IRRCi, IRRCi Research
Andrew Borek, Patrick McGurn, Zachary Friesner – Thursday, August 24, 2017
The report examines hundreds of new directors who joined S&P 1500 company boards as a result of activist campaigns over the study period from 2011 through 2014. Activist investors typically favored nominees with financial experience, while incumbent boards favored nominees with executive experience. In all, some 380 new board candidates were put forth during those four years as a result of activist efforts.
IRRCi, IRRCi Research
Thursday, August 24, 2017
Activism at Public Companies Erodes Gender, Racial and Ethnic Diversity, but also Results in Younger, More Independent Boards
Webinar on September 7th at 11 AM ET to Review Findings
NEW YORK, NY, August 24, 2017 – Shareholder activism at S&P 1500 companies results in corporate board members who are younger and more independent yet less diverse along gender, racial and ethnic lines, according to a new report, The Impact of Shareholder Activism on Board Refreshment Trends at S&P 1500 Firms. Commissioned by the Investor Responsibility Research Center Institute (IRRCi) and undertaken by Institutional Shareholder Services, Inc. (ISS), the report examines hundreds of new directors who joined S&P 1500 company boards as a result of activist campaigns over the study period from 2011 through 2014.
Activist investors typically favored nominees with financial experience, while incumbent boards favored nominees with executive experience. In all, some 380 new board candidates were put forth during those four years as a result of activist efforts.
A webinar is scheduled for Thursday, September 7, 2017, at 11 AM ET to review the findings and respond to questions. Register at no charge here.
Download the full report here.
The report also provides in-depth data on the boardroom impacts of activism in a number of areas. For example, with regard to board diversity, the analysis reveals study company boards were less likely to have at least one female director following an activist campaign than they were preceding one, decreasing from 87.1 percent to 82.8 percent. Similarly, the analysis finds that company boards were less likely to have at least one minority director following an activist campaign as compared with preceding one, resulting in a four percentage point decline to 51.6 percent. “If you want to ignite a heated discussion, just bring up the topic of shareholder activism,” said Jon Lukomnik, IRRCi executive director. “But lost in the debate is the impact that activism has on corporate boards. The new report closes that gap with the first deep dive on the implications of dissident campaigns on corporate boards. What we’ve found is a bit of a mixed bag – there is more financial expertise and independence, but also less diversity.”
“Activism has emerged as one of the biggest drivers of board refreshment at S&P 1500 firms,” said ISS Special Counsel and report co-author Patrick McGurn. “Shareholders and directors need to better understand the significant boardroom transformations that occur when activist investors target companies.”
Among the key findings of the report are that activism:
- Drives down director ages and tenure. The average age of directors at target companies decreased from 62.2 to 59.6 years while tenure decreased from 9.5 to 6.1 years.
- Erodes gender diversity. The number of boards at target companies with at least one female director decreased from 87.1 percent to 82.8 percent. During the same period, the overall corporate trend was in the opposite direction; the number of companies in the S&P 1500 with at least one female director actually increased from 72 percent to 82.7 percent.
- Erodes ethic/racial diversity. The number of boards at target companies with at least one minority director decreased from 55.9 percent to 51.6 percent. As with gender diversity, the broader corporate trend differs with the number of companies in the S&P 1500 with at least one minority director actually increasing from 53.5 percent to 56.8 percent during the study period.
- Slightly increases board size from an average of nine to 9.4 directors. In all, 41.9 percent of target companies increased in size post activism, while 18.3 percent of target companies experienced a decrease in board size.
- Boosts boardroom independence. About 79.5 percent of board members were independent pre-intervention, compared with 83 percent post.
The Investor Responsibility Research Center Institute is a nonprofit research organization that funds academic and practitioner research enabling investors, policymakers, and other stakeholders to make data-driven decisions. IRRCi research covers a wide range of topics of interest to investors, is objective, unbiased, and disseminated widely. More information is available at the IRRCi Website.
Institutional Shareholder Services Inc., is a leading provider of corporate governance and responsible investment solutions for asset owners, asset managers, hedge funds, and asset service providers. For more information, please visit www.issgovernance.com
Media Contacts: Kelly Kenneally | +1.202.256.1445 | kelly@irrcinstitute.org | @irrcresearch
IRRCi, IRRCi Research
Thursday, July 27, 2017
New Report Details How Central Banks and Development Finance Institutions Try to Affect the World’s Environmental, Societal, and Financial Systems Webinar on August 17rd at 1 PM ET to Review Findings
NEW YORK, NY, July 27, 2017 – A new report analyzes how and why central banks (CBs) and development finance institutions (DFIs) incorporate environmental, societal and financial systems-level thinking into their activities. The report identifies five “on ramp” activities that these financial institutions use to address systems-level risks and rewards, and it suggests parallels to how long-term investors attempt to manage systemic risks.
