GOP: SVB? ESG!

So Silicon Valley Bank collapsed and there was a big rush to stave off general financial mayhem.

But did you know that it was “woke” that brought about the institution’s untimely demise? Oh yes. According to The Washington Post, the Republican Party’s finest have been lining up to blame ESG for the near extinction of the techies’ favourite lender.

James Comer, House oversight committee chair, apparently described Silicon Valley Bank as “one of the most woke banks”. Florida’s governor, Ron DeSantis, said “equity and inclusion” policies had “diverted” managers from “focusing on their core mission”.

Slow rise in interest

According to a new report, few banks appear to have fully integrated sustainability into their operations. Compiled by governance supremo Stilpon Nestor, now at the consultancy Morrow Sodali, the report delivers a conclusion that suggests banks are still in the early stages of placing sustainability at the heart of what they do.

“Few banks have reached the maturity stage where sustainability aspects are fully integrated into their internal credit ratings or market and operational risk framework. Many described themselves as still being at the beginning of that journey,” Nestor says.

That said, there are more European banks, 62%, that assess their entire portfolio from a climate risk perspective than in North America, where the figure is 50%.

The majority of banks, Nestor reports, still see sustainability as a “standalone” feature of what they do, instead of it being “integrated into the firm’s overall business strategy.”

Blame game?

Traditionally, fund managers vote their clients’ shares at AGM. Recently, however, there have been some innovations—with BlackRock leading the way—in allowing the beneficial owners to vote their own stock. Other fund managers are following suit. A triumph of democratisation for corporate governance, you might say.

But some are clearly seeing as something else: an effort by the fund managers to dodge the heat of criticism for voting “conservatively” on ESG proposals.

Louise van Marcke, a Belgian academic, writes in the Oxford University Law School governance blog: “There is something to be said for this position. Criticism that voting behaviour falls short on sustainability issues can probably only be directed at those who actually determine (ie, control) how the votes should be exercised. With voting choice, asset managers seem to have effectively created a way to deflect some of that criticism towards their funds’ institutional clients.” That has got to sting.

The people’s choice

Cross border mergers. Researchers in France have unearthed some news that until now seems to have gone unnoticed. According to an examination of more than 100,000 deals over three decades, more buyers come from democracies than other political systems.

“Democratic institutions have a fundamental influence on international merger activity because they are conducive to better corporate governance standards.”

In an age when Democracy seems to be under threat from the outside and inside, that’s at least one reassuring message.