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The unprecedented situation the entire world finds itself in due to the COVID-19 pandemic presents fundamental challenges to businesses of all sizes and maturities. As the thinking shifts from crisis response to recovery, it is clear that there will be a greater need for scenario planning in a world remade by COVID-19. Artificial Intelligence (AI) will likely be at the forefront of data- driven scenario planning given its ability to deal with large volumes and varieties of data to match the velocity of a rapidly changing landscape. Even before the pandemic, the areas for which boards of directors have oversight responsibility seemed to expand on a daily basis. The last few years have seen increased calls for board oversight in areas such as cyber, culture, and sustainability, to name just a few areas of focus. And the challenges posed by the pandemic have further increased the number and importance of boards’ responsibilities. In addition, boards will increasingly be called upon to address an emerging area of oversight responsibility at the intersection of AI and ethics. [...] As is typical of many aspects of technology, AI offers numerous benefits, including speed, consistency, and reduced labor costs. And as more and more enterprises use AI, and the use of AI expands into new areas, companies may find it increasingly important to use AI to avoid the competitive disadvantages of not using it. However, AI poses risks as well as benefits. Some of these risks are unrelated to ethics, ranging from minor ones such as the failure of speech recognition to accommodate accents to major ones such as contamination of a water supply or the shutdown of a power grid. Real-world examples of AI gone awry include systems that discriminate against people based on their race, age, or gender, and social media systems that inadvertently spread disinformation.
Despite long-standing efforts to understand the proxy advice market, there is no way to identify the firms that supply specific investors with proxy advice, making claims about market shares conjectural at best. Nevertheless, it is widely believed that ISS and Glass Lewis control 97 percent of the market. However, ISS itself refutes this figure, saying it “is not a statistic we have verified or can confirm”. [1] In a new working paper, I use a largely unnoticed feature of regulatory filings to identify mutual funds’ voting platforms. I then provide what may be the first detailed depiction of the proxy advisory industry and proxy advisers’ influence on their customers. [...] With the identification of each mutual fund’s purchase of proxy service from either ISS or Glass Lewis, I provide what appears to be the first look at the dynamics of the proxy advice market. The following figures display the total net assets managed by ISS and Glass Lewis’ customers and their relative market shares. In 2017, ISS controls 63 percent of the proxy service market for mutual funds in the U.S. ($13.4 trillion assets from 134 fund families), and Glass Lewis controls 28 percent of the market ($6.0 trillion assets from 27 fund families). That implies ISS and Glass Lewis jointly control 91 percent of the market. Contrary to popular belief, I find that the proxy advice market has become less concentrated over the last decade. In 2007, ISS and Glass Lewis jointly controlled 96.5 percent of the market. The result shows that ISS is gradually losing market share to Glass Lewis and boutique proxy advisors.
Elon Musk’s SpaceX has applied to Canada’s telecom regulator for a licence as it plans to start beaming high-speed internet to hard-to-reach parts of the country from its constellation of satellites. Space Exploration Technologies Corp.‘s application for a Basic International Telecommunications Services (BITS) licence, which was posted on the telecom regulator’s website on May 20, has already garnered hundreds of responses, many of them from rural Canadians cheering on the initiative. “My home has no reliable access to the internet,” wrote Daniel Doucette, a resident of 100 Mile House, a town in the South Cariboo region of central British Columbia. “This would be of great value to me.” [...] SpaceX did not respond to a request for comment. But the website for Starlink, the rocket-launching company’s satellite internet startup, says it is aiming to start offering services in Canada and the northern United States in 2020 and expand to “near global coverage” by 2021.
On 19 June 2020, the Swiss parliament finally approved a general corporate law reform. The Act amending the Swiss Code of Obligations (Corporate Law Reform) originates from a draft bill the Swiss government published for consultation some thirteen years ago. The project was revised several times, including as a result of the adoption of the Minder initiative, resulting in a draft bill in 2014 and a bill in 2016 which was further amended following the debate in parliament. The Corporate Law Reform seeks to modernise corporate governance by strengthening shareholder rights and promoting gender equality in boards of directors and in senior management. It also replaces the provisions of the Ordinance on Excessive Compensation (MinderOrdinance) with only a few changes. Furthermore, it aims to facilitate company formation, makes capital rules more flexible and reforms the rules on corporate restructurings. Finally, it introduces certain disclosure requirements for commodity firms. The effective date of the Corporate Law Reform has not yet been.
