September 16, 2021 | Editor: Martin Wennerstrom
Investors call for standardized environmental disclosure from private companies
Private market investors with USD 2.3 trillion in assets have teamed up with global non-profit organization CDP to create what CDP have called “the first ever standardized environmental disclosure platform specifically for private markets”. The investors are requesting more than 1,000 private companies disclose environmental data through the platform and thus begin to address the gap in transparency with listed companies which are subject to more stringent reporting requirements. The goal of the project, dubbed as the Private Markets Pilot, is to increase disclosure from private companies of all sizes, including those which have historically avoided environmental scrutiny and pressure to decarbonize. The platform launch comes on the backdrop of increasing divestment of high-carbon assets by listed companies to private firms. Notably, private equity net asset value has grown three times as fast as public markets since the turn of the century. The CDP platform will allow investors to benchmark private companies and compare them in terms of environmental performance. Additionally, investors will benefit from CDP’s emissions estimates, thus being able to calculate financed emissions and make informed investment management decisions.
Activist investor pushes RWE to divest lignite assets
Activist investor Enkraft Capital GmbH, which has taken a stake in Germany’s RWE, is urging the company to separate its assets that run on lignite and accelerate transition to renewable energy. According to the investor, the German utility company could double its value by closing its brown coal activities. Its share price could exceed EUR 61, while the company could also release reserves of up to EUR 13 billion which Enkraft estimates it currently spends on carbon emission permits. RWE’s stock closed at EUR 33.47 on September 14. Enkraft owns 500,000 RWE shares, less than 0.1% of the company’s capital.
EasyJet rejects unsolicited takeover bid
U.K.-based no-frills airline EasyJet plc has rejected an unsolicited takeover bid, opting to raise around GPB 1.2 billion through a rights issue and GBP 400 million in debt to help it recover from the pandemic. EasyJet said its board had unanimously rejected “a low premium and highly conditional all‐share transaction” which “fundamentally’’ undervalued the company. The bidder, reportedly rival Wizz Air, is no longer considering an offer for the company. Meanwhile, EasyJet will proceed with a rights issue, under which existing shareholders will be offered 31 shares for every 47 they own at a 35.8% discount to the expected market price. EasyJet share price dropped around 10% on the news.
Easyjet | The Guardian | Bloomberg
TCI nominates four directors to Canadian National’s board
TCI Fund Management Ltd. has nominated four independent directors to Canadian National Railway’s board and said it has identified a candidate for the CEO role. The announcement came one day after Kansas City Southern (“KCS”) decided to terminate a USD 30 billion merger agreement with the company, accepting a lower offer from Canadian Pacific. TCI, which owns a 5% stake in Canadian National, has previously criticized the company’s board for its lack of background in the railway industry, asking it to take responsibility for the failure of oversight in sanctioning the bid for KCS. In August, the U.S. railway regulator ruled against the use of a voting trust in the planned Canadian National- KCS deal.
PR Newswire | PR Newswire (2) | Businesswire | Yahoo Finance
Governance in Brief – March 23, 2023
SVB Financial Group sued after the collapse of Silicon Valley bank unit SVB Financial Group, the parent company of Silicon Valley Bank, and two of its top executives, CEO Greg Becker and CFO Daniel Beck, are being sued by shareholders following the bank’s collapse. The lawsuit, filed by retail shareholder Chandra Vanipenta on behalf of a group of shareholders, accuses the bank and its two top executives of filing false and misleading financial reports.
Governance in Brief – March 16, 2023
Canada introduces climate reporting framework Canadian regulators have issued new guidance for the country's banks and insurance companies to better manage climate-related risks. The framework, which requires disclosure on governance, strategy, risk management, and metrics related to financial institutions’ greenhouse-gas emissions, was first drafted in 2022.
Governance in Brief – March 9, 2023
The U.S. Congress has passed a resolution repealing a Department of Labor (“DOL”) rule empowering retirement plan managers to consider climate change and ESG factors in their investment decisions. The rule, introduced by the Biden administration, falls under the Employee Retirement Income Security Act (“ERISA”), a federal law which sets protection standards for participants in private pension plans. Biden’s ruling entered into force in January this year, overturning prior Trump-era DOL rules that limited pension fund managers to restrict their investment strategies to “pecuniary factors.”
Governance in Brief – March 2, 2023
Indian regulator proposes enhancement to ESG disclosure rules India’s securities and market regulator SEBI has released a new ESG disclosure framework for public consultation. The proposed regulations impact India’s 1,000 largest companies by market capitalization, ESG funds and ESG ratings providers. For the largest companies, the regulator proposes areas of assurance of ESG disclosures and reporting and assurance of ESG footprint of the supply chain. The proposals expand on the 2021 Business Responsibility and Sustainability Report (“BRSR”) guidelines and propose mandatory assurance of certain KPIs under ESG disclosure. The KPIs contain intensity ratios such as GHG emissions, water consumption, and waste generation. For supply chain, SEBI will introduce a comply-or-explain approach for the top 250 companies starting in 2024, and assurance beginning in 2025. For ESG funds, SEBI proposes that at least 65% of AUM be invested in companies reporting on comprehensive BRSR and provide assurance on BRSR core disclosures. Under the proposed rules, ESG rating providers should also provide a “core ESG rating” based on assured information in addition to their own products.