The week in GRC: Netflix to drop supermajority requirement for board changes and competition for compliance officers heats up
– The Wall Street Journal reported that ExxonMobil said it has set a goal to reduce or offset greenhouse gas emissions from its operations to zero by 2050, amid growing pressure from investors and the public for oil companies to tackle climate change. ExxonMobil said it had developed detailed emission-reduction plans for major facilities and assets, and can profitably transition to greener energy sources. Engine No 1 last year elected three new members to the company’s board after criticizing its transition strategy.
The new goal doesn’t cover emissions from the use of its products, such as gasoline and other fuels made from refined oil, or natural gas burned in homes, which make up most of the emissions connected to the company. It also doesn’t cover oil fields or other assets it is invested in but doesn’t operate.
‘We are developing comprehensive roadmaps to reduce greenhouse gas emissions from our operated assets around the world and, where we are not the operator, we are working with our partners to achieve similar emission-reduction results,’ said CEO Darren Woods.
– BlackRock CEO Larry Fink sought to defend a shareholder movement focused on putting the interests of wider society ahead of profits, saying so-called stakeholder capitalism is neither political nor ‘woke,’ CNBC reported. In his annual letter to corporate leaders, Fink pushed back against accusations that the asset manager was using its heft and influence to support a politically correct or progressive agenda.
‘Stakeholder capitalism is not about politics,’ he wrote. ‘It is not a social or ideological agenda. It is not ‘woke.’ It is capitalism, driven by mutually beneficial relationships between you and the employees, customers, suppliers and communities your company relies on to prosper. This is the power of capitalism.’
Fink’s letter reaffirmed BlackRock’s policy of engaging with companies seeking to take part in energy transition rather than divesting altogether. He added that companies could not be the ‘climate police’ on their own but would instead need to work together with governments.
– Vanda Research analysts said in a weekly note that retail investors were less enthusiastic about buying the dip in US stocks on Tuesday in the latest sign of a possible fatigue after last year’s tech-fueled trading frenzy, according to Reuters. Individual investors bought $1.6 bn in stocks on Tuesday when US shares sold off sharply. By contrast, they bought close to $2 bn on September 28 when the S&P 500 fell 2 percent.
‘Retail investors bought a lot less than they typically would,’ said Vanda’s Ben Onatibia and Giacomo Pierantoni about Tuesday’s session. ‘This could be the first sign that retail fatigue or capitulation is setting in, at least in the tech space.’
– The WSJ reported that Wells Fargo & Co appointed Derek Flowers as the bank’s next chief risk officer. The move, effective immediately, follows the announcement earlier this month that Amanda Norton, who previously held the post, will retire this summer. Flowers has worked for Wells Fargo for 24 years, most recently as the bank’s head of strategic execution and operations. Before that, he held the post of chief credit and market risk officer.
– Environmental campaigners and activist investors want the SEC, which is drafting a landmark rule proposal, to require companies to disclose not only their own greenhouse gas emissions but also those generated by their suppliers and other partners, according to CNBC. But corporate groups are pushing for a narrower rule that would make it easier and less expensive to gather and report emissions data, and which would protect them from being sued over potential mistakes.
Progressives and climate campaigners want the SEC to deliver a rule that would reveal all the emissions for which a company is responsible, while many investors say they need such data to fully assess companies’ exposure to climate change and related policy measures.
– CNN reported that Starbucks is no longer requiring employees to get vaccinated or submit to weekly testing after the US Supreme Court rejected President Joe Biden’s vaccine and testing requirement for large businesses. In a letter published on January 4, the company recommended that its workers get vaccinated by February 9, in accordance with guidance from the Occupational Safety and Health Administration. Those who remained unvaccinated past that deadline would have had to submit to weekly testing, according to that note. But after the Supreme Court decision, Starbucks told employees it would adjust its requirements.
‘We respect the court’s ruling and will comply,’ said John Culver, COO and group president for North America at Starbucks, in a message to employees. Culver added that Starbucks will follow local requirements and still encourages workers to get vaccinated and boosted. He also encouraged workers to disclose their vaccination status and said more than 90 percent of workers have already done so.
– The SEC announced that it is looking for candidates to be appointed to its investor advisory committee. Candidates for vacancies on the committee will be identified by a nominating committee comprising staff from across the SEC’s divisions and offices. The SEC also encouraged members of the public to express their interest in serving on the investor advisory committee, which advises and consults with the commission in areas such as regulatory priorities and initiatives to protect investor interests.
– According to the WSJ, a tight labor market and evolving regulatory pressures are driving demand for compliance officers, with competition for such talent heating up in recent months as companies fear they will be short-staffed at a time of rapid growth and increasing regulatory scrutiny. Companies are luring compliance staff with salary increases, remote-working opportunities and company equity.
‘It’s all hands on deck for corporations to attract the talent,’ said Paul McDonald, a senior executive director at human resources consulting firm Robert Half International. ‘They are looking to pay the most they can, and [provide] benefits and perks the best they can.’
Job seekers in the compliance field are looking for growth opportunities at a potential employer and want to believe in the company’s products and its culture of compliance, said Will Brown, executive search lead for financial services at Hamlyn Williams. He added that job seekers in the field are less likely to compromise on their demands because hiring prospects are so plentiful these days.
– Netflix said it’s recommending the elimination of a supermajority provision that requires two thirds of shareholder votes for board member changes, CNBC reported. The proposal will come at the next AGM. ‘While our current governance structure has served our shareholders extraordinarily well with a sustained period of substantial growth, we’ve clearly proven our business model,’ Netflix said in a letter to shareholders. ‘So the Netflix board has decided to evolve to a more standard large-cap governance structure and will recommend several changes at our next annual meeting.’
On five occasions since 2013, investors have supported a proposal at the AGM to get rid of the supermajority requirement, yet the company has repeatedly opposed the efforts. In addition to removing supermajority votes, Netflix said it will allow shareholders to call special meetings and will change the voting standard for its directors in uncontested elections.
– The WSJ reported that France’s TotalEnergies said it is withdrawing from Myanmar over shareholder pressure and a deteriorating human-rights situation since the country’s military seized power in a coup last year. Energy companies have faced calls to divest or withhold revenue from the junta, while governments including the US and France have come under pressure to sanction the sector.
TotalEnergies is the largest shareholder and operator of Myanmar’s largest natural-gas project. It said in a statement that it continued after the coup to produce gas from the Yadana field to meet energy needs in Yangon and western Thailand, which imports it. It had tried to limit financial flows to the project partnership while protecting its employees from the risk of criminal prosecution, it said.