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Georgeson
Georgeson Monthly Roundup - August 2020
Activism
global
europe
north america
asia
australia
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Latest Georgeson publications

Georgeson opinion on El País - Two decades of corporate governance in Spain 

In this opinion article, Carlos Sáez Gallego, Georgeson's Country Head for Spain, declared to El País, that in the last 20 years, Spain has witnessed an increasing number of initiatives related to good practices in corporate governance, promoted by the regulator and the pressure of various market players, which have helped Spanish listed companies to become more aligned with international corporate governance standards.

Read the full artcle here.

Shareholder Activism
  • Reuters reports that U.S. activists complain that virtual shareholder meetings let companies silence them: https://www.reuters.com/article/us-health-coronavirus-shareholdermeeting/u-s-activists-complain-that-virtual-shareholder-meetings-let-companies-silence-them-idUSKCN25E1FD. “This year, Danhof often found himself ignored, as companies held their shareholder meetings remotely during the COVID-19 pandemic, and asked investors to submit their questions online. Danhof said his questions on topics such as companies’ dealings with China or restrictions on financing gun makers were answered in only 13 of the 27 virtual shareholder meetings he and his representatives attended. “Companies used the crisis to set up question-and-answer sessions that are a joke,” Danhof said. His success rate was much higher when he could sit near a microphone or in a CEO’s line of sight during in-person gatherings, he added.  Danhof is not alone. Investors faced obstacles, such as not being able to ask questions or not having their inquiries addressed, about 55% of the time in a sample of 88 virtual shareholder meetings held this year and reviewed in a Hebrew University of Jerusalem study published this month.  The researchers did not provide such figures for in-person shareholder gatherings in previous years but estimated that this year’s virtual meetings had significantly increased the number of dodged questions.”
  • The Financial Times reports that Ethical CSR focus triggers hostile investor activism, study finds: https://www.ft.com/content/2ab06d51-bb6d-4f41-88cf-b220b2a4bcd1 “Companies that rank highly on corporate social responsibility measures are more likely to be the target of hedge fund activism, academic research has found. This is because some activist investors view CSR as a sign that a company is wasting money rather than focusing on shareholder returns, according to research […].”
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Global
  • ISS Opens Global Policy Survey: https://www.issgovernance.com/iss-opens-global-policy-survey/. “This year, the survey is structured to include questions related to ISS policy guidance released earlier this year in response to the COVID-19 pandemic, AGM formats, and stakeholder expectations regarding compensation and adjustments to incentives. Additionally, it also elicits feedback on a global level related to climate change risk, sustainable development goals, auditors and audit committees, and racial and ethnic diversity on corporate boards. At regional and market levels, the survey topics include independent board chairs in the U.S.; pan-European executive and director remuneration; director independence classifications in Russia; board and corporate governance reports in the Middle East; auditor fees in Sub-Saharan Africa; board independence, capital misallocation tied to cross-shareholdings, and director elections in Japan; director independence related to tenure in India; and material governance failures in Korea.” See the full survey here: https://www.issgovernance.com/file/publications/iss-2020-benchmark-policy-survey.pdf. The survey deadline has been extended and will close on August 28, at 5pm ET.

  • The Financial Times argues that The dubious appeal of ESG investing is for dupes only: https://www.ft.com/content/e9f00cb2-3cd8-499e-9e8a-dd837f94657e “Stakeholder capitalism should also be viewed suspiciously by anyone seeking real change.”

  • The Financial Times reports that ESG screens provided no protection in virus sell-off, says study: https://www.ft.com/content/330b3b61-ab53-43be-ad71-11afb0e5f45b “Analysis by Marty Fridson likely to add fuel to debate between supporters and detractors.”

  • Bloomberg reports that Private Equity’s Biggest Critic Sounds Off With His Final Warning: https://www.bloomberg.com/news/articles/2020-07-23/private-equity-s-big-returns-aren-t-what-they-seem-academic-says “When University of Oxford professor Ludovic Phalippou told financiers responsible for investing trillions of dollars in retirement money that the stated returns for private equity funds were nonsense, there were two reactions, he recalls. Some worried they could be legally liable for misunderstanding the data. And some wanted everyone to pretend the talk never happened. […] Last month, Phalippou fired off one final paper blasting the opacity of private equity fees and performance. He doesn’t plan to write on the subject again. […] He says he’s now switching focus to environmental, social, and governance (ESG) investing—a topic in vogue in finance. He’s curious about how to properly measure it and sees signs of green­washing, in which companies exaggerate the ESG benefits of an investment. ‘I have managed to piss off some ESG investors already,’ he says.”

  • The Financial Times reports that Larry Fink retains position as highest-paid CEO in asset management: https://www.ft.com/content/4345d095-62d8-4980-aa7d-80479f2ed21e “Combined pay and bonuses among industry’s leaders rises to $233m last year.”

  • The Financial Times reports that Calpers, Schroders call for mandatory inclusion of climate risks in accounts: https://www.ft.com/content/09444686-e4da-4360-98ba-51fc670c3826 “Big investors demand groups follow BP’s example and consider global warming risk in financial statements.”

  • Pensions and Investments reports on ESG investing momentum growing – survey: https://www.pionline.com/esg/esg-investing-momentum-growing-survey)Momentum behind ESG investing has grown since the COVID-19 pandemic, according to a survey of 500 global institutional investors released Tuesday by CoreData Research. The survey conducted in the second quarter found investors, including pension funds, endowments and foundations, sovereign wealth funds and banks, adopting more sophisticated and fully integrated strategies. CoreData found that 51% of the global institutional investors now fully integrate ESG into their investment approaches, up from 36% in the final quarter of 2019.”

