International Women’s Day (March 8) is fast approaching, which celebrates the social, economic, cultural and political successes of women around the world.
Diversity, equity and inclusion is one of the most significant environmental, social and governance (ESG) topics for companies and communities the world over. Board directors and senior business executives need to lead by example, making changes where it counts: at the top.
1. Shareholder voting motivations. With proxy season coming around the corner, Insightia’s Shareholder Activism Annual Review sheds some light on what to expect this year. With the COVID-19 pandemic now in the rear-view mirror for many people, activist investing is back on the rise. According to the report, activist investors targeted 967 companies around the world in 2022, a rise by 54 over 2021. Partly due to the new universal proxy rules, 511 companies in the US faced activist demands, a 10.6% increase from 2021. Activists also zeroed in on Japan, spurred on by more domestic investors hoping to capitalize on undervalued companies. Last year, 108 companies faced activist demands, almost twice as much as the 67 and 66 companies targeted in the previous two years. However, in terms of ESG demands, only 11.5% were at least partially successful in 2022, a steep fall from 25.8% in 2021.
2. French bank faces legal jeopardy. A collection of climate activist groups have hit BNP Paribas, one of Europe’s largest banks, with a lawsuit that targets the bank’s financing of oil and gas projects. Friends of the Earth (Les Amis de la Terre) France, Notre Affaire à Tous and Oxfam France allege that BNP Paribas’ loans to major oil and gas companies contravene its legal binding duty not to damage the environment. The group says this is the first lawsuit of its kind against a commercial bank and that BNP Paribas is Europe’s largest and the fifth largest global funder of fossil fuel expansion. It is not the first time that climate campaigners have used the courts as a mechanism. Last year, a Dutch court ordered Shell to extend its planned greenhouse gas emission cuts.
3. D grades for deforestation. Global Canopy has released its annual report examining companies and financial institutions that are most exposed to forest-risk commodities. The Forest 500 reveals that one in four of those analyzed do not have a single policy on deforestation. Less than a third (31%) of the companies with the greatest influence on or exposure to tropical deforestation risk through their supply chains do not have a single deforestation commitment. Of those that do, only half (50%) are monitoring their suppliers or sourcing regions that align with their deforestation commitments. Just under two-thirds (61%) have no deforestation policies for any commodities, while the report also claims that asset management giants BlackRock, Vanguard and State Street have no policies in place at all. The report tracked the policies and performances of 350 influential companies and 150 financial institutions linked to deforestation in their supply chains and investments.
4. Carbon hits a century. The price of carbon in the European Union (EU) passed €100 for the first time in late February. Carbon pricing is one of the EU’s primary tools for fighting climate change. Now this threshold has been passed, many more companies may have to seriously consider investing instead in carbon capture and storage technologies, which would give a further boost to theclimate tech industry. EU companies that operate in the EU in the gas, coal power generation or industrial manufacturing sectors are legally obliged to buy carbon credits, with an equivalency of one credit per one tonne of carbon. The rise in coal consumption, triggered by Russia’s war in Ukraine and the subsequent energy crisis, has also helped carbon prices rise.
5. Failure to invest responsibly. The Point of No Returns, a new report by ShareAction, says that many global asset management giants are still not investing in a way that protects the planet’s climate, biodiversity and people. The four biggest and those with greatest influence — Blackrock, Vanguard, Fidelity Investments and State Street Global Advisors — all came bottom of the class, scoring D or E grades. Two-thirds of the firms surveyed, which control $60 trillion of assets, had “serious gaps in their responsible investment policies and practices”. European and UK firms Robeco, BNP Paribas Asset Management, Aviva Investors and Legal & General Investment Management (LGIM) topped the list. ShareAction concluded that this European dominance was caused by a supportive regulatory environment that focuses strongly on good corporate governance, climate change and stewardship. The report ranks 77 major asset managers, who control more than $77 trillion of assets under management, and ranks them in a league table.
Mathew Loup is Competent Boards’ Director, Marketing & Communications. Follow Competent Boards on LinkedIn.Back To News & Views