Corporate governance is a hot topic this month, with several noteworthy announcements. In-house lawyers should also keep an eye on developments in executive remuneration, women on boards and climate change.
Corporate governance
The FRC has published its annual review of corporate governance assessing the quality of reporting against the UK Corporate Governance Code. The review sets out recommendations for improved reporting across a range of areas including:
- Code compliance.
- Purpose and culture.
- Stakeholder engagement.
- Modern slavery.
- Environment.
- Diversity.
- Audit and risk.
- Remuneration.
On 4 November 2022 Institutional Shareholder Services (ISS) published its 2023 benchmark policy consultation seeking views on amending its UK and Ireland voting policies, and its all-markets policies on climate accountability. ISS expects to announce its final 2023 benchmark policy changes by around the first week of December 2022 and apply the revised policies to shareholder meetings on or after 1 February 2023.
Glass Lewis published its 2023 proxy voting policy guidelines for the UK on 17 November. Amendments to the 2022 guidelines include an update on director accountability for climate-related issues.
On 10 November the European Parliament resolved to adopt, with amendments, the Commission’s proposal for a Corporate Sustainability Reporting Directive. The Council is expected to adopt the proposal on 28 November.
Practical Law has published an analysis of key trends relating to certain aspects of narrative reporting, resolutions proposed and voting trends of FTSE 350 companies and certain AIM companies from the 2022 reporting and AGM season.
Executive remuneration
On 9 November the Investment Association published its principles of remuneration for 2023. There are no significant changes from the 2022 version. However, the accompanying letter to remuneration committee chairs includes sections on pensions, ESG performance measures, and investor expectations of how remuneration committees should respond to the cost-of-living and inflationary increases, and potential windfall gains for executives.
Women on boards
On 22 November the European Parliament resolved at second reading to adopt, without amendments, the Council position at first reading on a directive on the gender balance of boards of listed companies. Among other things, EU member states must require that at least 40% of non-executive director (NED) positions, or at least 33% of all director positions, in listed companies are held by members of the under-represented sex by 30 June 2026.
The Female FTSE Board Report 2022 looks at trends in female representation on FTSE 100 and FTSE 250 boards each year. It has found that, although the target of 40% women on their boards has been reached in the FTSE 100 and is on the cusp of being reached (39%) in the FTSE 250, this progress is failing to translate into genuine equality in senior roles, with the increase primarily coming from the rise in the number of female NEDs.
Climate change
The UK Transition Plan Taskforce has published a consultation on its proposed disclosure framework for private sector climate transition plans and accompanying implementation guidance. The draft framework sets out steps to develop a transition plan and guidance on when, where and how to disclose it. Responses should be received by 28 February 2023.
The UN High-Level Expert Group on the Net-Zero Emissions Commitments of Non-State Entities (HLEG) published a report, Integrity Matters: Net Zero Commitments by Businesses, Financial Institutions, Cities and Regions, at COP 27 in Egypt on 8 November. The HLEG report highlights the need for integrity in net zero commitments and sets out a:
“roadmap to prevent net zero from being undermined by false claims, ambiguity and ‘greenwash.'”
2022 Autumn Statement
On 17 November the Chancellor of the Exchequer, Jeremy Hunt, delivered the 2022 Autumn Statement (Medium-term Fiscal Plan) announcing wide-ranging tax increases aimed at reducing the “fiscal blackhole” identified by the government. Further to the reversal of many of the measures in the Growth Plan delivered on 23 September, most of the business tax announcements had been anticipated. On 22 November, the 2022 Autumn Statement (Medium-term Fiscal Plan) resolutions were passed, and the Finance (No 2) Bill 2022 received its first reading.
Bribery Act 2010
Glencore Energy UK Ltd has been fined over £182 million after pleading guilty to seven offences under the Bribery Act 2010. The SFO opened an investigation in 2019, which showed Glencore paid bribes worth a total of $29 million to secure its access to oil in Cameroon, Equatorial Guinea, Ivory Coast, Nigeria and South Sudan.
Sanctions
The Office of Financial Sanctions Implementation (OFSI) has published its Annual Review covering the reporting period from April 2021 to August 2022. Since the start of the conflict between Russia and Ukraine, £18.39 billion of Russian assets have been reported as frozen by OFSI. This is in addition to the total £12.4 billion frozen assets held in the UK as reported by OFSI in 2021 and shows the effect of the UK’s financial sanctions.
Data, information and cyber security
The Information Commissioner’s Office (ICO has published its draft guidance on information about workers’ health, which is open for consultation until 26 January 2023. The draft guidance covers key topics such as lawful basis for processing health data, data minimisation, transparency and retention.
The Parliamentary Joint Committee on the National Security Strategy has launched a call for evidence on ransomware encompassing the nature and extent of the threat and how it might best be combatted. The closing date for written submissions is 16 December.
Dates for your diary
2 December
The Miscarriage Leave Bill and Protection for Whistleblowing Bill are scheduled to have their second readings.
5 December
- The Exclusivity Terms for Zero Hours Workers (Unenforceability and Redress) Regulations 2022 come into force.
- European Commission’s call for evidence on the EU Trade Mark Regulation ends.
7 December
The Employment Relations (Flexible Working) Bill, a private member’s bill supported by the government, will reach the Public Bill Committee stage.
9 December
The Working Time Regulations (Amendment) Bill is scheduled to be read for a second time.
15 December
The Public Interest Disclosure (Prescribed Persons) (Amendment) Order 2022, which amends the list of prescribed persons to whom disclosures can be made, comes into force.
21 December
- European Commission call for evidence on consumer protection co-operation closes.
- European Commission feedback period on the Alternative Dispute Resolution Directive closes.
27 December
Validity of contracts incorporating European Commission standard contractual clauses transferring personal data from the EEA to third countries made on the basis of Decision (2001/497/EC) or Decision (2010/87/EU) and created before 27 September 2021, ends.
31 December
- Retained Research and Development and Specialisation block exemption regulations expire.
- ICO consultation on draft chapters in the new anonymisation and pseudonymisation guidance ends.
