The regulatory scrutiny surrounding ESG investing continues to grow. This week, the SEC announced a first-of-its-kind fine on the subject, slapping BNY Mellon with a penalty over alleged “misstatements” and “omissions” in some ESG considerations for certain funds it manages. Just two days later, the agency proposed new rules aimed at strengthening the criteria for ESG-labeled funds. These changes are a result of SEC Chairman Gary Gensler’s initiative to stop “greenwashing” – exaggerated claims by funds or investment products that market ESG investments.
On Thursday, activist investor Carl Icahn was dealt a decisive blow in his ESG-centered campaign against McDonald’s treatment of pigs as his two Board nominees received 1% of shareholder votes. This kind of proxy fight is not typical for Icahn; his stake of only 200 shares and narrow campaign scope made it difficult to influence votes from institutional shareholders. However, Icahn’s efforts put a spotlight on the growing trend of shareholders who are pushing for changes at companies based on ESG critiques.
The World Economic Forum at Davos returned after a two-year hiatus and top executives signaled a continued commitment to ESG and stakeholder capitalism – though they argue better ESG standards are needed to build sustainable brands. Additionally, senior dealmakers speaking at the conference have opined that M&A activity might begin to pick-up.
Below are some announcements from a busy week of M&A:
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Broadcom Inc. agreed to buy cloud-computing company VMware for approximately $61 billion in the biggest takeover ever for a chipmaker.
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The world’s most valuable company, Saudi Arabian Oil, has approached Valvoline about a potential takeover of its lubricants business.
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Activist investor Nelson Peltz is considering a potential takeover bid of Wendy’s, the third-largest burger chain in the US. Peltz has a significant stake of nearly 20% in the company and is non-executive chair of Wendy’s board.
Have a great weekend,
The GPP Team
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The Wall Street Journal: SEC Fines BNY Mellon Over ESG Claims
Greenwashing had consequences for BNY Mellon after the SEC levied a fine for some BNY mutual funds that failed to implement ESG quality review. Read More
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Bloomberg Opinion: The SEC Goes After Greenwashing
Matt Levine takes a look at the Securities and Exchange Commission’s effort to crack down on ESG claims and what this could mean for investors. Read More
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New York Times: Carl Icahn Gets Only 1% of McDonald’s Investors to Support His Campaign On Pigs
Lauren Hirsh writes, “The activist investor Carl Icahn’s clash with McDonald’s over its treatment of pigs ended with little fanfare on Thursday – all 12 of the company’s preferred directors were re-elected.” Read More
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World Economic Forum: The Big Fallacy In The Backlash Against ESG and Stakeholder Capitalism
As part of the research presented at Davos, Richard Samans argues that critics of ESG and stakeholder capitalism are underestimating their growing importance for firm financial performance. Read More
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Bloomberg: New World Order Adds Fresh Impetus to M&A, Say Davos Dealmakers
Certain panelists at the World Economic Forum in Davos believe that “the emergence of a new geopolitical order in the coming years will help to drive cross-border mergers and acquisitions” and also argue that “it wasn’t all doom and gloom for M&A in the near team.” Read More
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CNBC: Twitter Jumps After Musk Increases Commitment In Takeover Bid to $33.5 Billion
A filing on Wednesday revealed Elon Musk is planning on using more of his own wealth to finance the deal with Twitter. Musk is in discussion with other Twitter shareholders, including former Twitter CEO Jack Dorsey to help finance, or roll their shares over, to complete the deal. Read More
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As Twitter’s future remains in question, co-founder and former CEO of Twitter has officially stepped down from Twitter's board. The move was part of an agreement last November when Dorsey left his role as CEO. Read More
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NPR: Twitter Will Pay a $150 Million Fine Over Accusations It Improperly Sold User Data
The Department of Justice (DOJ) with the Federal Trade Commission (FTC) announced that Twitter has agreed to settle over allegations that Twitter violated the FTC Act and an administrative order issued in 2011 by misrepresenting how it would make use of users’ nonpublic contact information. Read More
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Insider: Twitter Shareholders Voted To Kick An Ally Of Elon Musk Off The Company's Board On An Apparent Snub
At Wednesday's AGM, shareholders voted against re-electing Egon Durban, co-CEO and managing partner of private equity firm Silver Lake. Read More
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Axios Pro: Retail Proxy Season Comes Into Focus
Axios Pro dives into the “mixed picture” this proxy season and takes a look at what’s on the table ahead of certain AGMs related to the retail industry. Read More
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The Deal Podcast: Activist Investing Today
Daniel Kerstein, global head of M&A, ESG and activist defense at Barclays, believes the deal market hasn’t yet slowed down, but if it does activists will find new entry points. Listen Here
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Financial Times: Shell AGM Derailed by Climate Activists
“The disruption came as Shell, which simplified its Angle-Dutch structure in December by relocating its headquarters to London, prepared for shareholders to vote on its energy transition plan to become a net zero carbon emissions business by 2050” writes Tom Wilson. Read More
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WSJ Tech News Briefing Podcast: Tech Startups Cut Spending As Investors Pull Back
As investments in tech startups dry up, Heather Somerville discusses with host Zoe Thomas the reality of the situation for investors and tech startups and what we could expect in the near term. Listen Here
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