(Reuters) - U.S. companies that spend more on social and environmental causes, such as sustainability or charitable donation programs, are more likely to attract hedge funds that challenge their strategy and board, according to a new academic study. The study’s findings underscore the pressure on companies to balance the interests of Wall Street and Main Street as management fields calls to protect companies’ share price while doing more to tackle social inequality. This tension has intensified in the wake of the COVID-19 pandemic and U.S. protests over racism and policing after the death of a Black man, George Floyd, in police custody. U.S. companies have about a 3% chance on average of being targeted by an activist hedge fund, but the probability nearly doubles for those who are top spenders on corporate and social responsibility (CSR) programs, according to the study, which analyzed 506 instances of shareholder activism between 2000 and 2016. “CSR spending can be an indicator (to hedge funds) that there might be some wasteful spending at companies and that maybe top management isn’t focused on the short-term returns,” one of the study’s authors, Pennsylvania State University professor Mark DesJardine, said in an interview. [...] While hedge funds are rarely explicit in their demands to companies about doing away with CSR spending, their focus on cost-cutting often results in the scaling back of these programs, according to the study. As a result, the targeted companies become reluctant to invest in CSR, even after the hedge funds have cashed out on their stock. [...] DesJardine said that the economic uncertainty fueled by the pandemic will pit the need of many companies to protect profits by cutting costs against calls by their customers, vendors and others to demonstrate a strong social conscience. “This will increase the tension companies face when deciding how to balance social spending and short-term profitability pressures,” DesJardine said.
Corporate boards are handing out millions to top executives before their companies seek bankruptcy protection, and courts can’t do much about it. [...] The coronavirus recession is pushing many companies into bankruptcy, a painful process that has led to layoffs, wiped out some investors and hurt the economy. But the chief executives of some of these businesses are doing just fine. Companies that are struggling to pay creditors and suppliers are managing to find millions of dollars to pay bonuses to their bosses. The payments, which are made just before a bankruptcy filing, appear to be legal and have been made by several companies. [...] Companies have said the payments are meant to help them retain qualified executives through the recession and bankruptcy. But critics counter that the money would be better spent on rank-and-file employees. [...] But other corporate boards, which hire the chief executive and set compensation for senior officers, seem to be showing more grace toward the boss. In many cases, the executives could do little to prevent the crushing falloff in business that occurred when the pandemic and lockdowns stopped people going into stores, eating out and taking trips. [...] Typically, a company in bankruptcy court has to get a judge’s approval before doing just about anything of importance, especially spending millions of dollars. If a chief executive got a new compensation package during bankruptcy, a judge would have to decide whether the compensation was justified after hearing from creditors, shareholders and other groups. But this can be a drawn-out and expensive process — a big reason companies pay bonuses before bankruptcy. [...] As a result, boards have quickly changed how top officers are paid, giving them cash bonuses instead of stock-based awards. But paying cash up front can be a windfall for chief executives when the livelihood of employees is under threat.
The chief U.S. securities regulator has uncovered problems with conflicted relationships and inadequate fee and expense disclosures at private-equity firms and hedge funds, issues it said may have unfairly harmed investors. The Securities and Exchange Commission laid out the types of failures it has seen in recent examinations of investment firms in a public alert released Tuesday, without naming individual firms found to have problems. The alert is intended to help private-fund advisers improve their compliance programs and give investors information on what to look out for, the agency said. The SEC identified nine broad types of conflicts of interest it has seen in its exams, including giving preferential treatment to certain investors and having multiple companies owned by the same firm doing business with one another. The SEC also flagged as a problem how some firms have handled material nonpublic information, such as insider information about companies they do business with. [...] “In effect, the SEC is trying to signal to the investment-advisory industry the practices they’re seeing that they don’t like so advisers have an opportunity to fix them,” he said. On fees and expenses, the SEC saw fund advisers improperly splitting fees among fund investors, causing some to pay more and some less than stated in relevant documents, as well as overcharging and failing to properly reimburse investors for fees and expenses.
