Governance News 27 April 2022

45 minute read (PDF download) 27.04.2022 Mark Standen, Siobhan Doherty, Kate Hilder

This issue has a strong ESG focus and includes a wrap up of recent ESG resolutions and BlackRock's 'net zero by 2030 statement' as well as coverage of the FRC's decision to introduce minimum diversity requirements into the UK Listing Rules and more…

Boards and Directors Navigation Show below Hide below

Top Story | National survey finds directors want action on climate

Remuneration Navigation Show below Hide below

Separate reports find CEO pay in the US and the UK has bounced back to pre-pandemic levels
COVID-19 has little impact on executive pay: UK report finds most firms did not implement executive pay cuts in response to the pandemic and that the cuts that were implemented tended to be modest in scale
In Brief | 'Shared responsibility': Mastercard has said it will extend the use of ESG goals (eg emissions reduction, financial inclusion and narrowing the gender pay gap) to all employee bonuses (rather than applying only to executive bonuses)

Shareholder Activism Navigation Show below Hide below

More Japanese companies than ever targeted with shareholder climate resolutions
Investors pre-declare their support for a shareholder climate resolution filed at Credit Suisse ahead of the AGM
Exxon board recommends shareholders reject a shareholder Scope 3 targets resolution, despite this Follow This predicts a majority vote
Shell shareholders facing a decision on whether to vote to endorse Shell's climate plan (in line with management's recommendation) or back a shareholder Scope 3 emissions reduction resolution at the upcoming AGM
ACCR welcomes Rio Tinto's exit from the QRC, calls on other QRC members to follow suit
Twitter board approves $USD44bn takeover by Elon Musk
Activist Carl Ichan steps up the pressure on McDonalds over its treatment of pigs

Institutional Shareholders and Stewardship Navigation Show below Hide below

BlackRock forecasts 75% of investments will be aligned with climate commitments by 2030
IIGCC releases an engagement toolkit for investors to support them in more effectively exercising their influence to hold companies to account on climate
In Brief | A year on from the establishment of the Glasgow Financial Alliance for Net Zero, Reclaim Finance (together with a number of other NGOs) has written to the Co-Chairs of the initiative calling for it to take a tougher stance including requiring member firms to: a) set interim emissions reduction targets; b) ensuring that carbon intensity targets are complemented by absolute emission targets; c) ensuring that fossil fuel and power company targets include Scope 3 emissions; and d) banning the use of offsets in meeting the 50% by 2030 target. The groups caution that the initiative risks becoming a 'smokescreen' to mask inaction by financial firms if it does not act
In Brief | Engagement isn't working to curb fossil fuel expansion? Reclaim Finance has published a 'scorecard' ranking 30 major asset managers on their climate commitments. Overall, the report concludes that in most cases, asset managers' engagement activities are 'toothless and effective' due to the absence of both specific requests – eg 25 asset managers have not set any expectation that their portfolio companies cease developing new fossil fuel projects (despite the fact that the asset managers in question are members of the Net Zero Asset Manager Initiative) - and 'credible sanctions'

Diversity Navigation Show below Hide below

The FRC is pushing ahead with the introduction of new diversity requirements into the UK Listing Rules
Insights from the Japanese mini-season: ISS has identified an uptick in board independence and board gender diversity
In Brief | A Californian court has ruled that a landmark diversity law, AB979 (requiring California-based public company boards to include a minimum number of members an 'underrepresented community') is unconstitutional. The decision on a separate challenge to SB 826 (which requires California-based company boards to meet minimum female representation targets) is still pending
In Brief | According to the latest DEI statistics released by Apple, 59% of open US leadership roles were filled by people from underrepresented communities over the past year, and 47% of open leadership roles globally were filled by women

Disclosure and Reporting Navigation Show below Hide below

SBTi launches its net-zero finance standard development process with the release of a 'foundations paper' setting out the SBTi's initial thinking

ESG Navigation Show below Hide below

Standard Chartered facing climate protests ahead of the upcoming AGM
In Brief | How to take immediate action on climate: The Governance Institute of Australia has launched a new guide to support boards and senior managers in taking meaningful action on climate. The guide outlines key steps - from initiating the initial climate conversation within an organisation, to mapping the specific impacts and formulating and implementing plans, to managing legal and stakeholder expectations - to ensure climate risk management is embedded into an organisation's strategy and reflected in reporting
In Brief | Transparency on climate action: The Commissioner of the California Department of Insurance has released a report and web page detailing insurance companies' investments in fossil fuels as well as their holdings in green bonds. Insurance Commissioner Ricardo Lara said the 'report is part of my continued comprehensive strategy to address insurance companies' fossil fuel exposures and hold them accountable while letting consumers judge these companies' progress on climate action for themselves'
In Brief | American Airlines has become the first airline in the world to have a science-based emissions target approved by SBTi. The SBTi approved target is to reduce carbon intensity by 45% by 2034 (compared to a 2019 baseline). The airline will monitor and reporting annually on progress in its ESG reporting

Financial Services Navigation Show below Hide below

APRA calls on industry to consult with regulators and conduct comprehensive due diligence to understand the risks, before expanding into cryptoassets
In Brief | The CBA has announced that current CBA Non-Executive Director and Chair of the Remuneration Committee Paul O'Malley will take on the role of Chair of the organisation from 10 August 2022, taking over from current Chair Catherine Livingstone who has held the role since 1 January 2017
In Brief | The Financial Planning Association has announced that Deputy Chair David Sharpe will take on the role of Chair of the organisation from 1 May 2022, taking over from Marisa Broome who has held the role since November 2018

Accounting and Audit Navigation Show below Hide below

UK audit reform: Three recent developments set to increase auditor accountability

Risk Management Navigation Show below Hide below

AUSTRAC has released new financial crime guides to help businesses avoid ransomware attack payments and prevent criminal abuse of digital currencies
In Brief | FRC report identifies 'significant shortcomings' in the quality of UK companies' modern slavery reporting

Contact

Mark Standen

Consultant, Sydney
- +61 2 9921 4902
- +61 412 104 902
Siobhan Doherty

Partner, Sydney
- +61 2 9921 4339
- +61 413 187 544

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Governance News 27 April 2022

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