As ESG activism continues to grow, issuers need to keep their ESG practices aligned with their top institutional shareholders goals. Such activism has been proven to be an easy springboard and an effective strategy to combat any potential dissident shareholders, who may leverage attacks against target companies with a high success rate. A strong ESG proposition could also potentially help companies enhance long-term shareholder returns.
ESG investing continues to trend up today, as more and more institutions are now including ESG as part of their investment criteria, when screening for potential investment opportunities. Issuers are expected to benchmark themselves against their peers, in terms of ESG practices, measured by various agencies, such as ISS QualityScore, a data-driven scoring and screening solution designed to help institutional investors review quality factors and assess risk. This presents an opportunity for issuers to attract institutional capital and long-term investors by improving their ESG practices, through an adoption of resources and commitment. The challenge is to navigate where the balance point is that not only satisfies investors’ criteria, but also doesn’t create so much of burden that it may result in potential problems for capital allocation.
Globalization has certainly benefited large international conglomerates, which must be well equipped to deal with local corporate governance standards in different markets, as well as a diversified shareholder base that may entail more complicated voting implications. As the world’s largest independent governance & shareholder service firm, Morrow Sodali has an unparalleled competitive advantage and is uniquely positioned to leverage the global expertise of over 200 consultants to serve our clients in dealing with the day-to-day demanding challenges of facilitating their integration of globalization.