Ask a public company to sum up 2019 in three letters, and there’s a good chance the response would be “E-S-G.” Environmental, social, and governance issues have been making a steady march to the very forefront of concerns occupying public companies. That trend continued in a big way in 2019, as the #MeToo movement, climate change, and income inequality dominated public discourse and put fresh energy behind all manner of ESG-related shareholder proposals. We ended the year by publishing a report, our 2020 Playbook on ESG Shareholder Proposals, that examined recent ESG proposals that won significant support.
Other storylines that recurred on the blog this year included unicorn companies, the use of multi-class shares, so-called “shadow regulators” and disclosure effectiveness. Before the blog takes a two-week hiatus, let’s review the major developments we covered in each area in 2019.
ESG and shareholder activism:
- Shareholders took Google parent Alphabet to court over its handling of #MeToo allegations.
- In another ESG-related story from Google, employees and shareholders pressed the board to encourage greater racial and gender diversity among its workers.
- We released a report on the Impact of Social, Political, and Data Privacy Issues on M&A Transactions.
- Social activism—the “S” in ESG—emerged as a growing area of concern for shareholders and issuers alike.
- An Intelligize study identified the most effective methods of securing shareholder proposal exclusions through the no-action letter process.
- Amazon shareholders pushed two proposals related to facial recognition.
- Like other ESG proposals at the Amazon annual meeting, they failed to pass.
- Public companies began laying out climate-change-related risks in public filings.
- SEC Commissioner Hester Peirce voiced her skepticism of ESG evaluations of public companies.
- Shareholder activists turned their attention to gun violence.
Multi-class shares:
- In a break with other unicorns, Uber chose not to employ a multi-class share structure in its IPO.
- WeWork’s IPO raised fresh concerns over the use of multi-class shares.
- When it failed spectacularly, we asked if WeWork would be the end of multi-class shares.
The influence of “shadow regulators”: institutional investors and proxy advisory firms:
- A group of 300 Nasdaq-listed companies voiced some “critical frustrations” with proxy advisory firms.
- The SEC targeted proxy advisory firms with two new guidance initiatives.
- Then the proxy advisory firms sued the SEC.
Disclosure effectiveness:
- At the start of the year, public companies began accounting for the threat of a government shutdown in their public disclosures.
- SEC Commissioner Robert Jackson dissented from a set of SEC rule changes that “modernize and simplify disclosure requirements.”
- Intelligize created a FAST Act Compliance Checklist.
- The prospect of a “no-deal Brexit” created disclosure headaches.
- Jay Clayton’s vision for “disclosure effectiveness” came into focus.
- Reg S-K modernized some disclosure requirements.
Unicorn IPOs:
- The government shutdown in January caused a traffic jam of IPOs at the SEC.
- At Intelligize, we published our Unicorn IPO Report, taking an in-depth look at how unicorns act when they choose to go public.
- Morgan Stanley caught some flak for its handling of the Uber IPO.
We can’t wait to see what 2020 brings on these and other topics. Until then, happy holidays to all.
The Intelligize blog will resume publishing on Tuesday, January 7th, 2020.