This week, activist shareholders took boards to task on what they see as a litany of failings, from ESG complacency to mediocre performance - often resulting in conflicting agendas that are increasingly challenging for companies to navigate.
Shell is attempting to satisfy a complex set of demands. It has seen a
drop in investor support for its climate strategy. But at its AGM, a group of activist shareholders opposed the company’s development of fossil fuels, delaying proceedings for almost three hours.
More complexity at HBSC, where a provocative
speech on climate led the bank to suspend Stuart Kirk, head of responsible investing at HSBC Asset Management, pending an investigation.
“Who cares if Miami is six metres under water in 100 years?” he asked rhetorically, at the FT Moral Money summit last week. “Amsterdam has been six metres under water for ages, and that’s a really nice place.” He was attempting to make the case that central bankers and policymakers are overstating the financial risks of climate change, but not everyone saw it that way.
Some accused him of flippancy. But others welcomed his willingness to identify what they see as groupthink and inconsistencies in ESG investing.
Either way, HSBC has been under intense pressure from campaigners and shareholders for its role in financing companies with substantial greenhouse gas emissions.
Meanwhile, Amazon’s 14th biggest shareholder, Legal & General Investment Management, effectively
told Amazon founder Jeff Bezos to drop dead by voting against a raft of management proposals, including the election of several Amazon directors that include Bezos himself - the retailer’s former CEO.
Its rationale? “LGIM expects a board to be regularly refreshed in order to maintain an appropriate mix of independence, relevant skills, experience, tenure and background. LGIM also considers the CEO of the company to be accountable for any long standing ESG failings.”
LGIM follows Schroders, which
last week said that it, too, would be voting against Amazon’s management’s recommendations in three workers’ rights related resolutions. FT reporters in San Francisco explained the extent of Amazon’s activism challenge
here.
More battles at Toshiba, where the board has spent much time in recent years dealing with activist investors. A government backed fund, Japan Investment Corporation, is
weighing a takeover of the Japanese technology group in what would be the country’s biggest ever PE buyout, and a bid to end a period in which the company was probed over fraudulent accounting.
And executives have not escaped pay scrutiny. Pay-for-performance proposals at Boohoo were found wanting by the world’s largest sovereign wealth fund, Norway’s $1.2trn oil fund, in an
attack on what it called “corporate greed” and excessive pay for “mediocre performance”.
The FT’s Cat Rutter Pooley
explains why the UK fast-fashion retailer’s plans look like a company with mediocre performance finding a way to hand executives a bigger pay package.
Shareholders are likely to become increasingly restless as global economies continue to slow.
Federal Reserve officials are trying to bring down inflation without causing a recession.
As minutes released from the Fed’s early May meeting show, central bankers considered a more hawkish move to “restrictive” policy, with aggressive rises in interest rates. In the event, they agreed to keep increasing the main interest rate by 50 basis points “at the next couple of meetings”. A higher interest rates may risk a strong recovery in the US jobs market.
The US is still grappling with a paucity of workers. Desperate to hire as the US economy rebounds, companies are struggling to find enough qualified people to fill a record number of openings. For every unemployed US worker, there are 1.9 vacancies.
This data-led piece explains the extent of the problem in charts.
China, the world’s second-largest economy,
is struggling to record positive growth during strict Covid-19 lockdowns to battle Omicron outbreaks. Millions of people in Shanghai have been confined to homes for two months or longer. Premier Li Keqiang this week urged officials to help companies resume production.
Eurozone house prices are
set for a correction, according to the ECB.
And In the UK, chancellor Rishi Sunak came under intense pressure to
introduce a multibillion-pound emergency rescue package for families struggling with inflation and increased energy costs, in a week in which data showed people on the lowest incomes have been
hit harder than others. Energy companies’
shares slid on fears of a windfall tax.
Earlier in the week, the threat of a windfall tax led to confusion, with some energy companies rushing to trumpet their UK investment plans, while others
refused to disclose them.
Meanwhile in Davos, it may be spring but the mood is
sombre and uncertain.
Inflation, recession and the war in Ukraine have cast a shadow over the gathering of economists at the Swiss ski resort.
Rebranding is conspicuous, writes the FT’s Gideon Rachman. What was previously the Russia House, playing host to the country’s corporate and political elite, is now the Russia War Crimes House - taken over by Ukranians highlighting the horrors of invasion.
