Companies could do better, says FRC

Governance is improving, but there are still areas that need work. That unsurprising conclusion comes from the Financial Reporting Council (FRC), which says companies need to up their game on disclosures about board appointments, succession and diversity. Sir Jon Thompson, chief executive of the FRC, says: “As we emerge from the pandemic, companies should use this report’s example of good corporate governance policies and reporting to deliver long-term benefits for the company, for all its stakeholders, the economy and society as a whole.”

US shareholders take action on ESG

While US regulators decide whether they are pushing ahead with mandatory ESG reporting, it seems investors in Wall Street are taking their own action. A report reveals that the 2021 proxy season has seen 33 ESG proposals passed by shareholder vote, an 83% increase on the previous year. Altogether, 71 shareholder proposals in total were passed compared with 45 last year.

Elsewhere there is much disappointment with the ability of some institutions to come to terms with climate change. The European Central Bank looked at 112 banks and concluded: “None of the institutions are close to fully aligning their practices with the supervisory expectations.” The only good news, perhaps is that they have been “candid about their need to improve their management and disclosure of climate-related and environmental risk”.

Boards ‘should show pay restraint’

Grumbles about executive pay continue. A note from the Investment Association, a professional body for asset managers, says boards are expected to show restraint over executive pay. Despite concerns among some fund managers that their complaints about pay are being ignored, the IA says it remain a major concern in the coming year.

Andrew Ninian, director of stewardship at the IA, says: “Since the start of the pandemic the vast majority of FTSE companies have sensitively balanced the need to incentivise senior executives while at the same time fairly reflecting the experiences of their wider workforces, their stakeholders, and their customers. However, as we recover from the pandemic, ensuring this approach is maintained will be critical for investors.”

Meanwhile, earlier this week it emerged Legal & General Investment Management (LGIM) has given up lobbying boards about excessive pay because the engagement is proving futile. Angela Benham, an ESG manager at LGIM, told the FT: “Companies tend to do what’s right for management rather than listening to us, a shareholder.”

Stick to Peppa Pig

While some remain occupied with pay, others took umbrage at what they viewed as the prime minister’s attempt to muscle in on the way executives run their companies.

In a speech which quickly found notoriety for its shambolic presentation, Boris Johnson said Mother Nature “does not like working from home”, a nod to efforts aimed at persuading workers to return to the office. The Institute of Directors responded with a warning for the PM to stay off its members’ turf. “It is not for government to second guess what is appropriate for each business,” Alex Hall-Chen, senior policy adviser at the IoD, declared.