Across the Board
Opinion: Let’s End the Confusion and Clarify the Role of ESG
"Recently, there has been much confusion and misinformation about (1) environmental, social, and governance (ESG) considerations,(2) the ways in which companies, boards, asset managers, investment funds, and other market participants can, do, and should factor such considerations into their decision-making processes, and (3) the need for companies to consider, balance, advance, and appropriately protect stakeholder interests in order to create value, generate sustainable returns, and guard against downside risks to value and corporate health….The unfortunate confusion that has entered the contemporary debate regarding ESG misunderstands the fundamental purpose of the corporation. We continue to believe it is essential that boards operate under a governance model that permits consideration of ESG principles and sustainable investment strategies, with the support of investors and asset managers, to promote long-term corporate value and to fortify the enterprise against relevant risks. There should be no doubt that the law in Delaware and in every other U.S. jurisdiction empowers boards to follow this course for responsible corporate stewardship and corporate success. ” HARVARD LAW SCHOOL FORUM ON CORPORATE GOVERNANCE
3 Guidelines for A Board’s Effective ESG Plan
“…We suggest three key guidelines for boards to consider when making an effective ESG plan. 1) What Gets Measured Gets Managed: Gathering verifiable ESG data is a helpful starting point for boards to begin considering investor demands. In a survey done by Boston Consulting Group, 90% of companies did not measure their emissions correctly, with over half estimating an error rate of 40%. 2) Walk the Talk: The benefits of increased [board] diversity to stakeholders are becoming more apparent and include an increased variety of fresh perspectives, improved decision making and oversight and strengthened internal controls. 3) Command Over Compliance: … When board members see ESG as a core tenant of their governance strategy, rather than a compliance box to check off, they can go above and beyond accountability, becoming a leader in the ESG space.” NASDAQ
Hedge Fund Seeks to Oust Kohl's Leadership
"Ancora Holdings, one of the hedge funds that spearheaded a board shake-up last year at Kohl's Corp , is now pushing for the removal of the U.S. retailer's chief executive and board chairman, according to a letter sent to the company on Thursday.
The move marks the beginning of a new round of shareholder unrest for Kohl's after the company explored a sale and decided in July to remain independent...Ancora, which holds a 2.5% stake in Kohl's, asked for the replacement of CEO Michelle Gass and board chairman Peter Boneparth with business leaders who have operating expertise and experience in turning companies around...Ancora and two other investors reached a settlement with Kohl's in 2021 that led to three new directors joining the board." REUTERS
Activist Investor Urges Apple, Disney to Stay Out of Politics
“An activist investor who has been a sharp critic of so-called environmental, social and governance, or ESG, investing is urging Apple Inc. and Walt Disney Co. to not engage in political discussions and to make employment decisions without taking an individual’s race, sex or political opinions into account... Vivek Ramaswamy, who recently launched Strive Asset Management, said Disney should no longer take public positions on political issues that aren’t related to the company’s core business. The letter cited how Disney Chief Executive Bob Chapek took a stance on Florida’s parental rights in education bill…In a separate letter to Apple, Mr. Ramaswamy pushed back on the company’s plans to conduct a racial-equity audit and asked the tech giant to make all hiring decisions without taking into account political beliefs, race or sex.” THE WALL STREET JOURNAL
Environmental Group Urges Investors to Vote Against P&G Board
“Environmental groups are asking Procter & Gamble investors to vote against re-electing its chief executive as board chair, and also opposing two other directors at the annual meeting next month, according to a filing that claims the company uses too much virgin wood pulp in its paper products…Environmental nonprofits including the Natural Resources Defense Council (NRDC) have targeted the maker of Bounty paper towels and Charmin toilet paper over the last few years, and are also calling on the consumer products company to clean up how it sources palm oil from tropical rainforests.” REUTERS
Will Governance Issues Undercut Porsche IPO?
"Porsche's leadership set-up and the limited influence for stock market investors after its IPO are prompting some fund managers - particularly those focused on governance issues - to think twice about whether to invest in the listing. Volkswagen has said it will list its Porsche AG sports car brand this month or early next. Valued at up to 70-80 billion euros ($70-80 billion), it could be among Germany's biggest listings and Europe's largest since 1999.… Oliver Blume, who became the boss of Volkswagen this month, will also stay on as CEO of Porsche, raising potential conflicts of interest… Another [concern] is the relatively small proportion of shares being offered to external investors - just 12.5% of Porsche's total capital - which would leave them with little influence.” US NEWS
From the Boardspan Library
Board Members: Are You Thinking Like an Activist Investor?
"The growing drumbeat of investor activism isn’t just a trend; it’s a fundamental change in relationship between shareholders and companies…In many cases, the activists actually forced assets into play. Traditionally, such activity was viewed as a threat, but that may be changing. …Activists increasingly are coming prepared with ideas for growing shareholder value and improving business performance…Nevertheless, board members shouldn’t wait for activists to make moves. They should be prepared by clearly understanding the value drivers of the business and considering ways to improve them. The board and management should work together to understand activists’ interests and motivations, recognize factors that can cause them to take action, and respond swiftly and decisively if an inquiry surfaces.” DELOITTE via BOARDSPAN
