Tax and tax transparency, ASX Listing Rules, Modern Slavery Act, Whistleblower policies, executive remuneration, climate change and culture.
ACSI submission to the GRI on Tax and Payments to Governments
ACSI submission on Simplifying, Clarifying and Enhancing the Integrity and Efficiency of the ASX Listing Rules
ACSI submission to the Board of Taxation on the Post-implementation review of the Tax Transparency Code
ACSI Submission on the Modern Slavery ACSI 2018 – Draft Guidance for Reporting Entities
ACSI submission on ASIC Consultation Paper 321: Whistleblower policies
APRA discussion paper 'Strengthening prudential requirements for remuneration'
EOS at Federated Hermes contributes to the development of policy and best practice on environmental, social and governance matters and shareholder rights to protect and enhance the value of the shareholdings of its clients over the long term.
In 2019, in relation to environmental concerns, Saker Nusseibeh, CEO of Hermes Investment Management, and Bruce Duguid, head of stewardship at EOS, attended a two-day Vatican summit on the energy transition, along with CEOs from major oil companies, asset managers and asset owners. The summit highlighted the need for urgent action on the climate emergency and focused on three key issues: a just transition to a low carbon economy; introducing reliable and meaningful carbon pricing; and transparency in reporting climate risks. Mr Nusseibeh signed two accords on behalf of Hermes on carbon pricing and transparency of financial risks, showing its commitment to taking genuine action on the climate crisis.
EOS is also an active member of the PRI’s Plastics Investor Working Group, advising on strategy and engagement. EOS gave feedback on the research for three PRI reports published in 2019, setting out what investors would find useful. The three reports explore why plastic is a problem, plastic value chain risks and opportunities, and how the plastic landscape is changing. The aim is to help investors identify where and how their portfolios might be exposed to plastic, so they can engage at the corporate and policy levels accordingly.
With regard to social issues, EOS responded to the UK Home Office’s consultation on potential revisions to the Modern Slavery Act and argued for a requirement to report on all six of the currently recommended areas, instead of adopting a ‘comply or explain’ approach. It supported the creation of a registry to enable stakeholders, including investors, to access companies’ modern slavery statements. It argued that a central registry should include a list of the companies caught by the Act’s reporting requirement, regardless of whether they had submitted a compliant statement.
EOS supported ‘Find It, Fix It, Prevent It’, a collaborative initiative to combat modern slavery. This calls on UK-listed companies to increase their efforts to address this issue and to support the provision of remedy to victims. And as an advisory committee member of the PRI cobalt supply chain collaborative engagement, EOS was the only investor representative to attend an OECD-led field trip to the Democratic Republic of Congo to see first-hand the human rights challenges, particularly around artisanal-scale mining. EOS also participated in an on-site OECD roundtable, sharing its perspective and experience with local and international stakeholders.
In relation to governance, EOS contributed to several reviews and consultations looking at ways to overhaul the UK audit sector, including the Competition and Market Authority’s study, the Business, Energy and Industrial Strategy consultation and the Brydon Review. In the consultations EOS expressed its concerns about audit quality, and called for more professional scepticism, with auditors prepared to challenge management, rather than taking a tick-box approach.
In the US, following moves by the Securities and Exchange Commission (SEC) to restrict rights relating to shareholder proposals and regulate proxy adviser activity, EOS wrote to the SEC pointing out that proxy advisers are contractual agents of institutional investors, not of the companies who are the subjects of their research.
EOS also joined an Asian Corporate Governance Association delegation to South Korea to engage with regulators, government departments and businesses on ways to improve corporate governance there. During the trip EOS urged stakeholders to do more to stimulate the economy and encourage entrepreneurialism, without diluting corporate governance standards. EOS argued against the proposed introduction of dual-class share structures, which may threaten minority shareholder rights. EOS also expressed the need for clearer guidance on the so-called 5% rule, whereby shareholders with a 5% stake in a company must state if they plan to influence management. The law was conceived as an anti-takeover measure but there are concerns it could make some asset owners reluctant to adopt the country’s stewardship code due to uncertainty about the legitimacy of engaging with companies on corporate governance.