How the new Capital Company Law can boost engagement in Spain

In this article published in Social Investor, the first Spanish-language publication on ESG investments and sustainability strategies in listed companies, owned by ED Group,  Eduardo Sancho Garcia, Corporate Governance manager at Morrow Sodali, analyses how the new Capital Company Law can foster Engagement in Spanish Listed companies.

The asset management industry can play a critical role in the urgent transformations of the economy required by the climate crisis. One of the essential lines of action to advance towards sustainability is to promote climate action by exercising its influence and voting power as shareholders. This is an area in which large Spanish investment groups still lag behind their international counterparts.

The limited engagement with shareholders by Spanish investment groups comes from a less stringent legislation, smaller size of funds managed and an investment culture focused on finance.

Sancho Garcia explains that this reform of the law is an impulse for shareholder Engagement. Among other issues, asset managers will have to detail their financial and non-financial criteria when making their investment decisions,  specify their 'engagement' policy and explain there criteria during AGMs. In particular the article focuses on the implication in the Shareholder Annual Meetings, providing an overview from the evolution of corporate governance to potential perspectives in the near future.

In addition, Sancho Garcia points out that this new legislation facilitates the identification of the ultimate shareholder, so issuers can know their shareholders base - at home and abroad - and engage with them directly or through Proxy solicitation campaigns.

Read more here (in Spanish)