With the 2020 proxy season now concluded, thousands of U.S. public companies have filed their proxy statements highlighting key trends with regards to their governance practices. Among the many trends captured from this year’s proxy season are those related to Say on Pay and the CEO Pay Ratio. In this post, Equilar analyzes Say on Pay voting results and the effects of the CEO Pay Ratio on Say on Pay among Equilar 500 companies—the 500 largest U.S. public companies by revenue. A decade following its inception, Say on Pay continues to play a pivotal role in providing shareholders a platform to voice discontent over executive compensation pay practices. In particular, shareholders seek for executive pay plans to align with company performance and shareholder return, and when that alignment is not present, executive pay is likely to come under some level of scrutiny. While executive compensation packages have been largely accepted by investors, approval percentages have steadily declined in recent years. During the first five years following the implementation of Say on Pay, a large proportion of companies passed their Say on Pay votes with over 95% support. However, so far in 2020, just 28.1% of Equilar 500 companies passed with more than 95% support—this represents a near 20 percentage point decrease from 2016 when 47.8% of companies passed with such level of support (Figure 1). Three-fourths of companies still passed their Say on Pay votes with over 90% support.
[...] Many of us know the survey that found 80% of CFOs would decrease spending on R&D to meet earnings targets, while 59% of executives would delay high net present value projects to avoid missing targets by a dime. “While asset owners may be focused on the long term, managers may not be. Yet, more than 40% of professionally invested assets are now invested using some form of ESG criteria. About half of that is exclusionary (guns, tobacco, coal); 10% engaged (advocates like me); and the rest is “ESG integration,” which I take to mean factoring in metrics managers hope are correlated with financial performance, such as SASB reports. [...] Henderson is hopeful that $68T is expected to transfer from baby boomers to younger generations, more interested in impact investing. I think many are underestimating the interest of baby boomers in impact investing and proxy voting. They just don’t have the right tools. We need to educate brokers and investment advisors now, not wait for people my age to die off. [...] In the final analysis, Henderson appears to come down to the following three routes to rewiring finance:
(A) Develop and utilize accounting standards so that firms “routinely report material, replicable, auditable ESG data in addition to financial data. (SASB) Almost everyone agrees to this one.
(B) Rely in impact investors, employees or customers for funding. The challenge is to scale.
(C) Change the rules to shelter managers from investor pressure. BlackRock, Vanguard, State Street and other largely passive investors are already sheltering managers. It does not work. Accountability is key.
Instead of focusing solely on surface-level diversity characteristics, boards should select demographically diverse candidates who also improve cognitive differences in the boardroom. To make sure that boards are able to take full advantage of the contributions their directors can make, we recommend that they work diligently to ensure that diverse perspectives are welcomed in the boardroom, drawn out during deliberations, and incorporated into the decision-making process.
Wirecard AG’s former chief executive officer was detained by Munich prosecutors as the scandal over 1.9 billion euros ($2.1 billion) that went missing from the Germany’s fintech company triggered calls from the government for urgent regulatory reform. Markus Braun, who resigned last week, turned himself in Monday evening in Munich as part of a probe into the company’s accounting practices, prosecutors said in an emailed statement. At a hearing Tuesday afternoon, he was granted bail of 5 million euros ($5.67 million) -- one of the largest amounts ever posted in Germany. The company is fighting for survival after acknowledging the missing funds probably don’t exist. The payment processor said it’s in discussions with creditors and is considering a full-scale restructuring after pulling its financial results for fiscal 2019 and the first quarter of 2020. The scandal has become a national embarrassment for Germany and prompted Finance Minister Olaf Scholz to call for urgent reforms of the country’s financial regulation after the nation’s top supervisor BaFin was criticised for not acting on previous allegations of accounting fraud. [...] Initially, authorities looked at media reports that caused the stock to tumble, with Wirecard a potential victim of market manipulation. Then, earlier this month, they began an investigation targeting the management board, over how an internal review by KPMG was communicated to the markets. The arrest of Braun shows, however, that the probes have come full circle, with the former victims becoming the suspects. “Given the numbers, it’s certainly the biggest accounting scandal in Germany,” said Katie Schroeder, a criminal defense lawyer in Frankfurt. “You’d have to think pretty hard to find a case of such scope.”
