Welcome to your weekly corporate governance briefing. Next year’s event agenda is already taking shape. While there are no sign up links yet, it might be worth making a diary note for the following: October 18 | Generative AI Join the FT’s artificial intelligence editor Madhumita Murgia and guest to discuss how machine learning will affect your business.
November 29 | Forecasting the world in 2024 FT journalists including foreign editor Alec Russell, economics editor Chris Giles, US financial editor Brooke Masters, and world news editor Alex Barker will share their predictions.
As always, the latest stories and resources are on ft.com/board-network-members. If you have any membership queries, email [email protected]. Feel free to forward this newsletter to other directors. They can join FT Board Network via ft.com/board-network. Thanks for reading. Tech + investors = influence
BlackRock will ask investors to chose among policies ranging from voting with management to prioritising Catholic values or ESG © Bloomberg Among the monoliths of index fund management, something is shifting. BlackRock is to give investors in its $342bn iShares Core S&P 500 exchange traded fund an opportunity to influence the way the fund votes in 2024. Rivals State Street and Vanguard are also experimenting with increased investor participation in proxy votes. To be clear, this is a long way from smashing the block-voting influence of the behemoths. The BlackRock ETF, known as IVV, is the group’s biggest, but the asset manager has a total of $9.4tn under management. Also, IVV investors will only be permitted to select from a range of options, such as prioritising Catholic values or environmental, social and governance factors. They will not be able to pick and choose which way to vote on specific shareholder proposals at individual companies. The initiative is also coloured by more than a little self-interest on the part of BlackRock, which has come under intense political pressure, from all sides, about whether it is too “woke” or not woke enough in wielding its influence over corporate America. In reality, as a sceptical Lex note pointed out this week, inertia is likely to prevail and “most investors will continue to let the investment titan make calls for them”. Still, as technology to help individual investors to express their views improves, I suspect we’ll see more such initiatives. The news reminded me of the criticism levelled at shareholders by the late Paul Myners, former head of UK fund manager Gartmore and later a UK minister. In 2009, he accused them of being “absentee landlords” and urged shareholders to become more engaged on issues such as executive pay. Directors tend to pay attention when a big fund threatens to wield its votes en bloc. But if individual beneficiaries of ETFs and pension funds exert their influence more directly, it could make it harder for complacent boards and complicit fund managers to ignore pressure. What do you think? Email me with your thoughts on this or any of the items in this week’s newsletter. Chart of the weekFor decades, many traders who sold Russian oil called Geneva home. But this was upended when Moscow invaded Ukraine. The Swiss mirrored EU sanctions – and much of the trade in Russian oil moved to Dubai and other cities in the UAE. The energy trading industry in the UAE was already on the up – now that growth has been supercharged. “Dubai is the new Geneva,” says Matt Stanley, a former trader and 20-year industry veteran who now manages client relationships in the region for data provider Kpler. | How much is it worth to retain a star CEO? | Remuneration: Former investment banker William Cohan looks at the new pay package for Disney’s Bob Iger, alongside others, and asks why directors feel it necessary to boost already high executive pay | | | Over 25% of European financial services board members hold 4 or more posts | Overboarding risk: Of the 300 fund managers surveyed, more than 80 per cent believed holding more than three board positions could affect directors’ abilities to fulfill their duty | | | Hargreaves Lansdown chair to quit after criticism from co-founder | Strategy: The news that Deanna Oppenheimer will step down comes after Peter Hargreaves attacked the company’s costs and its plans to launch an automated advice service | | | | | | Best from elsewhereGolden age index 2023 | PwC This research measures how effectively countries include the over-55s in their workforces. New Zealand, Iceland and Japan top the rankings, while the UK lags in 21st position. Its main problem is “the poor participation rate of older workers in the labour market, which lags behind other advanced economies.” Empty spaces and hybrid places: The pandemic’s lasting impact on real estate | McKinsey Global Institute This report models future demand for office, residential, and retail space in “superstar cities”. In a moderate scenario, by 2030 demand for office space “is as much as 20 per cent lower than it was in 2019, depending on the city,” the researchers write. Does it pay to link executive compensation to ESG goals? | Stanford Business Researchers found that “when firms include emission-specific metrics in their executive compensation packages, they also achieve a subsequent decrease in their CO2 emissions”. Interestingly, however, no benefit is seen in financial performance or share price.
From FT Specialist’s AgendaDo boards need a devil’s advocate to navigate the culture wars? The appointment of “a temporary loyal dissident” to the board can help to bring in more perspectives, according to experts at the Women Corporate Directors Global Institute event, held in New York last month. Any other businessThe former Nissan chair has filed a $1bn lawsuit against the Japanese carmaker. It alleges defamation, slander, libel and “the fabrication of material evidence” by Nissan and about a dozen individuals. Nissan declined to comment on the suit. Have words of wisdom to share? Email me. |