Key Governance Developments - October 2020

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Large US groups announce pledges on carbon neutrality and renewable energy

Leading US corporations have stepped up commitments to climate change and sustainability goals in pledges announced to mark Climate Week. Walmart and General Mills have published new net-zero emissions targets, while PepsiCo has set out plans to use renewable electricity, and AT&T says its global businesses will be carbon-neutral by 2035.

Best source: S&P Global Market Intelligence

Climate Action 100+ calls for companies to pledge net zero emissions

The Climate Action 100+ investor group has called on the world’s largest corporate greenhouse gas emitters to commit to net zero targets by 2050 or earlier, including for scope 3 end-user emissions. The group’s members, which manage more than $47trn in assets, say the 161 companies should set medium-term targets for reducing emissions by 45% from 2010 levels by 2030. Climate Action 100+ will create a new benchmark next year to track progress of the companies targeted, which include Chevron, Rio Tinto and Honda.

Best source: Financial Times (subscription required)

See also: Chief Investment Officer

China adopts stricter corporate governance rules for listed companies

The Chinese government has adopted measures to improve corporate governance and transparency at the country's listed companies, which number more than 4,000 and with a market capitalisation exceeding CNY79trn (€9.95trn). Stricter rules will apply to controlling stakeholders, directors, supervisors and senior management, with greater involvement for institutional investors in corporate governance. Tougher measures will be introduced against misappropriation of funds, market manipulation and insider trading.

Best source: Xinhua

More than 60% of FTSE 350 companies comply with new governance code

A survey by EY has found that 61% of companies in the UK's broad-based FTSE 350 index comply with all the elements of the new UK corporate governance code, while 80% comply with all but one provision of the code. Most non-compliance was related to a lack of independence among directors and chairs, remuneration committee independence and staff engagement. However, only 45% of the 100 firms polled comply with a requirement to publish a statement on how directors consider the interests of stakeholders when making key decisions.

Best source: Accountancy Daily

Vanguard votes against Alphabet, Uber and Ocado executive pay resolutions

US asset manager Vanguard has voted against CEO remuneration resolutions at Alphabet, Uber and UK online grocery delivery firm Ocado. It is the third year that Vanguard has voted against CEO pay at Alphabet, saying the $218m awarded to Sundar Pichai is not aligned with his performance, and the asset manager had the same complaint about Uber’s award of $55m in stock to CEO Dara Khosrowshahi. Vanguard also says the £58.7m awarded to Ocado’s Tim Steiner was excessive and poorly structured, despite the company's good performance.

Best source: Financial Times (subscription required)

See also: Philadelphia Inquirer