In his 1943 paper “A Theory of Human Motivation”, Abraham Maslow put forward his seminal theory on the “Hierarchy of Needs.” The theory describes how we as humans must fulfill certain basic needs before we can progress to higher levels of needs and desires. For example, humans need to eat so they are willing to forego safety if they can’t fulfill the need for food. Both of these basic needs precede psychological needs, such as relationships, friendships, and feelings of accomplishment. Maslow did not consider these needs to be direct trade-offs, but rather as a foundation for the level that follows. Amid the extraordinary circumstances and economic difficulties brought on by COVID-19, companies in 2020 are faced with decisions on how to best serve the many stakeholders that rely on them—customers, investors, suppliers, employees, and so on. Each group has its own distinct needs and contributions to the company’s overall success, and companies recognize that these groups build on each other to serve their purpose. Like Maslow, so too can a company reach its “self-actualization” of long-term shareholder value by meeting various stakeholders’ priorities rather than viewing each as a trade-off for another. Survival for the company itself represents the basic need of the hierarchy. A company’s first priority has to be ensuring it is resilient (and liquid) enough to outlast the crisis. If this need is not met, there are no employees, customers, or other stakeholders to serve. Hard decisions may have to be made to ensure the long-term survival of the enterprise that will affect other tiers of needs—closing stores, furloughing employees, or postponing dividends to investors. Once the basic need is met, however, and the company is a going concern, the company can reorient its focus.
In an important decision for M&A professionals and other board advisors, the Delaware Court of Chancery addressed a stockholder plaintiff’s claims that the target board’s financial advisor and law firm, as well as the private equity buyer, aided and abetted a breach of fiduciary duty by the target board in connection with a take-private merger. See Morrison v. Berry, C.A. No. 12808-VCG (Del. Ch. June 1, 2020). While the claim against the financial advisor was allowed to proceed, the claims against the law firm and buyer were dismissed. These diverging results provide early guidance as to when the Delaware courts will (and when they will not) dismiss aiding and abetting claims. In many cases, the determining factor will be whether the complaint pleads facts raising a reasonably conceivable inference that the advisor, buyer, or other third party knew the board was engaging in a breach of its fiduciary duty. This has important implications for the way board advisors and M&A buyers should approach a situation in which they become aware that the board of a target company is unaware of some material fact that could conceivably affect its ability to fulfill its fiduciary duties. [...] This case initially drew attention two years ago when the Delaware Supreme Court ruled that “Corwin cleansing” did not apply, reversing the Court of Chancery’s dismissal of the case. See Morrison v. Berry, 191 A.3d 268 (Del. 2018). The Supreme Court held that undisclosed facts concerning Berry’s communications with Buyer would have been important to a reasonable stockholder in deciding whether to approve the merger, and thus their omission precluded a finding that the stockholders’ approval of the merger was sufficiently informed to extinguish merger claims under Corwin v. KKR Financial Holdings LLC, 125 A.3d 304 (Del. 2015).
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Yesterday, the Federal Reserve announced the results of its annual stress tests. This was the first time since 2009 that the Fed had stress tested large banks during a period of systemic distress. In a new paper, Stress Testing During Times of War, forthcoming in The Stress Test Handbook (Cambridge University Press) and available here, I explain why stress testing after a negative shock is both more important and more fraught than stress testing during times of peace. I further address why time-limited government backstops may be critical to ensuring the tests are robust, relevant and disclosed – the criteria that must be satisfied for crisis-era stress tests to be useful. Based on these criteria, there were meaningful weaknesses in how the Fed approached its most recent round of stress tests. [...] As the Covid crisis has made clear, however, these regular stress tests can never assure that banks are adequately prepared for what the future may bring. The future is too uncertain, and even well-run stress tests can never fully capture the feedback loops that can take hold when crisis sets in. Thus, although regular stress tests should remain central to the supervisory toolkit, their results must always be taken with a grain of salt, and bank regulators must remain attuned to the possibility of threats and weaknesses not captured.
