12/5/2019

Lagardère Group Chairman Resigns 'For Personal Reasons'

Financial Times (12/05/19) Pooler, Michael

Citing personal reasons, Xavier de Sarrau has resigned as chairman of the supervisory board of Lagardère Group (MMB), a position he had held since 2010. De Sarrau will remain a member of the supervisory board and be replaced as its chairman by Patrick Valroff, who has served on the board for about 10 years. The development comes as the French group crosses swords with Amber Capital, a London-based hedge fund that recently became the group's third-largest shareholder by increasing its stake to 6.8%. Lagardère has shrunk considerably under the leadership of Arnaud Lagardère, who took over the group after the sudden death of his father Jean-Luc Lagardère in 2003. Amber has criticized the firm's corporate governance and tried to oust de Sarrau as chairman at its last annual shareholder meeting, which failed. In the past Amber has pointed to what it sees as a breach of independence at Lagardère's supervisory board. Valroff, the new chairman, has strong links with Crédit Agricole (CRARY), the main lender to Arnaud Lagardère's personal holding company, Lagardère Capital & Management. LC & M, through which Arnaud Lagardère holds a 7.3% stake in Lagardère, had €204 million of debt at the end of 2017, which exceeds the current value of his shares in the group that bear his family's name. In October a French commercial court demanded Arnaud Lagardère publish a decade of annual accounts for LC & M, another of Amber's demands. Arnaud Lagardère has defied the court order and is appealing the decision. Meanwhile, four members of Lagardère’s supervisory board have their mandates coming up for renewal by shareholders next year, and Arnaud Lagardère's own mandate as the group's managing partner is up for renewal by the supervisory board in March 2021.

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12/5/2019

The Battle Over Green Investment Is Hotting Up

Financial Times (12/05/19) Tett, Gillian

Christopher Hohn, founder of TCI hedge fund, entered the climate debate this week, announcing that he would engage companies like Airbus (EADSY) and Moody's (MCO) if they failed to improve their standards of disclosure and action over climate risks. Hohn then criticized BlackRock (BLK) for failing to impose equally strict disclosure requirements in its own investments. BlackRock responded to Hohn's attack by saying it "has the largest stewardship team in the world, and engaged 370 companies globally on the topic of climate risk in the past two years." The tussle has generated questions about whether it is possible for the asset management world to fight climate change while the sector is so dominated by passive funds that track indices, rather than active managers. BlackRock has grown largely on the back of exchange traded funds (ETFs) and other forms of passive investing that track the performance of a particular market or sector. Moreover, the ETF sector recently passed the $6 trillion mark, and BlackRock projects this will double by the end of 2023. BlackRock officials argue that if climate activists want to attack finance for its lack of "green" credentials, they should start with the index companies and proxy advisers. However, Hohn contends that asset managers should still insist on screening ETFs for climate issues, possibly using the metrics developed by the Carbon Disclosure Project. Changes at BlackRock are unlikely to be made immediately, and observers say investors should keep an eye out for BlackRock's comprehensive internal analysis of all its operations in relation to climate change, covering both active and passive funds. Further, the World Economic Forum plans to push the world's biggest asset managers to agree on joint standards and commitments for active and passive funds in Davos next month, and European regulators are raising pressure for reform as well, with Brussels preparing a lengthy taxonomy of green standards.

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12/4/2019

An Overwhelming Majority of Investors Expect Companies to Implement Effective Environmental, Social-Impact and Governance Practices

PR Newswire (12/04/19)

According the 2019 Edelman Trust Barometer Special Report, which surveyed 600 institutional investors in six countries, 84% of investors agree maximizing shareholder returns can no longer be the primary goal of the corporation, preferring a multi-stakeholder approach.  Seventy percent of respondents say they believe companies that place too much emphasis on shareholder return will be partially responsible for consumer or employee activism, and 74% say that companies with employee activism are less attractive investments. Almost all respondents expect the board of directors to oversee at least one environmental, social, and governance (ESG) topic, and 52% say tying executive compensation to ESG target performance would positively impact their trust in a company. In addition, 54% of investors say ESG practices positively impact trust, and 61% have increased their investment allocation to companies that excel with regard to ESG factors. Board diversity is also a topic of interest, with 55% of investors saying it has a significant positive impact on trust. Seventy-nine percent of respondents stated that most companies are not prepared to handle activist campaigns, with the main issue an inability to define and specify new and emerging areas of risk and value creation. Ninety-six percent of investors use one or more social platforms on a weekly basis, and 82% of investors consult a company's social media channels when evaluating an investment. Top strategies for underperforming companies to shore up trust with investors include announcing a change to business strategy (52%), conducting a business or strategic review process (51%), and implementing significant cost cuts (46%).

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12/4/2019

Moral Money: Davos Boss Tells Execs to Align Pay With Stakeholder Interests

Financial Times (12/04/19) Tett, Gillian; Nauman, Billy; Edgecliffe-Johnson, Andrew

World Economic Forum founding Chairman Klaus Schwab has issued a new "Davos manifesto" ahead of January's annual meeting in the Swiss mountain resort. The document unveiled in 1973 stated that "the purpose of professional management is to serve clients, shareholders, workers, and employees, as well as societies, and to harmonize the different interests of the stakeholders." The new document says the purpose of a company "is to engage all its shareholders in shared and sustained value creation." And multinationals must do nothing less than "improve the state of the world." One line may catch the attention of Davos attendees: "executive remuneration should reflect stakeholder responsibility." Meanwhile, a survey of more than 600 investors in the United States, United Kingdom, Canada, Germany, Japan, and the Netherlands by public relations and marketing consultancy Edelman reveals that 84% agreed that companies should balance shareholders' needs with those of their customers, employees, suppliers, and communities. Some 71% of investors said that overemphasizing shareholder returns exposed a company to consumer or employee engagement. More than 60% said they were investing more in companies that excel on ESG standards, 52% said that linking executive pay to ESG targets boosts their trust in a company, and 86% said they would accept lower returns to invest in a company that addressed sustainability or impact investing considerations.

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