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Jul 07, 2023

The week in IR: US and Europe split over climate resolution support, UK top target for activist rebellions and investors become selective in AI stocks

Our pick of stories from around the web that you might have missed this week

– As the 2023 results season draws to a close, it presents a mixed picture, according to Reuters (paywall). The general perception is that there has been a step back in the fight against climate change, amid record oil and gas prices and the political backlash against ESG in the US. But it’s more complex than that and any sense that oil and gas companies have ‘seen off’ investors concerned about climate change look to be very premature. There is a clear geographical split between Europe and the US, with support for climate resolutions holding firm in Europe but falling across the Atlantic.

Support for climate resolutions at US annual meetings fell from around a third to about 10 percent, said Mark van Baal, founder of pressure group Follow This, which has become one of the most visible filers of shareholder resolutions, particularly at oil and gas majors. ‘There is a concern that investors cannot separate short-term profits from long-term risks,’ said Van Baal. ‘This is the narrative of big oil: you have to choose between profit and the climate, which is just a fallacy. In fact, you have to choose between action and inaction.’

– Investors launched more environmental campaigns than ever before this year, as more companies came under pressure from a wave of shareholder activism, The Independent reported. The UK became a top target for activist investors as major firms like Shell, BP, HSBC and The Restaurant Group have faced shareholder rebellions this year. The number of activist campaigns has grown steadily each month since January, resulting in 25 launched across Europe in May, according to professional services firm Alvarez & Marsal. The growing momentum bucks the trend of previous years where new campaigns dipped after AGM season, typically in March and April. Environmental campaigns have become more prominent as activists ramp up calls for corporations to commit to stronger climate policies. They accounted for 12 percent of all activist campaigns in 2023, compared with just 4 percent in 2019.

– The rapid adoption of generative artificial intelligence (AI) boosted markets this year but, after the initial euphoria, investors are waking up to the possible risks, including the need to be highly selective in stock picking, Reuters reported. Businesses ranging from IT services and consulting to media, information and education are now under portfolio managers’ microscopes to assess the potential for AI disruption. The overall impact for corporate profitability is seen as hugely positive, yet beyond Nvidia and other obvious winners in the chip sector, analysts warn there might also be losers across Europe and the US. McKinsey says generative AI could add $7.3 tn in value to the world economy each year and believes half of today’s work activities could be automated between 2030 and 2060. That, however, means corporates also face big challenges, like redundancies and rethinking their business models, if they want to fully realize AI’s potential.

– Retail shareholders in Bidstack have deployed a rare technique to flex their muscle in an effort to force change at the top of the in-game advertising company, The Times (paywall) reported. Eight investors clubbed together to reach the 5 percent holding in the company required to force an emergency general meeting and challenge the way it is run. In a strategy usually reserved for big institutional investors, Nick Hargrave, owner of one investment platform, organized for stockbrokers, including Hargreaves Lansdown and Interactive Investor, to write letters to Bidstack on behalf of the shareholders, calling for two directors of the company to be ousted and for Hargrave to be appointed in their stead. The letters allege that the company does not communicate effectively with shareholders, has repeatedly diluted the share offering and has not put enough focus on cash management.

– Singapore is enforcing new crypto consumer protection measures as the city-state continues applying regulation to its burgeoning crypto industry, according to Decrypt.

Chief among the new measures, the Monetary Authority of Singapore (MAS) – the country’s chief financial regulator – will enforce a ban on lending and staking for retail investors, a measure that has been on the table since last October. The regulator will also require that exchanges move customers’ digital assets into a trust before the end of the year. This is to prevent an FTX-style scenario where their funds are commingled or traded.

The news comes a little over a week after MAS granted in-principle approval to Ripple for a Major Payments Institution License, allowing the company to offer crypto tokens and services in Singapore. In the US, Ripple has been locking horns in court with the SEC since December 2020, after the commission sued it for allegedly offering unregistered securities.

City AM reported that Crowdcube joined the alliance of brokers forming Retailbook, the new platform giving retail investors access to IPOs. Crowdcube, based in Exeter, UK, is one of the world’s largest equity crowdfunding platforms. Since its founding in 2016, it has raised more than £1.2 bn ($1.5 bn) for more than 1,300 businesses including Monzo, Revolut and What3Words. It joins existing partners Hargreaves Lansdown, Jefferies, Numis and Rothschild, enabling it to expand its model into IPOs. The partnership aims to further the democratization of capital markets and creates one of the largest single pools of retail investors in the UK to which a company may market its IPO.

Staff Writers

The staff writers on IR magazine are from our team of highly experienced journalists.