Alberta’s government-owned investment fund parted company this week with executives responsible for a $2.1-billion loss on trades linked to market volatility, as its board of directors completes an audit and brings in an outside leader. Alberta Investment Management Corp., known as AIMCo, oversees $119-billion on behalf of 31 clients, including pension plans for health care workers and police officers and the Heritage Savings Trust Fund. In an e-mail to clients on Wednesday, chief executive officer Kevin Uebelein said executive vice-president of public equities Peter Pontikes “is no longer employed with AIMCo.” Separately, AIMCo said portfolio manager David Triska, who ran the volatility-based strategies, also left the Edmonton-based fund manager. [...] As The Globe first reported, AIMCo’s public equities portfolio included a strategy that essentially bet against sharp swings in stock prices, an approach that made modest returns in recent years, but resulted in significant losses when the global pandemic sent markets on a roller-coaster ride in late March. In April, AIMCo decided to wind down the investments, a process that took until mid-June.
Volatility trades — which have caused major losses at hedge and pension funds alike — are the toxic subprime mortgages of the Covid Crash. Malachite Capital Management embarrassed its hedge-fund rivals for years before facing its own fatal humiliation. In the gossipy and arcane world of volatility trading, just about everyone knows, and has an opinion on, everyone else. [...] The hedge fund raked in hundreds of millions of dollars from charities, colleges, pension funds, and other investors during its six years of life. With $600 million in chips and the magic of leverage, Weinig and Aiken had bets worth upward of $1.5 billion in other people’s money on the table early this year. But the only thing certain about a safe bet is that, as grizzled gamblers and traders know, eventually someone gets burned. [...] The severely wounded include Alberta’s public fund AIMCo, which killed its aggressive vol unit after losing C$525 ($387) per woman, man, and child in the province. [...] The Canada Pension Plan Investment Board (CPPIB) lost a mere C$700 million on its strategy.
Shareholder activists are conducting campaigns against a record number of Japanese companies, saying they have more than enough cash to weather the coronavirus pandemic and boost shareholder returns. Activist investors have submitted proposals to the annual general meetings of 23 listed firms this year as of June 22, according to data from IR Japan Holdings Ltd. That already surpasses the all-time high of 16 the year before. Money managers including Oasis Management Co., RMB Capital and Asset Value Investors Ltd. are urging companies to buy back shares, arguing they can easily do so despite the impact of the pandemic. It’s a country where return on equity for companies in the benchmark Topix index is less than half the level for those in the S&P 500 Index in the U.S. “It’s a problem for shareholders to use the virus as an excuse not to seek better returns,” said Masakazu Hosomizu, a partner and portfolio manager at RMB Capital. “Japanese companies still have a lot of room to improve from a global perspective.” Prime Minister Shinzo Abe’s administration has overhauled Japan’s corporate-governance rules, seeking to encourage investors to press companies to improve profitability and capital efficiency. This has emboldened activist investors to increasingly target Japanese firms at this year’s AGMs, which peak in June.
Activist investor Jeff Ubben has left ValueAct Capital, the $16bn hedge fund he founded, to launch a new environmental and social impact investment company. Mr Ubben’s departure from ValueAct comes after a years-long transfer of power. [...] He will continue managing ValueAct’s own $1bn impact fund while his new business gets off the ground. Existing investors in that fund will have the option to transfer their money over to the new venture. ''When you’re talking about addressing climate change with a business solution, that is the biggest problem in the world. That’s like a 10-times-your-money deal'' (Jeff Ubben). Environmental and social impact is a logical next step for activist hedge funds, said Mr Ubben, who is famous for a friendlier approach to activism which avoids public battles with target companies in most cases. [...] “Finance is, like, done. Everybody’s bought everybody else with low-cost debt. Everybody’s maximised their margin. They’ve bought all their shares back . . . There’s nothing there. Every industry has about three players. Elizabeth Warren is right.”
