Whilst most investor activism these days seems to focus on ESG issues, recent developments remind us that until fairly recently ‘shareholder activism’ was a largely financially motivated activity. Paul Singer, CEO of hedge fund Elliott Management, is known as the ‘the world’s most feared investor’ and judging by his latest investment it seems he is in no rush to lose this reputation. This ‘activist’ investor has reportedly accumulated a multi-million-pound position in GlaxoSmithKline (GSK) and plans to use its influence to shape the pharmaceutical company’s planned restructure. Under the watch of CEO Dame Emma Walmsley, GSK is expected to split its consumer arm – whichRead More →

Apparently, banks are doing enough to manage racial inequality and have told shareholders to vote down racial equity audit resolutions at their forthcoming AGMs. While agreeing that Blacks Lives Matter and supporting demonstrations following the murder of unarmed black civilian George Floyd by a police officer last year, Citigroup, Wells Fargo, Bank of America, Goldman Sachs, JPMorgan do not agree that they need to demonstrate their commitment to equality in their own organisations. The shareholder proposals – put forward by the Service Employees International Union and CtW Investment Group – call on banks to review their practices and policies and identify ways to ‘avoid adverseRead More →

Good news and bad news on the worker rights front this week. Share Action reports that more companies than ever are disclosing workforce data, yet that data demonstrates there is still a long way to go before employees can said to be treated fairly. The Workforce Disclosure Initiative (WDI) annual survey reveals major improvement in workforce transparency but this has only served to highlight just how big the gap is between executive and worker pay. 141 of the world’s largest listed companies disclosed to WDI in 2020, a 20% increase from the previous reporting cycle. The WDI revealed that participating companies are disclosing more dataRead More →

What a week for fast-food delivery service Deliveroo. With its much-awaited IPO this week more and more asset managers have stepped out to announce their refusal to participate in the offering. In a boycott that has forced the delivery company to set the final price at the bottom of its initial range which values Deliveroo at £1.3bn less than the top end of its original expectations, some of asset management’s biggest names have cited the food delivery company’s questionable labour practices as a reason to steer clear. Aviva, Legal & General, Aberdeen Standard, M&G, Rathbones, Jupiter, BMO and CCLA are among the institutions refusing toRead More →

This week’s edition of name that Uber driver’s employment status comes from the UK Supreme Court where 70,000 drivers will now be treated as full time employees entitled to the minimum wage, pension benefits, and holiday and sick pay. But only when they are driving and not if they are delivering for Uber Eats. This is the latest instalment in what must be the most convoluted labour battle for decades which has spanned courts across multiple continents with no two rulings seemingly the same. Refusing to make life easy for itself and concede that those who bring in the company’s income might deserve a fairRead More →

HSBC is the latest global financial organisation to bow to shareholder pressure and implement climate change initiatives across its operation. Rather than face a resolution from shareholders at its May AGM, the bank’s board has agreed to propose a new special resolution which will commit HSBC to phasing out financing for coal-fired power and thermal coal mining across the EU and OECD by 2030, and across the world by 2040. This goes further than its original pledge to simply limit the financial services it provides to fossil fuel producers in a bid to manage the impact of climate change. HSBC has also said it willRead More →

It was a dark day in the City this January when Amsterdam pushed the London Stock Exchange aside to become Europe’s biggest share trading venue. The Dutch city’s exchanges posted a higher average daily value of shares traded than London, at EUR9.2 billion compared with EUR8.6 billion, leaving the UK government scrabbling to put a finger in an increasingly leaky financial dyke. Last week, Chancellor Rishi Sunak published a review of the UK listing regime by Jonathan Hill, a former EU finance commissioner which suggests a series of measures to make London once again seem desirable. These included a relaxation of rules on dual-class sharesRead More →

More signs of investors starting to bring broader ESG concerns into their voting activity. First up the UK’s Railways Pension Fund has unveiled its new voting policy. This includes a commitment to challenge companies on issues including climate change, fair pay and workforce issues. The last point is particularly interesting as in our experience it’s still rare for UK asset owners to tie their voting activity to the S in ESG. The policy states: ‘We expect boards to be able to communicate the importance of the workforce in the context of the company’s business model and strategy, and how they engage with their employees –Read More →

PIRC recently held an ESG webinar focusing on the issues of industry and ownership concentration, and the questions that this might pose for investors. We are continuing to dig into the topic on behalf of our clients. But in the meantime we thought it useful to flag the issue of monopsony. Much of the emphasis in the literature on concentration relates to monopoly, where a dominant firm, or firms, has market power and can therefore have significant influence over prices. However, firms in concentrated industries might exert as much power as price-takers as price-makers. A single buyer is a monopsony. This is often understood asRead More →

In 2019 the High Court and the BEIS Parliamentary Select Committee debunked the myth that the public expected more of auditors in respect of dealing with fraud and going concern than is required of auditors. Some large auditors for many years have described this as the ’expectations gap’. However, from the High Court case, rather than the public expecting too much, the legal expectations might make people’s hair stand on end. Because of failing to find a management fraud the Court held that the auditor Grant Thornton was accountable for the financial consequences of the company trading unlawfully with defective accounts. The damages included dividendsRead More →