Time for Responsible Corporate Tax

The COVID-19 crisis may become the “tipping point” that makes tax havens and aggressive tax avoidance as controversial as bribery and corruption.


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Climate Series: Engaging with the Top 100 Climate Change Contributors

On behalf of institutional investor clients, Engagement International has evaluated and engaged with the 100 listed companies that contribute the most to climate change since the Paris Agreement was adopted in December 2015. Through in-person meetings and conference calls every six months over the past three years, we seek to encourage the companies to align their business with the well-below two-degree goal. This blog is the first of a climate series, in which we will discuss the premise and results of the engagement project “Top 100 Climate Change Contributors” (Top100CCC).

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The cost of ESG exclusion

Exclusion of more than a handful of companies due to ESG incidents has a negative impact on the risk-adjusted financial return, according to the analysis from MSCI ESG Research. Read the article about the main results in Økonomisk Ugebrev (in Danish).


Decline in shareholder democracy

While the Danish and European authorities are pushing institutional investors to be more active and responsible owners of companies they are investing in by voting at the general meetings, among others. It is quite the opposite in the United States. Read more in the Økonomisk Ugebrev article.


EU encourages active and responsible ownership

Just before Easter, the European Union finally adopted the Shareholders’ Rights Directive that is encouraging institutional investors to behave more as active and responsible owners. After ten years of dispute, the European Council followed the EU Commission and Parliament and gave its green light for the comprehensive directive that applies to more than 8.000 listed companies. The member states have now up to two years to transpose the new provision into domestic law.

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Overpaid CEOs underperform financially

Extremely high payments to CEOs are often explained by the “fact” that they get “peanuts” compared to the much higher financial value they are creating for shareholders. In Denmark, it has recently been the answer to the many critics of the IPO of Nets, which resulted in a gain of nearly USD 100 million for the CEO. And the answer was similar when it was known that America’s new foreign minister, Rex Tillerson, raised an annual compensation of USD 27 million as CEO of Exxon Mobil and an even greater amount when he said goodbye to the oil company. However, two independent studies based on the US data prove that the truth is rather the opposite.

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Climate Engagement leads to better Management

During the last months of 2016, Engagement International engaged on behalf of institutional investors with 28 of the 100 listed global companies that are contributing the most to climate change – now or potentially later, due to their fossil fuel reserves. About 40% of the companies have a clear commitment to the Paris Agreement and are explicit about their own responsibility to contribute to the two-degree-goal. However, in general, the highly exposed energy-, mining-, steel- and cement companies need to do much more. Two thirds have shown an increasing carbon emission intensity over the last five years. And a new set of very ambitious financial disclosure recommendations from the Financial Stability Board (FSB) will push not only these highly climate change exposed companies, but organisations in all industries to adopt a better management of their climate risks and opportunities.

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Strong growth in seven archetypes of responsible investments

The amount of responsible investments in Europe and the US has grown significantly the past two years and strategies are getting still more sophisticated. It began more than 250 years ago with religiously inspired exclusions of companies that could be associated with alcohol, tobacco, weapons etc. This first generation approach is still the most dominating strategy according to new surveys from Eurosif, US SIF and PRI. However, in Europe engagement and voting have grown more than 30% the last two years.

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New Stewardship Code for Danish institutional investors

From 2017, Danish institutional investors are supposed to follow a new stewardship code holding seven recommendations on active ownership. The code, drafted by the Committee for Good Corporate Governance at the initiative of the Minister of Business and Growth, has been through a public hearing in September. After adjustments, the final version is planned to be published in December this year.

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Denmark’s fall from the anti-corruption throne

There are many indications that Denmark now must relinquish its position as the country with the least corrupt public sector, according to Transparency International. Danish Police has arrested nearly 50 current and former public servants and accused them for being bribed with smartphones, computers and other electronic equipment from the IT vendor Atea. The case is the largest of its kind in Denmark and embarrassing, especially because the persons arrested work for the National Police, the Armed Forces, the Military Intelligence Services, the Public Prosecutor’s Office, the Ministry of Foreign Affairs and the City of Copenhagen.

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