Over the past several years, hospitals began to play innkeeper to open the door to more elective surgery, which is the lifeblood of their revenue. They developed hotels near their operating rooms where patients, who often came from overseas for specialized treatments, could recover comfortably. Expanding into the hospitality business also allowed health care providers to avoid the high costs of being hosts themselves. But as with so much else, the coronavirus pandemic has devastated medical tourism. To allow doctors to focus on emergencies, hospitals have canceled hip replacements and tummy tucks, while flight bans have grounded many foreign visitors. [...] Yet hospitals, whose costs have mounted as the pandemic dragged on, may have little choice but to revive the sector, according to some developers, who are forging ahead despite the uncertainty. [...] Someone who goes to the tower looking to, say, replace a damaged knee would undergo surgery in the Center for Health and Performance, a 10-level facility at the tower’s base. Then, after being wheeled down halls and into a private elevator, the patient would begin a stay of a week or so in a hotel room above. [...] Developers say the distinction is crucial. Some hotel guests are bound to feel uneasy about sharing space with people who have spent time in a hospital — a concern amplified by the spread of the coronavirus — even if the discharged patients pose little risk of infectious disease. “You’re in a luxury hotel,” Mr. Kodsi said. “You don’t want to be around people who are dying.”
This spring, New York City Comptroller Scott Stringer and the New York City Retirement Systems (NYCRS) announced the successful initial results of Boardroom Accountability Project 3.0. Building on the “Rooney Rule” pioneered by the National Football League (NFL), Boardroom 3.0 calls on major companies to adopt search policies requiring the consideration of women and racially/ethnically diverse candidates for board directors and chief executive officers (CEOs). The initiative marks the first time that a large institutional investor has called for such structural reform for CEO searches. [...] The policies do not dictate who should be hired, but instead require a diverse set of candidates for consideration in the talent pool. Many of the policies include explicit provisions that the Board will instruct any search firms they retain to include such individuals in their initial list or pool of candidates. In addition, while the CEO diversity search policy is not intended to be a substitute for robust internal succession planning, the NYCRS encouraged portfolio companies to maintain and disclose processes for fostering a diverse talent pipeline for executive management.
It is too soon to know whether, how, and to what extent the COVID-19 pandemic will lead to permanent changes—the “next normal”—in how companies are governed or if, post-pandemic, we will go back to the way things were just a few short months ago. In the meantime, governing through the pandemic and the post-pandemic recovery raises a host of new challenges, while also offering potential opportunities. The purpose of this On the board’s agenda is to consider some ways in which boards may get through the pandemic and to contemplate the future of governance in a post-COVID-19 world. [...] Are boards up to the challenge? The pressures on boards during the pandemic are intense and are likely to remain so for a long time. As a result, boards may have to make fundamental, substantive choices to satisfy their fiduciary duties—to distinguish between what may be “nice to have” versus what the company “must have” to survive. Governance during and after a pandemic may entail considerations in the areas discussed previously—board oversight, social purpose, board composition, investor concerns—and many others. Hopefully, most boards will be up to the challenge.