  • Asian Investor Daily reports on Asian insurers building from the basics in ESG adoption: https://www.asianinvestor.net/article/asian-insurers-building-from-the-basics-in-esg-adoption/462640 “Regional insurers lack a holistic approach to ESG adoption, but appear likely to increasingly use exchange-traded funds as they increase their usage of the principles.”
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Europe
Pan-European developments
UK
France
  • Bloomberg reports about Backstabbing, Patronage And Squabbles in French Billionaire Class: https://www.bloombergquint.com/gadfly/lagardere-vincent-bollore-and-hedge-fund-amber-look-hard-to-beat. “The new coalition makes life deeply uncomfortable for Arnaud. Vivendi and Amber are Lagardere’s two biggest investors, with a combined 44% stake. Amber’s biggest complaint is an antiquated management structure that lets Arnaud retain de facto control of a company in which he owns just 7% of the stock. This partnership arrangement, known in France as a ‘commandite,’ also means Arnaud’s management firm is generously reimbursed, even though operational responsibility is largely delegated to Lagardere’s two businesses, publishing and retail. If Bollore and his hedge fund ally expected their combined might to weaken Arnaud’s resolve, they’ve been quickly disabused of the idea. On Aug. 17, less than a week after Vivendi announced it was teaming up with Amber, Lagardere’s board extended Arnaud’s contract by four years. That looked like an effort to shore up control before the reinforced opposition was able to drive through a board shakeup. It was also a pretty good demonstration of why Amber is so unhappy about the company’s corporate governance — the commandite structure means even the board can’t oust Arnaud until the end of his contract. Arnaud’s rearguard defense may yet be in vain, however. According to Reuters, Vivendi and Amber are seeking a shareholder meeting to change the board anyway. If no such meeting is approved by the current directors, as seems likely, a court case is bound to follow. Would a judge really dismiss the demands of such a large tranche of the shareholder base?”
Germany
Italy
Netherlands
Switzerland
Spain

Norway
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North America
United States
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Asia
Japan
China
Hong Kong
  • Bloomberg reports that Alibaba and Xiaomi get into Hong Kong’s Benchmark Index: https://www.bloomberg.com/news/articles/2020-08-14/hong-kong-s-benchmark-index-poised-to-include-tech-giant-alibaba "Alibaba Group Holding Ltd. will be included in Hong Kong’s Hang Seng in one of the biggest revamps in the benchmark index’s 50-year history. Xiaomi Corp. will also be joining the index, as will Wuxi Biologics Cayman Inc., according to Hang Seng Indexes Co. on Friday as it unveiled the first major changes since the compiler began allowing dual-class shares and secondary listings."

  • Reuters reports that China's Nongfu Spring to raise $1.1 billion in Hong Kong IPO: https://www.reuters.com/article/us-nongfuspring-ipo/chinas-nongfu-spring-to-raise-1-1-billion-in-hong-kong-ipo-idUSKBN25L04L "Chinese drinks maker Nongfu Spring 9633.HK will raise up to $1.08 billion by pricing its shares between HK$19.50 to HK$21.50 ($2.52 to $2.77) in its Hong Kong initial public offering, according to its prospectus."

  • China Daily Hong Kong reports that SFC approves in principle for 1st crypto exchange license: http://www.chinadailyasia.com/article/140900 “OSL said last November it had become the first firm to apply for a digital asset license from Hong Kong’s Securities and Futures Commission (SFC) under new rules allowing crypto exchanges to opt into regulation. No other company has so far said it has received such approval. Financial regulators worldwide have been debating whether and how they should regulate the cryptocurrency or virtual asset industry.”

  • The Financial Times reports on Vanguard to exit Hong Kong and move regional HQ to China: https://www.ft.com/content/ff29241a-def6-4c8e-86a6-910f591254b2 “Vanguard has announced it will exit Hong Kong and transfer its Asian headquarters to Shanghai in a move that will be seen as a blow to the former British colony where overseas companies have expressed concerns about China’s recent imposition of a controversial national security law.”

  • The Standard reports that Index compiler names new CEO: https://www.thestandard.com.hk/breaking-news/section/2/153943/Index-compiles-names-new-CEO “Hang Seng Indexes Company appoints Anita Mo as new chief executive from September 1. Mo will succeed Vincent Kwan who is to retire in January 2021 after 20 years. Kwan will take on the role of senior adviser."
India
Israel
  • The Israel Securities Authority has issued a Call for Proposals on Corporate Responsibility and ESG Risk Disclosures: http://www.isa.gov.il/sites/ISAEng/1489/Calls_for_Comments/Documents/ESG_Risk_Disclosures.pdf “In recent years, international investors, and especially institutional investors such as pension funds, insurance companies, and leading financial entities, are increasingly looking at corporate social responsibility, and no longer relying exclusively on yields in their investment decision-making. […] Given the complexity of the issue, ISA staff believes that it is important to hear the public’s preliminary opinion on the subject. Specifically, the public is invited to address issues including the need for ESG disclosures, whether disclosures should be mandatory or voluntary, whether disclosures should apply only to reporting companies according to the securities laws, and whether securities laws is the most appropriate framework for such disclosure requirements.”
Taiwan
  • Taiwan News reports that Taiwan launches new ESG dashboard: https://www.taiwannews.com.tw/en/news/3996307 “Taiwan Depository & Clearing Corporation works with world's top ESG rating providers: FTSE Russell, ISS ESG, MSCI, Sustainalytics.”
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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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