Watch out for assertive investors

What will investors be looking for this year from corporate governance? According to Russell Reynolds, a headhunting firm, investors will be more “assertive” and willing to vote for change; they’ll demand higher standards for climate disclosures; increased emphasis on equality, diversity and inclusive culture and “enhanced board effectiveness”.

In an article for the Harvard Law School governance blog, Richard Fields, Rusty O’Kelley III and Laura Sanderson from Russell Reynolds Associates write that UK companies face major climate reporting changes while “social justice, equity and inclusion” are key.

“Although the ‘E’ of ESG came to the fore in 2021, the ’S’ remains important. Investor focus on the diversity of boards continues with attention to turning to accelerating diversity among key roles and among executive directors. The board’s role in overseeing diversity and inclusion is also coming under increased scrutiny.”

Meaty topic for McDonald’s

Pigs may not fly but it seems animal rights do: Carl Icahn, the US financier, has launched a battle with McDonald’s over the treatment of pigs.

Icahn, an investor in the fast food chain, is demanding two seats on the company’s board and new commitments from the company to move to a “crate free” pork supply, and to a demanding timeframe.

The company says Icahn’s demands are “impossible” and argues it is a “leader” in this area, having made a commitment in 2012 to source from producers who reject the use of crates. McDonald’s expects up to 90% of its supply to be produced this way by the end of this year.

Nevertheless, McDonald’s and Icahn continue to clash, making animal rights and the plight of pigs a headline issue on the business pages.

Green fields and the FTSE

From free-range pigs to nature-loving chief executives. Much attention has been paid to companies becoming more focused on social justice, inclusion and environmental responsibility. But how do you create the incentives for CEOs if these topics are inherently difficult to measure?

One academic believes she may have a solution: hire a nature-loving CEO by measuring the volume of green space in their hometown, Weijia Zhi of the Frankfurt School of Finance, finds that a “CEO’s love of nature that was developed in childhood is positively correlated with a firm’s environmental protection record strategies.”

Cue headhunters everywhere looking for a database of green space.