Key Governance Developments - April 2023
Shareholders target social issues as well as climate change with AGM wage resolutions
Following the success of efforts to focus the attention of boards of directors and executives on sustainability and climate issues, activist investors, often backed by large institutional shareholders, are starting to raise social impact questions through resolutions at annual general meetings. A group of large asset managers and pension schemes including Legal & General Investment Management, Aviva Investors and Axa Investment Managers plans to target large UK companies, calling on them to pay their lowest-paid employees at least the living wage calculated by the Resolution Foundation think-tank - based on the amount workers and their families need to live - rather than the lower, government-mandated minimum wage. With annual inflation in Britain exceeding 10%, the investors, who between them manage around £2.4trn, plan to pressure companies including supermarket groups Tesco and Sainsbury's, fashion retailer Next and sportswear firm JD Sports to address hardship suffered by members of their workforce.

Shareholders call for greater environmental transparency at Glencore

Institutional shareholders including hedge fund manager Man Group and insurer Scottish Widows say they will back a shareholder resolution demanding greater clarity from mining and resources group Glencore about how its production and expenditure plans are aligned with Paris Agreement goals on curbing climate change. Last year almost 25% of shareholders rejected the company’s climate plan for failing to address their concerns, including a proposal to separate Glencore's coal business into a separate entity.

Best source: Reuters (free registration)

UK’s Legal & General Investment Management to back climate resolutions at eight US and Canadian banks

The UK's largest asset manager, Legal & General Investment Management, will support climate-focused shareholder resolutions at eight US and Canadian banks where it is among the 30 largest investors. It will back measures to set time limits for Citigroup, Bank of America, Wells Fargo and other institutions to end lending to and underwriting fossil fuel exploration and development. The group, which manages around $1.5trn in assets, will also support resolutions that would require Toronto-Dominion Bank, Goldman Sachs, JPMorgan Chase and Morgan Stanley to publish reports on how they are aligned with 2030 carbon emission reduction targets.

Best source: Reuters (free registration)

Institutional investors call on UK companies to offer living wage

ShareAction and 15 institutional investors that oversee £2.4trn in assets will vote in favour of shareholder resolutions calling on large UK companies to introduce the living wage of £11.95 per hour in London and £10.90 elsewhere, as part of their commitment to sustainable investment. Legal & General Investment Management, Aviva Investors and Axa Investment Managers are among fund management groups demanding that businesses such as supermarket groups Tesco and Sainsbury’s and retailers Next and JD Sport offer their employees more than the government’s National Living Wage rate of £10.42 per hour.

Best source: Reuters (free registration)

UniCredit shareholders approve CEO Orcel’s 30% pay rise

UniCredit shareholders have voted in favour of a 30% increase in CEO Andrea Orcel's compensation to €9.75m should the bank achieve its financial targets. The proposal to increase Orcel's remuneration package by almost one-third led last month to the resignation of the bank’s non-executive director and remuneration committee chairwoman Jayne-Anne Gadhia, after she was targeted by allegations, seemingly unfounded, that she had leaked information about the proposed increase.

Best source: Reuters (free registration)

Shell advises shareholders to vote against activists’ emissions reduction demands

The management of oil group Shell has advised shareholders to vote against resolutions filed by activist group Follow This and six institutional investors with $1.3trn in assets. They are demanding that the group commit itself to absolute emissions cuts by 2030, including scope 3 emissions from its supply chain and use of its products, rather than the current intensity-based targets. Shell claims the resolution is not in the interest of shareholders, the climate or good governance.

Best source: Reuters (free registration)

Environmental activist coalition calls for immediate end to insurance for new fossil fuel projects

Global activist movement Insure our Future has written to the CEOs of 30 insurers, calling on them to stop insuring new fossil fuel projects with immediate effect. The group also says insurers should not offer cover to new oil and gas clients that have not adopted binding targets to reduce their greenhouse gas emissions. The coalition of 23 climate groups says the insurance industry has not done enough to help achieve the 1.5℃ global warming ceiling enshrined in the Paris Agreement.

Best source: Reuters (free registration)

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A note from our new CEO
By Philipp von Restorff