Governance News 11 May 2022

50 minute read + (PDF download)  11.05.2022 Mark Standen, Siobhan Doherty, Kate Hilder

This week's Governance News has a strong ESG focus and includes a wrap up of several recent Say on Climate votes as well as significant votes on a number of shareholder ESG resolutions.  On the risk management front, this issue also includes coverage of the landmark RI decision (Australian Securities and Investments Commission v RI Advice Group Pty Ltd [2022] FCA 496) and more…

Full coverage of this weeks content is now available.

Past issues are available

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Diversity  Navigation Show below Hide below

  • US Board Diversity: Heidrick and Struggles' latest report on Fortune 500 board diversity finds the boards are placing a higher value on cyber skills and sustainability experience 
  • Glass Lewis report finds that the UK's voluntary approach to increasing board gender diversity has proven as effective as binding requirements in other jurisdictions (though it considers that this success is underpinned by stakeholder pressure on companies to act and transparency)
  • The 'vast majority' of SEC-regulated entities elected not to report to the regulator on D&I practices

Remuneration Navigation Show below Hide below

  • Addressing the gender pay gap: European parliament votes to enter into negotiations on new pay transparency measures aimed at facilitating the comparison of salaries and the identification of gender pay gaps
  • UK poll finds there is strong public support for introducing curbs on CEO pay

Shareholder Activism Navigation Show below Hide below

Recent 'Say on Climate' votes

  • Say on Climate: 83.2% of Standard Chartered shareholders have voted to endorse the bank's climate plan, a rival shareholder resolution calling for tougher climate action secured 11.77% support
  • Say on Climate: Glencore's climate plan was endorsed by 76.28% of shareholders
  • Say on Climate: A 'resounding vote of support': 91% of Boeing shareholders have voted to endorse a shareholder 'Say on Climate' resolution at the airline
  • Say on Climate: 64% of Santos shareholders backed the company's climate plan, shareholder climate resolutions failed to be carried
  • In Brief | Say on Climate: 80.81% of Barclays shareholders have voted to endorse the bank's climate plan (19.19% against). Though the 'against' vote falls below the 20% threshold at which UK boards are expected to formally respond, ShareAction has called on the bank to nevertheless do so, including outlining the actions it will take to allay shareholders concerns
  • In Brief | Say on Climate: 84.29% of Rio Tinto Limited and Rio Tinto plc shareholders have voted to endorse the company's climate action plan (15.71% against). Market Forces considers the 'against' vote to be an indicator that shareholders want 'more ambition and accountability on Scope 3 emissions'

Other Developments

  • Three shareholder ESG resolutions at Berkshire Hathaway succeeded in securing over 25% shareholder support at the recent annual meeting
  • Activists are pushing for board change at Wendy's in protest over the (alleged) failure by the company to adequately respond to the majority vote on a 2021 shareholder workforce proposal
  • Encroaching on management: A shareholder climate resolution filed TotalEnergies will not proceed to a vote
  • Shareholder climate resolution received 19% support at Credit Suisse
  • Shareholder resolutions at Bank of America, Wells Fargo, and Citigroup calling on the banks to wind down fossil fuel financing failed to be carried
  • Climate lobbying: ICCR says shareholder climate lobbying proposals are proving effective in pressuring companies to act
  • Support for shareholder climate resolution at QBE down on 2021
  • AGL board reaffirms commitment to planned demerger, AGL's largest shareholder Grok Ventures has urged shareholders to oppose it
  • In Brief | Pesticide use in supply chains: A shareholder climate resolution calling on Archer Daniels Midland Company (ADM) to report on how the company is measuring the use of pesticides in its supply chains secured 33.7% of support at the AGM. As You Sow has welcomed the result and expressed willingness to 'work with' ADM on the issue going forward

Institutional Shareholders and Stewardship Navigation Show below Hide below

  • Say on Climate | Waiving through sub-par climate plans? ACCR analysis finds large investors' 'rubber stamped' Say on Climate resolutions in 2021, despite companies' lack of alignment with Paris

ESG Navigation Show below Hide below

  • Outputs are not the same thing as outcomes? Consultation seeks feedback on a new way to account for/measures the real impact of climate commitments
  • In Brief | Toymaker Mattel has announced a new target of reducing plastic packaging by 25% per product by 2030

Disclosure and Reporting Navigation Show below Hide below

  • SEC extends comment period on proposed climate disclosure rulemaking
  • Success? ShareAction considers that the Workforce Disclosure Initiative is driving improvement in workplace and supply chain practice
  • In Brief | The PRI has published a template letter to aid signatories in structuring their own response to the SEC's consultation on its proposed climate disclosure rule (the template is supportive of the proposed rulemaking)

Regulators Navigation Show below Hide below

  • Key takeaways from ASIC's latest quarterly update
  • SEC steps up its capability to 'police wrongdoing' in cryptomarkets
  • SEC calls on companies to provide detailed disclosure around the impact of Russia's invasion of Ukraine on their finances/business
  • AFCA has outlined its planned actions and timeline for implementing the 14 recommendations of the first Independent Review of the Regulator

Financial Services Navigation Show below Hide below

  • FPA calls on the next Federal government to provide certainty to industry on key reforms
  • APRA consults on proposed changes to prudential standards to support the operation of the cyclone reinsurance pool
  • In Brief | APRA has said that in light of feedback from ADIs that 'they are prepared, or could be prepared at short notice, for zero and negative interest rates on products that are more likely to experience such rates', the previously advised timeframe of 31 July 2022 for ADIs to meet APRA's expectations around their preparedness for dealing with negative interest rates is 'no longer considered relevant'.  APRA has flagged that it 'is reviewing its broader strategic approach and will provide a further update 'at the appropriate time'
  • In Brief | Insurance stress test: The UK PRA has launched its biennial insurance stress test. The regulator has asked a number of the largest regulated life and general insurers to provide information about the impact of a range of stress scenarios on their business by 28 September 2022

Risk Management Navigation Show below Hide below

  • Top Story | Perspectives on cyber risk: new threats and challenges in 2022
  • Federal Court finds RI Advice failed to adequately manage cyber risk
  • (Alleged) Gender-based pay discrimination: LinkedIn to pay $1.8m in back wages and interest to settle claims that the company underpaid female staff between 2015-2017
  • In Brief | Why not unlock an existing resource? Research released by Chief Executive Women suggests that increasing women’s participation in the paid workforce would address Australia’s current skills shortage – halving the workforce participation gap between men and women could result in 500,000 full time skilled workers with post-school qualifications filling job vacancies

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https://www.minterellison.com/articles/governance-news-11-may-2022