1. CEO pay: The outlier in compensation patterns. As the world faces a global recession hot on the heels of cost of living crises caused by the pandemic and inflation, executive compensation is facing more and more scrutiny. When the United Auto Workers went on strike, they argued that CEO pay for General Motors, Stellantis, and Ford had jumped 40% since 2019 while worker compensation increased by 6%. The salary ratio of CEOs to employees is almost 400:1, the highest in recorded history. Noone is arguing that CEOs have an easy job, however this staggering pay disparity in the face of unprecedented economic hardship is drawing attention and rightly so. As employees advance and receive salary increases, their annual raises tend to decrease as a result. This same pattern is not observed in CEO compensation at all. Employees are the backbone of a company and without fair, transparent worker compensation businesses risk setting themselves up for disaster.
2. European Union’s Carbon Border Adjustment Mechanism comes into force. On October 1st, the EU’s Carbon Border Adjustment Mechanism (CBAM) was formalised, and importers will have to release disclosures by the end of January 2024. The CBAM was developed to address carbon leakage. Carbon leakage occurs when companies produce goods in countries with looser emissions regulation and then import them into more strictly regulated countries to avoid financial penalties. The CBAM will place a tax on high emission goods produced in countries with lax carbon emissions being imported into the EU to close this emissions loophole. It will initially only apply to high carbon industries such as steel, cement, fertiliser, electricity, iron, and hydrogen production but will gradually expand beyond that in the coming years.
3. Historic win as Manitoba elects First Nations Wab Kinew as premier. Last week, Manitoba elected Wab Kinew of the New Democratic Party to replace Progressive Conservative Heather Stefanson as premier. He is Canada’s first First Nations provincial premier. This is a historic moment for Canada on the heels of the National Day for Truth and Reconciliation on September 30th. Kinew centred his campaign around improving Manitoba’s healthcare system, searching a Winnipeg landfill for two missing Indigenous women believed to be buried there, and addressing the homelessness crisis.
4. Nature Action 100 begins the engagement phase. Nature Action 100, a coalition of investors from around the world, has identified and reached out to 100 companies in industries most associated with biodiversity loss. These industries include agriculture, forestry, mining, and pharmaceuticals. Nature Action 100 has asked the companies in these sectors to take action to prevent further biodiversity loss as a result of their business operations. The investors in this coalition are hugely influential, as they manage about US $24 trillion in capital every year.
5. ESG bonds are losing momentum in the United States. Research by Goldman Sachs has found that U.S. companies “are on track to halve the amount of ESG-labeled debt they issue this year”. This comes at a time when the European Union is strengthening its ESG and climate commitments via the Carbon Border Adjustment Mechanism and Corporate Sustainability Reporting Directive. One reason for this trend in the U.S. is the fact that ESG has been facing partisan political attacks for over a year. Rising energy and fuel prices also play a part in this, as many fossil fuel companies have scaled back their climate commitments. Finally, rising interest rates and stubbornly high inflation numbers are pushing investors to focus on safer funds over relatively new ESG and sustainability funds.
Ira Srivastava is Competent Boards’ Program Coordinator. Follow Competent Boards on LinkedIn.