November 6, 2014

More say on directors

A group of institutional shareholders in the United States have begun to push for greater control of board nominations for 75 publicly-traded companies throughout the U.S. The group, led by New York City Comptroller Scott Stringer will begin submitting proposals to each company requesting changes to the governance bylaw. Any shareholder that has owned three per cent of the company’s stock for more than three years would be able to nominate its own candidates for the board. “The bottom line is, friends still put friends on boards,” Mr. Stringer told the New York Times Wednesday. “My job as a long-term investor is to make sure that these companies truly represent the interest of share owners.” The California Public Employees’ Retirement System (CalPERS), the second largest public pension fund in the U.S., is also backing the effort, along with a number of other city and state comptrollers.


Canadian federal pension board exploits tax shelters

Documents obtained by the International Consortium of Investigative Journalists and shared with the CBC have unearthed a complicated overseas tax avoidance scheme being pursued by a Canadian federal pension board. The leaked documents demonstrate that the Canadian Public Sector Pension Investment Board funneled money through dozens of companies in Luxembourg to avoid paying German taxes on property investments in Berlin, beginning in 2008. The plan, set up by PricewaterhouseCoopers, combined the exploitation of a loophole in German law with lax tax laws in Luxembourg. While not illegal, the actions pursued by the pension board risk undermining wider efforts by the OECD and G20, both of which Canada is a member, to crack down on international tax evasion.


World’s largest companies lack disclosure

Transparency International released its annual report on corporate transparency on Wednesday, which analyzed the disclosure performance of 124 of the world’s largest publicly-traded companies.The Bank of China, Honda Motor, Bank of Communications, Agricultural Bank of China and Russia’s Sberbank were listed as the five least transparent companies.  Only 34 of the 124 companies assessed currently disclose the amount of taxes they pay in foreign countries, while almost half disclose no information on their revenues in other countries. The report warns that weak performance by the world’s biggest oil, gas and mining companies demonstrates that corporations will struggle to comply with upcoming EU extractive industry payment regulations, expected to come into force in July 2015.


Japanese government soft on corporate corruption abroad

After years of inadequate oversight over its corporations operating abroad, officials have begun to crack down on corrupt practices by Japanese companies in foreign countries. A landmark anticorruption bill passed in 1999 has only led to four prosecutions, according to Businessweek. This compares unfavourably to the 193 enforcement actions taken against companies by the U.S. Department of Justice under the Foreign Corrupt Practices Act during the same time period. Faced with growing pressure from the OECD, Japanese Prime Minister Shinzo Abe rolled out an action plan in April to strengthen enforcement. The OECD, while encouraged by the development, will be looking for “a substantial increase in successful prosecutions and convictions in the near future.”


Look into the crystal ball

Corporate Knights is publishing an extensive, fictional look this week into a future where humanity has successfully tackled climate change. This article was written by the Centre for Global Development, and is well worth a read. It’s 2030 and instead of racing toward the brink of climate catastrophe the world has begun to back away. Annual global emissions of heat-trapping gasses have fallen two-thirds, faster than anybody had dared to hope as recently as a dozen years ago with continued steep reductions ahead. Attention and investment are shifting from the need for steep emissions reductions – a global goal that has largely been attained – to large-scale, low-cost biological methods for extracting carbon from the atmosphere. The first part of the five-part series was published yesterday.

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