Views on improving the integrity of global capital markets
04 February 2016

CorpGov Roundup: NY Comptroller Extends Proxy Project, EU Tackles ESG

Research on the materiality of nonfinancial disclosures from the buy and sell sides’ perspectives, how companies are using corporate governance codes in Japan and the United Kingdom, and the New York City Comptroller’s expansion of its “Boardroom Accountability Project” are among corpgov news spanning the globe in January.


In late December the Industry Super Australia and Australian Institute of Superannuation Trustees proposed a review of governance practices for Australian pension funds to draft a best-practice governance code for such funds. The deadline for comment was 1 February, but this is only the first round, asking interested parties which topics should be covered. Expect word of meetings to produce a draft of the code soon.

European Union

The European Commission recently issued a draft document on long-term and sustainable investment to solicit comments on guidance on reporting of nonfinancial information (ESG data) by companies.

The consultation seeks to gather information on how institutional investors, asset managers, and other service providers in the investment chain factor in sustainability (ESG) information and performance of companies or assets into investment decisions. The consultation will also gather information about possible obstacles to long-term, sustainable investment.

The results of the consultation will be used by the Commission to assess the state of play in this field. A feedback document outlining the overall results of the consultation will be made public.

CFA Institute is currently drafting its own response to this consultation. Comments are due by 25 March.


As discussed in our recent report, Environmental, Social, and Governance Issues in Investing: A Guide for Investment Professionals, more investors are seeking to better understand ESG issues and integrate ESG data into the investment process.

The current disclosure environment, however, can pose significant challenges for investors and issuers:

  • Asset Managers: How to identify the nonfinancial information among enhanced disclosures by firms that is material to the investment decision.
  • Asset Owners: Increasing demand from beneficiaries to consider ESG issues.
  • Issuers: How to focus disclosures that effectively address information needs of long-term investors and identify the trends in disclosure of nonfinancial information.

The University of Cambridge Judge Business School, with the support of BNY Mellon, is surveying asset managers and asset owners about the materiality and reporting of ESG information.

The research project represents an opportunity to capture the views on the materiality of nonfinancial disclosures from both the buy and sell sides’ perspectives. Each of the three groups, asset managers, asset owners, and issuers, will be surveyed to:

  • Understand the disclosure needs of the various stakeholders
  • Identify commonalities and disparities in the supply of and demand for enhanced nonfinancial disclosure
  • Identify what constitutes material information for long-term investors/capital providers
  • Clarify and systematise the materiality of nonfinancial information
  • Refine what materiality means in the emerging area of reporting of nonfinancial information

If you are an asset owner, asset manager, or issuer, you are invited to take the survey, which is estimated to take about 20 to 30 minutes to complete.

The survey is to stay open until the end of February.


The Conference Board recently published a Handbook on Corporate Governance in India: Legal Standards and Board Practices. The handbook is designed as a practical reference tool reviewing key features of the legal and regulatory standards applicable to today’s Indian corporate boards, from their composition to their activities. The material is organized by the variety of functions and responsibilities in the director’s job description: the qualification and appointment process; fiduciaries’ liability and indemnification; the delegation of authority to board committees and the role and responsibilities of nomination, remuneration, and audit committees; the duty of overseeing an ethics and compliance program; and specific requirements pertaining to disclosure, related party transactions, risk management, and corporate social responsibility.

The handbook’s release marks the launch of The Directors’ Collective by the Conference Board, a new initiative that brings together the independent research and thought leadership that the Conference Board, KPMG, Russell Reynolds Associates, and Khaitan & Co. have developed while assisting Indian businesses.


According to a recent report by the Tokyo Stock Exchange (TSE), only 12% of companies on the TSE complied fully with the country’s new corporate governance code. However, about 78% of companies have complied with 90% or more of the code.

The code operates under the comply-or-explain principle, so the rationale provided by noncompliant companies was informative. Of those that did not fully comply with the code, nearly 30% said that they plan to comply in the future, while 27% said that they had no plans to comply in the future.

According to text of the governance code finalized in 2015, this corporate governance code establishes fundamental principles for effective corporate governance at listed companies in Japan. It is expected that the code’s appropriate implementation will contribute to the development and success of companies, investors, and the Japanese economy as a whole through individual companies’ self-motivated actions so as to achieve sustainable growth and increase corporate value over the mid- to long term.

