aed6f-c395-4515-8041-
      a69107fb37c6
      “BlackRock and Vanguard face having to offload billions of dollars worth of investments in order to comply with the US government’s decision to blacklist Chinese companies with military connections. The order, which came into effect on Monday, has forced index providers, including MSCI, FTSE Russell, S&P Dow Jones Indices and JPMorgan, to announce the removal of several Chinese companies from their indices. The world’s two largest passive fund managers are particularly affected because of the amount of money they manage in funds tracking those indices.”

    • AsianInvestor reports that Private equity in China faces hurdles despite new rules: https://www.asianinvestor.net/article/private-equity-in-china-faces-hurdles-
      despite-new-rules/466097?
      “Hurdles such as foreign exchange limitations still exist, but the new rules could help private equity fund managers and investors with ESG integration. China’s new rules to strengthen governance and transparency in the private equity industry will help to align it with environmental, social and corporate governance (ESG) ideals , but the country's controlled currency exchange system will continue to keep foreign private equity investors at bay.”
    India
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    Australia
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    Contact
    Daniele Vitale
    Georgeson
    Head of Governance UK & Europe > Corporate Advisory
    daniele.vitale@georgeson.com
    T +44 (0)20 7019 7034 M +44 (0)7747 697 136 F +44 (0)870 702 0158
    Moor House, 120 London Wall, London EC2Y 5ET, United Kingdom
    www.georgeson.com

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