Institutional investors in Europe drive businesses towards sustainability

In this feature, Il Sole 24 Ore Plus, comments on the recent Auxiliary Corporate Governance Conference, held from 12 to 14 October in Rome, where Stilpon Nestor, Senior Advisor at Morrow Sodali, explored the current trends and concerns in European markets.

Also, during this conference, Morrow Sodali announced the release of its latest European Lighthouse, the report that clearly proved that so-called ESG (Environmental, Social and Governance) has become the dominant theme in the context of the company-shareholder dialogue. In Europe, there were 738 ESG shareholder resolutions up to September 2022, while in US and Canada there were 623. “ESG is an amalgam of sorts, containing various elements of varying disparity,” argues Stilpon Nestor. “Sustainability requires distinct skills, distinct approaches and measurement tools, and distinct reporting. All these are different from those required for governance.”

According to Morrow Sodali’s 2022 Proxy Season Review, average shareholder support for board elections exceeded 90% in all indexes apart from the Portuguese PSI. This broad support generally decreased in all markets when considering free float levels, although in some cases this decrease is very slight (Switzerland 95%) and in others very significant (Portugal 26%).

Remuneration-related items were the least supported items at European AGMs on average. Overall support was around 90% of votes cast, although the gap between general support and free float support has become wider, dropping below 70% in some cases (Spanish IBEX 35).

As for the board composition, aside from the Greek ATHEX 25 and the Portuguese PSI, all indexes have boards that were on average majority independent, which is the most extended corporate governance demand amongst international stakeholders.

Read the full article here.