United Kingdom

Grant Thornton recently published a review of corporate governance at companies in the FTSE 350 Index.

The report covers the annual reports of 312 of the UK’s FTSE 350 companies with years ending between June 2014 and June 2015. Investment trusts are excluded as they are permitted to follow the Association of Investment Companies (AIC) Code of Corporate Governance.

The review assesses compliance with:

  • The disclosure requirements of the UK Corporate Governance Code 2014
  • The requirements for narrative reporting as set out in S414c of the Companies Act 2006 as amended

The report sees companies improving the quality of their disclosure, while stating that general compliance with the UK corporate governance code appears to have plateaued. The report states that more than half of the FTSE 350 companies studied were fully compliant with the code, and 90% of companies comply with all but a few governance code provisions. Of those that choose not to comply with some aspects of the voluntary comply-or-explain code, about 70% provide a good explanation for not doing so (an increase from 50% last year).

Other highlights:

  • 73% of companies provide incisive, high-quality accounts of their business models, up from 61%
  • 50% produce a strategic report that complies with the Code
  • Quality shareholder engagement is down from 64% to 55%
  • 13% of chairmen personally discuss culture in their primary statements, up from 5%
  • Only 14% show detailed links between remuneration and wider strategy

United States

Proxy access was the issue that dominated the proxy season in the US in 2015, thanks in part to the CFA Institute report Proxy Access in the United States: Revisiting the Proposed Rule. The issue looks to dominate proxy season again in 2016. Last year the New York City Comptroller Scott Stringer filed proxy access proposals at 75 US companies as part of the office’s “Boardroom Accountability Project.” This ultimately led to well over 100 proxy access resolutions being voted on at annual meetings in 2015.

In mid-January, Stringer’s office decided to expand the project, announcing that it has filed 72 new shareowner resolutions asking for proxy access. Here’s a breakdown:

  • 36 companies from its 2015 focus list that have not yet enacted, or agreed to enact, a 3% bylaw with viable terms; this includes companies that enacted unworkable bylaws requiring 5% ownership, some of which received binding proposals to amend their bylaw. (Six of the 36 have subsequently been withdrawn after the companies enacted, or agreed to enact, a 3% bylaw.)
  • 36 new companies, with a focus on the funds’ largest portfolio companies as well as coal-intensive utilities, board diversity laggards, and companies with excessive CEO pay. (Nine of the 36 have subsequently been withdrawn after the companies enacted, or agreed to enact, a 3% bylaw.)

Speaking of proxy access, recently the Nathan Cummings Foundation released a “Proxy Access Scorecard.” The scorecard shows how mutual funds voted on proxy access in 2015. This resource reveals a deep divide on the issue of proxy access among mutual funds in the United States. Firms such as BlackRock, T. Rowe Price, and State Street Global Advisors supported proxy access more than 90% of the time; Vanguard supported proxy access only 18% of the time; and Fidelity Investments never supported proxy access in 2015.

Speaking of transparency, the largest US pension fund, CalPERS, announced that it will post its proxy voting decisions on more than 10,000 equities it owns on a searchable database at least a day prior to the annual general meeting. CalPERS already posts vote decisions two weeks in advance on 300 companies with which it engages.

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Image Credit: YinYang

About the Author(s)
Matt Orsagh, CFA, CIPM

Matt Orsagh, CFA, CIPM, is a senior director of capital markets policy at CFA Institute, where he focuses on corporate governance, ESG, and climate change analysis. He writes and speaks frequently on these topics on behalf of CFA Institute. His paper, Climate Change Analysis in the Investment Process was named “Best ESG Paper” by Savvy Investor in 2021.

2 thoughts on “CorpGov Roundup: NY Comptroller Extends Proxy Project, EU Tackles ESG”

  1. Norges Banks is following the lead of CalSTRS, Florida SBA and now CalPERS in trying to post at least some of their proxy votes in advance of meetings. Last year they posted six. They’ve already matched that number this year. I hope to see them post thousands in the next year or two.

    If we ever see Vanguard, Fidelity, SSgA and BlackRock posting their votes in advance it will be the end of corporations as democracy-free zones.

    1. Matt Orsagh, CFA, CIPM says:

      Thank you for your comments Jim. It will indeed be interesting to see how this trend develops in future years.


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