On 28 May 2020, the General Court of the European Union (“General Court”) handed down its judgment in Case 399/16 CK Telecoms UK Investments Ltd v European Commission (the “Judgment”), annulling the decision of the European Commission (“Commission”) of 11 May 2016, which prohibited the merger of the two mobile network operators O2 and Hutchison 3G UK (“Three”). The Judgment represents a significant blow to the European Commission’s established merger policy in the telecommunications sector and possibly beyond. Challenging four-to-three consolidation in the telecommunications sector as a matter of routine has been a central and heavily criticised feature of the Commission’s merger policy under Commissioner Vestager’s watch. In the General Court’s view, by merely counting down the number of players and assuming rather than showing negative effects from such consolidation, the Commission committed “several errors of law”. The Judgment will thus rekindle interest in telecoms consolidation across Europe. Its broader implications for the EU’s merger policy beyond the telecommunications sector remain to be seen
Quebec, the Canadian province that has suffered more cororonavirus deaths than 43 U.S. states, has emerged from the first stage of the pandemic with a new plan: less lockdown, more investment. The province has a long history of jumping to the rescue of its homegrown firms. In the COVID-19 era, that commitment means the government will become a shareholder of more companies, Quebec Economy Minister Pierre Fitzgibbon said in an interview. “Governments in general in the world will be more interventionist in the economy because of the requirements to inject some capital,” Fitzgibbon said. “In some instances, we’re going to need to own some equity.” Potential future equity investments include Aldo Group Inc., a global footwear retailer based in Montreal forced into court restructuring by the crisis. Quebec’s approach puts it closer to some European countries than to its own federal government; Canada’s Prime Minister Justin Trudeau has resisted calls to bail out firms such as airlines. Still, the province has no intention of managing the companies it invests in. The government has recently acquired preferred shares in private companies, Fitzgibbon said, declining to name them. “We’d be minority for sure and hopefully at one point we can be replaced by other equity holders,” he said. [...] In an era if rising protectionism, Fitzgibbon is paying particular attention to maintaining good relations with Canada’s closest trade partners. Tensions flared with the Trump administration in recent years, including over steel tariffs and a trade spat over Bombardier Inc. “My focus is the U.S.,” which is the magnet for 72 per cent of Quebec trade, he said. “We want to make sure we stay in very, very, very, good terms.”
If there is a silver lining to the coronavirus, it is that Americans are finally alert to the threat that an ambitious, authoritarian China poses. Polling shows that the U.S. public has become significantly more hawkish on China since the crisis began; a bipartisan consensus is coalescing around the idea that the Chinese Communist Party’s aims and values are incompatible with America’s. Unfortunately, some of the United States’ major tech companies are still trying to sit on an increasingly uncomfortable fence. [...] Zoom, a California-based videoconferencing company whose profile has soared during the coronavirus pandemic lockdowns, responded that the takedowns resulted only from the company’s obligation “to comply with local laws”—China’s laws, in this case. It apologized for impacting users outside of China, reinstated the accounts of U.S.-based activists, and pledged not to censor non-Chinese accounts. [...] This isn’t a hypothetical challenge. Zoom has admitted that the Chinese government asked it to terminate the activist accounts linked to the Tiananmen commemorations. So one has to ask: What else has the CCP asked Zoom to do that Zoom hasn’t yet publicly admitted? Who’s to say that the Chinese government—which has long engaged in aggressive economic espionage against American companies—hasn’t tasked Zoom employees with monitoring sensitive business conversations for valuable insights? Or that a Chinese official hasn’t threatened an engineer’s family with legal jeopardy if the employee doesn’t build a backdoor into Zoom’s platform?
Over the last several years, U.S. public companies have faced increasing pressure from investors and other stakeholders to disclose their environmental, social and governance (“ESG”) risks, practices and impacts. In the last few years, with more U.S. public companies publishing sustainability reports and other ESG disclosures, some investors have expressed concern that the lack of a standardized ESG disclosure framework, which makes it difficult for investors to meaningfully evaluate and compare companies’ ESG practices and risks, reduces the value of such disclosures. [...] Companies considering the potential implementation of an ESG disclosure framework should be aware of the variety of reporting standards that have been developed by standard-makers around the world. Different standard-makers address different cross-sections of ESG issues and have different concepts of what factors are material:
(1) SASB: The SASB framework provides sector-specific guidance on a broad range of ESG topics, covering issues such as greenhouse gas (“GHG”) emissions, energy and water management, data security and employee health and safety, while providing sector-specific guidelines emphasizing topics SASB believes are material for issuers in those An overview of the SASB framework is available here.
(2) TCFD: Unlike the SASB framework, the TCFD framework provides both general and sector- specific guidance, but only on climate-related topics, such as physical risks of the effects of climate change and climate-related opportunities, including those related to resource efficiencies and alternative energy sources. The TCFD framework has been endorsed and incorporated into mandatory reporting regimes by regulators in the EU, United Kingdom and Hong The TCFD’s final report providing disclosure recommendations is available here.
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