ESG topics related to women — Happy International Women’s Day!
Issue #71: A weekly update on responsible investment. Forwarded by a friend? Subscribe here.
Happy International Women’s Day to all! In honor of seeing a lot of great content dedicated to women circulating today, I wanted to highlight some of the female focused content I saw this week.
When will there be progress at the top?
First, I want to highlight an article I noticed a few days ago by the Financial Times titled “Big Business Fails to Promote Women.” I think it serves as a healthy reminder, there is still a long way to go for women in business!
It starts by highlighting: “The world’s biggest companies are still recruiting far more men than women for top jobs.” It then quotes: “A quarter of the largest 500 companies named a new chief executive or executive chair in the past two years, but only one in 10 of those appointed were women.”
This isn’t to say there hasn’t been any progress made. The article goes on to share: “In recent years, efforts to push companies to appoint more women to board positions have had some success. In the UK, the number of female directors across the largest 350 companies jumped by 50 per cent since 2015 — with women now accounting for a third of board members at those companies.”
Gender Lens Investing
Sharing an oldie but goodie I saw a piece re-shared on LinkedIn which offers a Guide on Choosing Impact Metrics for Gender Lens Investing.
What is Gender Lens Investing? The article offers a definition by an industry pioneer Suzanne Biegal:
“Gender lens investing can be defined in a few different ways. One is to think about how you integrate gender analysis into financial analysis to get to a better outcome in any investment. Another way is to think about how we use capital intentionally to achieve positive impacts on women and girls.
You might think about women’s access to capital. You might think about products and services that positively affect women and girls or take advantage of the women’s market. You might think about where women show up across the value chain of a business, in governance, in leadership, in supply chains and distribution channels all the way through to end customers. And you might be thinking about how we use our capital intentionally to shift structural gender inequality.”
What are some of the policies to consider?
- In-Company Policy
- Equal Pay
- Parental leave
- Safe place to work
- Standardized Impact Investing Metrics
- SDGs
- IRIS
Women and the Environment
As my final piece to share I saw a list created by Maria Carolina Fujihara, CEO of Sinai Technologies where she highlights some facts tied to the environment and women.
Check out some of the points:
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Top Stories
An ESG Reckoning Is Coming
How do we ensure that these companies follow through on their commitments? The authors suggest three ways to align the work of corporations with creating a more sustainable, inclusive, and prosperous economy.
- Companies should be required to publicly report on their social and environmental impact with clear, standardized, easy-to-understand metrics, such as carbon emissions, investments in training programs, and proportion of workers earning a living wage.
- Corporations need to be held accountable.
- If a company is serious about becoming more sustainable, inclusive, and socially responsible should consider putting their purpose into their charter and becoming benefit corporations.
Aviva becomes the first major insurer worldwide to target Net Zero carbon by 2040
Aviva has announced its plan to become a Net Zero carbon emissions company by 2040. This is the most demanding target of any major insurance company in the world today. The undertaking, which will inform every aspect of operations and investment decisions at Aviva, is part of its strategy to be the UK’s leading insurer, contributing to a sustainable economic recovery.
Aviva Press Release.
Europe’s VCs are working together to crack the ESG conundrum
All across Europe, VCs have been quietly meeting up over the past six months to discuss one thing: ESG (environment, social and governance).
- Early-stage funds GMG Ventures and Houghton Street Ventures hosted a kick-off meeting this week with 60 VCs investing at different stages across Europe to workshop a new ESG framework.
- Transatlantic fund Beringea will be collecting the results of a pilot scheme it conducted with eight startups, to test an ESG framework it developed in collaboration with more than 30 VC funds, including Localglobe, Playfair Capital and Octopus Ventures.
SASB XBRL taxonomy now available for public comment
SASB announced that SASB XBRL taxonomy is now available for public comment. The public comment period will be open for a period of 60 days. It ends on May 3rd, 2021. What are the key aspects of the taxonomy?
- Reporting Format Agnostic — The SASB Taxonomy is, by design, agnostic to the reporting format. It supports both the traditional XBRL format and the inline (iXBRL) format.
- Hierarchical Structure — The presentation of the taxonomy (using its presentation linkbase) identifies its structure. Refer to Figure 1 below for an example of the hierarchical structure of the taxonomy.
SEC Announces Enforcement Task Force Focused on Climate and ESG Issues
The Securities and Exchange Commission today announced the creation of a Climate and ESG Task Force in the Division of Enforcement. Consistent with increasing investor focus and reliance on climate and ESG-related disclosure and investment, the Climate and ESG Task Force will develop initiatives to proactively identify ESG-related misconduct. The task force will also coordinate the effective use of Division resources, including through the use of sophisticated data analysis to mine and assess information across registrants, to identify potential violations.
SEC Press Release.
FTSE 100 — the 5 highest ESG rated companies
- AstraZeneca (AZN)
- GlaxoSmithKline (GSK)
- British American Tobacco (BATS)
- Glencore (GLEN)
- Coca Cola HBC (CCH)
How the World’s LargestAsset Managers Are FinallyTaking ESG Seriously
The top 50 asset managers — with $60 trillion in assets — are signing on to sustainability codes, publishing ESG papers and voting policies, and paying for rating providers. According to a report The UN PRI is a “driving force” behind the integration of ESG factors into investment portfolios. One emerging area of interest for asset managers is tax policy, a subject area that is expected to grow.
