UK investment managers are looking to send a stronger message to boards about their ethnic diversity in this year’s season of annual general meetings (AGMs), according to updated Investment Association (IA) guidelines.
This year, IVIS, the IA’s voting service, will for the first time issue a so-called “amber-top” for FTSE 350 companies that do not disclose either the ethnic diversity of their board or a credible action plan to achieve the target of having at least one director from an ethnic minority background by 2021.
2021 is the first year for that target under the government-backed Parker Review.
An “amber-top” alerts asset managers using IVIS that there is a significant issue to be considered for deciding how to vote at an AGM.
IVIS will also be issuing such an alert in relation to climate change, and specifically where companies in high-risk sectors do not address all four pillars of the Task Force for Climate-related Financial Disclosures (TCFD). Under new Financial Conduct Authority rules, from spring 2022 premium-listed companies have to provide TCFD reporting, or explain why not.
Questions guiding the IVIS analysis include whether companies have committed to aligning its business model or operations with the Paris Agreement, and explained how this will be achieved. The IA will also be looking for companies to provide a statement about climate risks being incorporated in the financial accounts.
Publishing its shareholder priorities for 2021 today, the IA also said investors would “continue to shine a spotlight on executive pay, having already cautioned companies to treat their executives in line with the rest of the workforce and remain mindful of the pandemic’s impact on society”.
The IA also highlighted that it would be raising the bar for companies to avoid a “red-top” on board gender diversity; last year the threshold was that 20% of the board should comprise female directors, this year it is 30%.
Swiss exchange operator buys AI platform
SIX, which operates and develops infrastructure services for the Swiss and Spanish stock exchanges, is taking a majority stake in Orenda Software Solutions, a Canadian-based artificial intelligence platform specialising in ESG and alternative data sets.
Operating out of Ontario, Orenda is described as a platform that analyses and quantifies social media data to provide insights, quantify public perception, and “to identify values that resonate with customers and stakeholders”.
In a statement, the acquisition is described as part of SIX’s strategy to “help its customers drive more insights with data, providing consumption-ready data and analytics for faster and more informed decisions”.
Orenda and SIX had already signed a redistribution agreement in September last year. The transaction, for which the financial terms were not disclosed, is expected to close this quarter.