Russian firms removed from FTSE

The war in Ukraine continues to have an impact on markets. Four Russian companies—Evraz, Petropavlovsk, Polymetal and Raven Property Group—will be removed from FTSE indices from next week.

FTSE Russell said their removal was due to brokerage firms no longer “supporting trading” of their shares and “therefore there is insufficient liquidity and market depth”.

Last week all non-executives quit the Evraz board.

Stakeholders ‘have chosen sides’

Elsewhere investment managers have it clear that dealing with Russian companies has become an issue of “stakeholder capitalism”.

In an article for the Harvard Law School governance blog, Peter Essele, vice-president of investment management and research at advisory firm Commonwealth, said that decisions by many western companies to part company with Russian interests was a “clear signal that that the world is pivoting to a stakeholder capitalism model, one that is designed to benefit all parties”.

“It’s possible,’ Essele writes, “that the autocratic regime in Russia didn’t fully appreciate the power of stakeholder capitalism. In the wake of the invasion, stakeholders have clearly chosen sides—and they do not include the Kremlin.”

This week the Institute of Directors said asset managers holdings stock in Russian companies “will be writing their value down sharply, if not to zero, and under pressure to sell if a market exists for them to do so”.

LGIM to vote against non-diverse boards

Legal & General Investment Management (LGIM) has revealed intentions to vote against five S&P 500 companies in the 2022 proxy season for failing to appoint at least one board member from an ethnic minority group by the end of last year.

A blog from the investment firm says it will mount opposition to boards at IPG Photonics Corporation, Mohawk Industries, People’s United Financial, Skyworks Solutions and Universal Health Services.

According to Clare Payn and John Hoeppner, ESG and stewardship managers at LGIM, the companies have been warned of the investor’s voting plans.

“Beyond that, as we have done for gender diversity on boards, we plan to extend our expectations to other regions and to smaller companies. There is much to be done and much more to come from us,” they write.

EU gender rules: ‘Nothing will be achieved voluntarily’

New rules compelling European Union companies to staff at least 40% of their board seats with women took a step closer to becoming law this week after two votes in the European Parliament.

Negotiations will now go ahead between the parliament and commission on details of what has become known as the Women on Boards directive. Evelyn Regner of the women’s rights committee of the European Parliament, said: “When it comes to equal representation, more than enough studies have shown that nothing will be achieved voluntarily. Binding standards are needed in all EU countries to ensure that women are fairly represented on the boards of private companies.”

US firms in ‘race to the top’ on standards

US companies can expect many more climate change resolutions this proxy season, as well as increased attention for diversity and inclusion and other “hot-button” social issues, according to observers.

Governance watchers from PwC and Broadridge Financial Solutions say statements from proxy advisers indicate “directors on boards of companies that are not taking proactive steps in these areas may face increased opposition.”

They say shareholders may be in a “race to the top” to see which investors “can hold their portfolio companies to the highest standards”.

Audit committees share climate woes

Audit committee members say their organisations are too slow in responding to climate change and lack strength. They also say they lack the “information, capabilities and mandate” to tackle climate-related responsibilities.

The news comes in a blog for the Oxford University governance blog from experts at audit and advisory firm Deloitte. They reveal 42% of audit committee members say their reaction to climate is not speedy enough, while 50% are concerned about data, expertise and their authority to push for change.

The writers say: “These responses are sobering and indicate that much work remains to be done in many of today’s boardrooms in order to come to grips with the climate emergency and its increasingly catastrophic consequences.”