Institutional Investor.
**Want to make your ESG processes digital, schedule a call to see a demo of Nossa Data’s software via emailing: team@nossadata.com
Report Highlight
2021 Global and Regional Trends in Corporate Governance
Harvard Law School Forum on Corporate Governance
Global Trends Predicted for 2020
- Greater focus on the E&S of ESG
- Increasing importance of corporate purpose
- Better board oversight of corporate culture and HCM
- More expansive view of board diversity that includes ethnicity and race
- Companies facing wider forms of activism
Global Trends Predicted for 2021
- Climate Change Risk
- Diversity, Equity & Inclusion (DE&I)
- Convergence of Sustainability Reporting Standards
- Human Capital Management
- Return of Activism and Increased Capital Markets Activity
- Virtual Board & Shareholder Meetings: Here to Stay
It gets really interesting after this because it offers a breakdown of requirements by country. For example, here is a look at US & Canada:
U.S. & Canada
Diversity, Equity and Inclusion (DE&I): Investors and other stakeholders expect material improvement in and disclosure of a company’s diversity data all the way from the boardroom (where directors will be asked to self-disclose their ethnic and racial identity) to the shop floor (in the US using EEO-1 data). Improvement in the ethnic/racial diversity of the board is a top 2021 priority for the three largest institutional investors (BlackRock, Vanguard, State Street), and they are prepared to use their voting power against nominating committee chairs and others if progress is not made.
ESG Oversight and Disclosure: Institutional investors have committed to increasing their support for shareholder proposals on “E” and “S” issues and holding directors accountable for oversight of related initiatives. With the shift in proxy fights focusing on ESG issues, proxy advisors are following suit as well. ISS’s 2021 voting policy update for the first time includes “whether a board has demonstrated poor risk oversight of environmental and social issues, including climate change,” as a failure of oversight and can now lead to an “against” or “withhold” vote on directors. In light of the Biden administration’s ambitious climate change and carbon neutrality goals and Larry Fink’s demand for net-zero plans, boards will have to ask themselves whether they have the proper oversight in place. Key priorities include having (a) timely ESG data sufficient relative to peers; (b) proper consideration of stakeholder interests beyond shareholders when crafting ESG initiatives; and © ESG integrated into business strategy.
Corporate Culture and HCM: Investors continue to increase expectations around the governance of human capital and culture, stating they will actively support more shareholder proposals and hold directors accountable. The COVID-19 pandemic has rapidly accelerated interest in how companies are approaching HCM and corporate culture and managing related risks. In November 2020, the SEC adopted new, principles-based HCM disclosure rules. These rules underscore the notion that employees are key to the value of an organization. The new rules require a description of the company’s human capital resources, including any human capital measures or objectives that management focuses on in managing the business. This includes actions that address attraction, retention and development of employees.
Executive Compensation: Investors will enhance scrutiny of executive pay incentives in light of attendant circumstances caused by the pandemic (e.g., company acceptance of government aid, layoffs, worker safety and treatment). Boards will have to consider — even more so than in years past — the reputational risks that accompany executive compensation decisions, particularly when meeting financial targets via extensive layoffs or other measures that hit frontline employees. Inclusion of E&S metrics in compensation decisions will serve as a stand-in for whether a board has truly integrated E&S into its strategy.
Technology and Cybersecurity: With an estimated 60 percent of global GDP enabled by or supported by technology and with frequent cybersecurity breaches across the S&P 500 (including the recent SolarWinds hack), investors will place increased scrutiny on board oversight and disclosure around this risk. In a PwC survey of business and technology executives, 96 percent of respondents said that they will shift their cybersecurity strategy due to COVID-19, and 50 percent said that they will consider cybersecurity in every business decision (up from 25 percent last year).
Political Contributions: Following the January 6, 2021, insurrection at the US Capitol, many companies have decided to reduce, pause or eliminate political campaign contributions. From Amazon to American Express to Marriott International, the list of companies rethinking their approach this year continues to grow. Many companies that have not yet made a change are under pressure from employees, customers and other stakeholder groups to do so. Time will tell as to whether these changes in corporate policy will be temporary or more permanent.
Return of Activism and Increased Capital Markets Activity: As noted in the global trends, we expect shareholder activism to continue its return in 2021 as the world begins to look toward a post-pandemic future. SPACs have recently skyrocketed in popularity in the US, with 230 new SPACs formed in the US last year, some 50 percent more than the total of the past four years combined. Although it will be important to pay attention to any new regulation initiated by a new Biden-appointed SEC chair, we expect the SPAC popularity from last year to continue.
Virtual Shareholder Meetings (VSMs): While investors were forgiving about the lack of functionality of many VSMs that were hastily put together in the face of the pandemic in 2020, they will be much less patient in 2021. Best practices have been codified in the Report of the 2020 Multi-Stakeholder Working Group on Practices for Virtual Shareholder Meetings, and boards should ensure that this year’s VSMs take those into account. Best practices cover issues such as submission of questions, treatment of shareholder proposal proponents and the use of audio versus video.
What content do you want to see next week?
Nossa Data aims to curate content on responsible investment and ESG to support leaders around the world in staying informed. Keep us posted on the content that is most relevant for you to learn about by replying to this email. We will do our best to include it in a future issue.
Kind regards,
The Nossa Data Team
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