Investor Relations Week: Box in Struggle with Starboard Value, Call to End Fossil Fuel Lists in London, SEC Polls Asset Manager on ESG Claims

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– Reuters reported that Box, the cloud storage provider backed by ISS, in its fight with activist investor Starboard Value, recommending that shareholders vote for the company’s directors rather than the fund company’s nominees speculative. In its report, ISS said shareholders should vote for Box directors Peter Leav and Aaron Levie, arguing that the current board has made some wise changes and should be given more time to effect a turnaround. Earlier this year, Starboard appointed four directors to Box’s 10-person board, saying the company had failed to capitalize on the trend of working from home during the Covid-19 pandemic.

– UK Liberal Democrats have proposed a plan to end new registrations of fossil fuel companies, reported the Guardian. The party said the plan could help the UK become a leader in tackling the climate emergency. As part of the plan presented to the newspaper by Lib Dem leader Ed Davey, another immediate policy would be to stop issuing new bonds in London to finance exploration for oil, coal or gas. Fossil fuel companies already listed in the UK would then have two years to develop a cohesive plan on how they would achieve net zero emissions by 2045, or face delisting from the London Stock Exchange. Longer term, pension funds are expected to divest from fossil fuels by 2035, and all companies with fossil fuel assets would be delisted by 2045.

– SEC investigates Deutsche Bank’s asset management arm, DWS Group, after the company’s former head of sustainability says he overestimated how much he used sustainability investing criteria to manage its assets, noted The Wall Street Journal (paywall) Wednesday. The DWS authorities’ review comes after the document reported that the $ 1 billion asset manager had “overestimated” its sustainable investing efforts. The WSJ, citing documents and the company’s former chief sustainability officer, said DWS was struggling with its ESG investment strategy and at times presented a “rosier than reality” image to investors. After declining to comment on the original story, DWS released a statement to the press Thursday evening, saying the allegations were “unfounded” and the company “stands by its disclosures in its annual report.” He added: “We strongly reject the allegations made by a former employee.”

– In related news, the Financial Time (paywall) reported that funds marketed as “climate-themed” often hold shares in major polluters, including major oil companies, and many are inconsistent with the goals of the Paris Agreement although they claim to be aligned with it, according to analysis by think tank InfluenceMap. About 72 of the 130 climate-focused funds examined – which collectively hold more than $ 67 billion in assets and are managed by leading investment firms, including BlackRock and State Street Global Advisors – were found to be out of step with the objective of the Paris agreement to limit global warming to well below 2 ° C. Collectively, the 130 funds held $ 153 million in companies along the fossil fuel production chain, according to the report. A State Street “unreserved fossil fuel fund” and a BlackRock “fossil fuel selection fund” held shares in Marathon Petroleum and Phillips 66.

– The BBC reported that UK group Frasers, led by controversial Mike Ashley, offered the retail mogul’s future son-in-law a £ 100million ($ 137million) bonus – but only if he can more than double the share price. The group have offered the bonus plan for Michael Murray when he becomes chief executive of Frasers in May 2022, but he will only receive if his share price reaches £ 15 for 30 consecutive trading days before October 2025, against his level current of around £ 6.50. The company described the goal as “difficult but achievable”. Murray, 31 and engaged to Ashley’s daughter Anna, is currently ‘Chief Elevator’ at Frasers and is in charge of store modernization and business transformation. The board of directors of Frasers Group, which owns Sports Direct and House of Fraser, said it had also recommended an annual salary of £ 1million for Murray. Shareholders are expected to vote on the proposed bonus plan at the group’s annual general meeting on September 29, with Ashley to step down as CEO – but remain on the board as executive director – when Murray takes over.

– According to Reuters, India has fewer ESG funds than the 10 largest economies. The world’s sixth-largest economy has 23 ESG funds, according to Refinitiv data, compared to the US and UK, which have more than 500 each. Japan has 182 and China 119. Other top 10 economies also have more ESG funds. “Indian investors are not completely familiar with the concept of sustainable investing, unlike the global markets led by Europe, where sustainable investing has been present for many years,” said Kaustubh Belapurkar, director of Morningstar India. Analysts said investors were reluctant to invest money in ESG funds because most funds in the sector were new and could not show a history of outperforming.

– The FT reported that Brussels was set to launch a formal competition investigation early next month into Nvidia’s $ 54 billion buyout from UK chip designer Arm, after months of informal talks between regulators and the American chip company. The newspaper said the investigation is expected to begin after Nvidia officially informs the European Commission of its plan to acquire Arm, the US chipmaker planning to make its bid in the week of September 6, citing people with knowledge. direct from the process. People added that the date could still change, however.

The Brussels investigation is said to come after the UK Competition and Markets Authority (CMA) said its initial assessment of the deal suggested there were “serious competition concerns” and that a set of remedies suggested by Nvidia would not be sufficient to remedy it. The British watchdog said he fears the deal will stifle innovation in a number of markets, including giving Nvidia the power to hurt rivals by limiting their access to Arm’s technology. . Nvidia announced last September its intention to buy Arm from SoftBank, the Japanese investment conglomerate.

– Elsewhere, Best Execution has reported that the CMA is launching an investigation into the proposed £ 33bn IHS Markit takeover by S&P Global. The antitrust regulator has said it is examining whether the deal will hurt competition in the UK. The CMA said it has set an Oct. 19 decision to refer the merger to a Phase II investigation. S&P announced last November that it had agreed to buy London-based IHS Markit in an all-equity transaction. Together, the two companies would create one of the largest data providers, rivaling the behemoths Bloomberg and Refinitiv.

– Reuters reported that SEC Chairman Gary Gensler said the agency would investigate whether digital customer engagement innovations used by financial services firms should be governed by existing rules or could require new ones. While the SEC’s considerations on the subject are at an “early stage,” its rules may need updating to reflect an artificial intelligence (AI)-led revolution in predictive analytics, the differential marketing and behavioral prompts designed to optimize customer engagement, he said.

“We are in a time of transformation. I really believe that data analytics and AI can bring a lot of positives, but that means we have to look back and think about what [this means] for user interface, user engagement, fairness and bias, ”Gensler said. “What does this mean for the rules written at an earlier time? The consultation was in part sparked by January’s memes action saga, which led to a scrutiny of retail brokerage practices, including ‘gamification’ – game-like prompts designed to maximize customer engagement. .

– CityWire reported that the UK’s Financial Conduct Authority (FCA) said it was unable to effectively oversee Binance, the world’s largest cryptocurrency exchange, after the platform refused to provide basic details of its operations. Binance is an online digital currency broker with a monthly turnover of tens of billions of dollars. He was censored by the FCA in June and asked to comply with a number of requests by the end of the month. The FCA has now said Binance failed to provide vital information, including details of how the business is organized and how UK customers might use the platform, and has failed to identify the legal entity behind its website. “The FCA considers the company’s responses to have been incomplete and have included direct refusals to provide information,” the watchdog said in a report.

– Reuters (via CNBC) reported that, according to a document it had reviewed and people familiar with the matter, the SEC has started issuing new disclosure requirements for Chinese companies seeking to list in New York City in as part of an effort to make investors aware of the risks involved. Some Chinese companies have started to receive detailed instructions from the SEC regarding greater disclosure of their use of offshore vehicles known as variable interest entities for IPOs, the implications for investors, and the risk that investors will have. Chinese authorities are interfering with the company’s operations. Gensler last month called for a “pause” in IPOs of Chinese companies in the United States and called for more transparency on the issues. Chinese listings in the US came to a halt after the SEC freeze. An SEC spokesperson did not immediately respond to a request for comment.


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