The week in investor relations: Boost for US ESG resolutions, stacks of money to fight climate change and growing litigation over Spacs
– The SEC made it harder for US companies to block shareholder proposals on environmental and social issues, reported the Financial Times (paywall). The regulator has revoked policies that were put in place during the Trump administration, a move that will boost ESG investors filing resolutions. Previously, climate resolutions could be excluded for including targets or timelines, while social resolutions could be excluded if they focused on an issue not of ‘significance’ to the company. In the future, the SEC will not consider these as reasons for exclusion as long as certain conditions are met.
– The Wall Street Journal reported that Jes Staley stepped down as CEO of Barclays under pressure from regulators about how he characterized his relationship with the convicted sex offender and financier Jeffrey Epstein. Barclays said Staley stepped down ‘in view of the conclusions’ made by UK regulators in an investigation into what Staley told the bank about his association with Epstein and what it told regulators about the relationship.
– According to Reuters, litigation over special purpose acquisition companies (Spacs) is heating up, leading deal lawyers to take steps to help avoid such challenges. Attorneys are advising clients to more thoroughly vet a potential target’s business and to increase transparency around conflicts of interest and other issues that could spark lawsuits. The SEC is also ramping up enforcement actions and scrutiny of the Spac deals market.
– SoftBank, the Japanese technology group, is under pressure to announce a share buyback program to boost its flagging share price, according to the FT. ‘Multiple investors’ have told the newspaper that they spoke directly with the company about returning capital to shareholders. A buyback program would stand ‘in contrast to [CEO and chair Masayoshi] Son’s continued focus on pouring billions of dollars into early-stage start-ups,’ said the article.
– Nordic and UK pension funds committed to invest $130 bn by 2030 to fight climate change and report annually on the progress of their green investments, Reuters reported. The pledge, launched at the COP26 climate summit in Glasgow, Scotland, included asset owners in Sweden, Norway, Finland, Denmark, Iceland, the Faroe Islands and the UK, plus a fund from Greenland.
– Bloomberg reported that the Science Based Targets initiative (SBTi), which certifies corporate climate policies and introduced a net-zero standard for companies last month, published a report aimed at providing a foundation for reaching consensus on what ‘net-zero’ means. The paper should be seen as a ‘first step’ to develop a science-based net-zero standard for financial institutions, SBTi said.
– The International Organization of Securities Commissions, in an effort to curb greenwashing, published recommendations that its members are obliged to apply when scrutinizing how asset managers sell funds touting ESG good practice, Reuters reported. Regulators are playing catch-up to contain the risk of money managers overstating the ESG credentials of their products, with the value of such funds hitting a record $3.9 tn at the end of the third quarter.
– The WSJ reported that most of the world’s big banks, major investors, insurers and financial regulators for the first time signed up to a co-ordinated pledge that will incorporate carbon emissions into their most fundamental decisions. The United Nations’ Glasgow Financial Alliance for Net Zero said financial groups with assets of $130 tn have committed to its program to cut emissions. That is enough scale to generate $100 tn through 2050 to fund investments needed for new technologies, and enough reach to impose pathways for companies and financial institutions to restructure themselves, the group said.
– Shoe company Allbirds was hoping to attract investors that favor companies that put an emphasis on sustainability as it launched its IPO, according to CNBC. ‘We did get exposure to a lot more pockets of capital as a result of the fact that people saw the genuine and authentic leadership we’re putting forward on ESG,’ said co-founder and co-CEO Joey Zwillinger. ‘I think the demand was so great [because] investors were really attracted by the opportunity to put their capital against a great opportunity to create outcomes that were better for the planet.’
– ISS is seeking views from governance stakeholders globally with regard to a number of its proposed benchmark voting policies changes for 2022 and beyond. The comment period runs until November 16, 2021. Feedback is sought on 16 proposed policy changes. These include the assessment of and focus on the world’s highest greenhouse gas-emitting companies and adding policy provisions for say-on-climate votes. A new climate-related board accountability policy is proposed in several major markets, based on expectations from many investors that high-emitting companies should assess, mitigate and report on their climate change risks and targets.
– High-profile backers are among the investors in a start-up that wants to make more information available to the growing number of retail investors, reported CNBC. Quartr, a Swedish firm, has raised $4.5 mn to build out its services, which include providing earnings call recordings and corporate documents to retail investors. Backers include executives at the Ritholtz Group, including CNBC contributor Josh Brown, and Peter Sterky, a former Spotify executive.