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Mar 11, 2022

The week in investor relations: What Russia exits mean for ESG, Amazon share split and delisting fears resurface in Hong Kong

This week’s other IR-related stories that we didn’t cover on

– According to CNBC, as companies exit Russia with unprecedented speed, one of the questions being weighed is where this response to an act of unprovoked war fits on the spectrum of leadership decision-making. Is it a short-term pause, a sign of the greater influence of ESG considerations in the C-suite or a significant reshaping of corporate strategy and the economy around the theme of deglobalization?

For some experts in international business and management, current events appear as if they may go well beyond reputation management and to a fundamental shift from the post-World War II period of increasingly global markets and efforts to achieve global scale. Gary Hufbauer, a fellow at the Peterson Institute for International Economics, thinks the emphasis on CSR has played a role in the swift response.

‘My thinking is that we’ve had this period of emphasis on [CSR] and many CEOs and directors nominally saying they are all for it,’ he says. ‘With the ‘woke language’ of the moment they would be hard pressed by the background, their statements and the atmosphere not to be out in front of it.’ 

– US President Joe Biden signed an executive order calling on the government to examine the risks and benefits of cryptocurrencies, CNBC reported. It is a long-awaited directive that has had the crypto industry on edge, not least due to growing regulatory concern around the world regarding the digital asset market. The order calls on federal agencies to take a unified approach to regulation and oversight of digital assets, according to a White House factsheet. The measures announced on Wednesday will focus on six key areas: consumer and investor protection, financial stability, illicit activity, US competitiveness on a global stage, financial inclusion and responsible innovation.

– The Wall Street Journal (paywall) reported that Amazon’s board approved a 20-for-1 stock split and authorized the company to repurchase up to $10 bn of its common stock. An Amazon spokesperson said the split will make the split-adjusted share price more accessible for potential investors and will allow employees more flexibility in how they manage stock-based compensation. The stock split and authorized share increase are subject to shareholder approval at the firm’s AGM, which is scheduled for May 25.

– Hong Kong shares of dual-listed Chinese companies including NIO, and Alibaba plunged in Friday trade after fears of US-delisting resurfaced, according to CNBC. By Friday afternoon in the city, shares of tech behemoth Alibaba had fallen 6.56 percent. Electric vehicle maker NIO, which debuted in Hong Kong a day earlier, saw its shares plunge 11.64 percent. Baidu declined 5.14 percent, while NetEase slipped 6.94 percent. Those losses tracked declines for some US-listed Chinese stocks overnight amid renewed concerns over potential delistings stateside.

The SEC recently named five US-listed ADRs of Chinese companies that it said failed to adhere to the Holding Foreign Companies Accountable Act, fueling fears that more firms could be delisted.

– The WSJ reported that the Financial Crimes Enforcement Network (FinCEN) is warning financial institutions and cryptocurrency firms to be on the lookout for attempts to evade sanctions and other restrictions imposed as a result of Russia’s invasion of Ukraine. FinCEN issued an alert that includes red flags to help financial institutions identify potential sanctions-evasion efforts and to remind them to quickly report any suspicious activities.

FinCEN said sanctioned Russian and Belarusian entities and individuals may try to evade sanctions in various ways, including through non-sanctioned Russian and Belarusian banks and financial institutions in third countries. Some signs of possible evasion activity include the use of shell companies to obscure the ownership of entities or funds or to make international wire transfers.

– The Financial Times (paywall) reported that Goldman Sachs and JPMorgan Chase are closing down their businesses in Russia as Wall Street banks follow western companies in withdrawing because of Moscow’s invasion of Ukraine. Goldman on Thursday disclosed plans to pull out of the country. JPMorgan, the largest US bank by assets, followed hours later. Both said they were acting in compliance with government instructions.

‘Goldman Sachs is winding down its business in Russia in compliance with regulatory and licensing requirements,’ the bank said in a statement. ‘We are focused on supporting our clients across the globe in managing or closing out pre-existing obligations in the market and ensuring the wellbeing of our people.’ Reuters noted, however, that Deutsche Bank was ‘bucking the trend’ by maintaining ties with Russia, with the news agency saying the bank had faced ‘strong criticism’ as a result.

– The SEC proposed amendments to its rules with the aim of enhancing and standardizing disclosures regarding cyber-security risk management, strategy, governance and incident reporting by public companies. The proposed amendments would require, among other things, current reporting about material cyber-security incidents and periodic reporting to provide updates about previously reported cyber-security incidents.

The proposal would also require periodic reporting about a company’s policies and procedures to identify and manage cyber-security risks, the company’s board of directors’ oversight of cyber-security risk and management’s role and expertise in assessing and managing cyber-security risk and implementing cyber-security policies and procedures. In addition, the proposal would require annual reporting or certain proxy disclosure about the board of directors’ cyber-security expertise, if any.

– Credit Suisse set new targets to almost halve its exposure to the financing of emissions from oil, gas and coal between 2020 and 2030, according to Reuters. Switzerland’s second-biggest bank reduced its exposure to emissions it financed in the oil, gas and coal sector by 41 percent between 2020 and 2021, preliminary estimates in its sustainability report showed on Thursday, when it had around $2.6 bn in loans outstanding to such clients. The report marks the first time the bank detailed its exposure to financing emissions from the fossil fuel sector, which it estimated at 21.9 mn tons of CO2 equivalent for 2021.

Garnet Roach

An award-winning journalist, Garnet Roach joined IR Magazine in October 2012, working on both the editorial and research sides of the publication. Prior to entering the world of investor relations, her freelance career covered a broad range of...