Governance News 6 July 2022

50 minute read (PDF download) 06.07.2022 Mark Standen, Siobhan Doherty, Kate Hilder

This week's issues covers several significant ESG developments including the US Supreme Court's decision finding the EPA lacks authority to set emissions standards for existing power companies as well as the results of a number of votes on shareholder climate proposals targeting Japanese companies. On the disclosure front, the issue covers ACSI's report into ESG disclosure by ASX 200 companies and our key takeaways from KPMG's in depth analysis of the extent to which ASX listed companies have adopted the changes introduced by the Fourth Edition of the ASX Corporate Governance Principles and Recommendations. The issue also includes coverage of key financial, risk and regulatory developments and more...

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Shareholder lobbying resolutions: ISS suggests the high failure rate suggests a majority of shareholders are satisfied with companies' additional disclosure
Investor backed trio of shareholder climate resolutions secured between 18-26% support at J-Power
Shareholder climate resolutions at four Japanese companies secured strong support

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No rubber stamp: Amundi and BNPP AM separately announce they supported fewer 'Say on Climate' proposals this year
In Brief | Scottish Widows' 2021 Stewardship Report flags that under a refreshed stewardship policy, the fund expects asset managers to become signatories to the UK Stewardship Code by 2024. The fund sees active stewardship as key to delivering benefits for savers and for the broader community, including delivering on its ESG commitments
In Brief | Gender diversity as a driver of higher returns? A Vanguard study has found that US active equity funds with gender balanced investment teams tend to outperform all-male or all-female teams, even where team members are similarly well-qualified/experienced

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SCOTUS rules the EPA does not have authority to set emissions standards for existing power plants
UK Climate Change Committee says existing programs will not deliver net-zero, calls for more focus on action
G7 to establish a 'Climate Club' to support implementation of the goals of the Paris Agreement
ICA declares NSW floods a 'significant event', reiterates the need for increased investment in mitigation and resilience

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Top Story | KPMG report finds smaller ASX listed companies have the most room to improve on E&S and Diversity
Overview of KPMG's analysis of the extent to which companies have adopted the updated ASX Principles and Recommendations
ACSI report finds ESG reporting is now the norm for ASX 200 companies
ASIC has encouraged stakeholders to make a submission on the ISSB draft standards
What good is a standard on financed emissions if there is no requirement to comply? New report finds 0% of
PCAF signatories comply with the PCAF standard, recommends the initiative adopt a tougher approach
CDP's 'Non Disclosure Campaign' continues to gain traction: Major investors with US $31 trillion in assets are pushing companies to disclose environmental data through the CDP
In Brief | The TFND has released a second iteration beta framework including initial guidance on metrics ahead of the planned release of finalised TNFD recommendations in September 2023

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APRA's post implementation review of Basel III liquidity reforms finds they are operating effectively, but highlights opportunities to further improve the efficiency of the prudential framework
Strengthening crisis preparedness: The ICA's submission on APRA's draft prudential standard CPS 190 calls for adjustments to address potential 'unintended consequences' for insurers
ASIC is consulting on remaking CO 12/752 on financial requirements for retail OTC derivative issuers for a further five years without significant change
APRA has finalised amendments to prudential standards to support the operation of the cyclone reinsurance pool
CCIV financial resource requirements: New ASIC instrument registered
In Brief | Australian Prudential Regulation Authority Supervisory Levies Determination 2022 setting financial institution's supervisory levies for the 2022-23 year has been registered
Post-implementation review: As required under the Your Superannuation, Your Choice Act, APRA is conducting a review to identify any unintended consequences of the amendments to the SSGA on the operation of Defined Benefit schemes. The due date for submissions is 8 September 2022
In Brief | ASIC has released Regulatory Guide 276 Superannuation forecasts: Calculators and retirement estimates (RG 276) and a new legislative instrument updating the relief for providers who use these tools. ASIC Commissioner Danielle Press said that the guidance will provide trustees with 'greater clarity' on how the tools can be used as part of their strategies under the retirement income covenant as well as 'greater flexibility' around how trustees can give estimates to their members

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Supporting stronger board/audit committee oversight of audit: ASIC to 'routinely' tell directors about negative audit findings

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Record losses: Australians lost over $2 billion to scammers in 2021 according to the ACCC's latest report
Digital Platform Regulators Forum identifies the impact of algorithms, increased digital transparency and increased collaboration as key priorities for 2022/23
AICD report highlights that though awareness of cyber risk among directors is high, boards have some way to go to improve
In Brief | 'Considerably more to do': ASIC has publicly reiterated that it expects market operators and participants to fully implement the expectations around responding to a market outage as set out in ASIC's 2021 report (Report 708) Report 708 was released in response to the ASX equity market outage in November 2020