Central Bank and Development Finance Institution Approaches to Investing in Global Systems analyzes six central banks (including two U.S. Federal Reserve System regional banks), seven DFIs, and one microfinance bank, all of which are known to be incorporating environmental, societal, or financial systems-level considerations into their programs. The report, commissioned by the Investor Responsibility Research Center Institute (IRRCi) and authored by William Burckart, Steve Lydenberg and Jessica Ziegler with The Investment Integration Project (TIIP), suggests that investors could learn from how the CBs and DFIs approach systemic risk issues.
A webinar is scheduled for Thursday, August 17, 2017, at 1 PM ET to review the findings and respond to questions.
Register at no charge here.
Download the full report here.
The analysis comes at a time when the world is increasingly interconnected, populous, prosperous, and complex, and while institutional investors are increasingly concerned about the interplay between environmental, societal, and financial systems and their investments. Recent actions and statements by CBs and DFIs indicate that they are incorporating systems level thinking into their work. They contend that concern for systems-level issues aligns closely with CB mandates to stabilize financial systems, catalyze entire economies, set monetary policy, and mange interest rates and money supply, and with DFI missions to generate economic growth and alleviate poverty through investing in the private sector in emerging markets. The report finds that CBs and DFIs have incorporated five “on ramp” activities to bring attention to and address systems-level risks and rewards:
- Environmental and social risk assessment. The identification, definition, and quantification of issues that are potential sources of economic instability, social unrest, or environmental disruption.
- Long-term prosperity protection. Focusing on the enduring long-term health of the systems within which they operate, which is vital to protecting lasting prosperity.
- Impact measurement. Specifying, evaluating and reporting on social and environmental factors throughout the investment process along the dimensions of various impact evaluation frameworks.
- Financial systems stewardship. Protecting and enhancing financial systems over the long-term by encouraging behavior that supports the prioritization by investors of positive systems-level societal and environmental considerations in their decision-making.
- Universal cooperation. Consideration of the need for cooperation among nations that they serve in their policies and practices as they build consensus across regions, economies, and countries.
“Sustainable prosperity means different things to different investors. For CBs and DFIs it may mean economic stability and poverty alleviation; for investors it may mean wealth generation and preservation. But the common thread is the need to enhance and safeguard the systems-level sources of this prosperity. While still in its infancy, systems-level investing holds tremendous promise for doing just that in an increasingly interconnected and complex world,” said Jon Lukomnik, IRRCi executive director.
“More and more, institutional investors are recognizing the complicated interplay between global systems and their portfolio decision making. What has been less obvious are the ways in which investors can most effectively go about developing and integrating these considerations into their practices and policies. Though they do not offer direct comparisons, CBs and DFIs do provide compelling insights and lessons for institutional investors looking to embrace a systems-focus,” said William Burckart, report co-author, TIIP president and chief operating officer, and visiting scholar to the Center for Community Development at the Federal Reserve Bank of San Francisco.
This new report is an extension to a previous report, Tipping Points 2016: Summary of 50 Asset Owners and Managers’ Approaches to Investing in Global Systems. This previous study demonstrated that a range of investors are exploring whether and how the health of the environmental, societal and financial systems within which they operate impact their portfolios and vice versa.
The Investor Responsibility Research Center Institute is a nonprofit research organization that funds academic and practitioner research enabling investors, policymakers, and other stakeholders to make data-driven decisions. IRRCi research covers a wide range of topics of interest to investors, is objective, unbiased, and disseminated widely. More information is available at the IRRCi Website.
The Investment Integration Project conducts research and analysis that enables institutional investors to make the important connection between their portfolio-level decisions and environmental, societal, and financial systems-level considerations. TIIP’s research portal and database of investor profiles, market analysis, and practical guidance provides a way to better match investors to like-minded peers, benchmark strategies, and optimize the development of investment activities and other initiatives that address pressing systems-level issues. More information is available at http://tiiproject.com/
Media Contacts: Kelly Kenneally | +1.202.256.1445 | kelly@irrcinstitute.org | @irrcresearch William Burckart |+1.646.902.4511| wburckart@TIIProject.com | @TIIP_Insights
IRRCi, IRRCi Research
Jessica Ziegler, Steve Lydenberg, William Burckart – Thursday, July 27, 2017
This report analyzes how and why central banks (CBs) and development finance institutions (DFIs) incorporate environmental, societal and financial systems-level thinking into their activities. The report identifies five “on ramp” activities that these financial institutions use to address systems-level risks and rewards, and it suggests parallels to how long-term investors attempt to manage systemic risks.
IRRCi, IRRCi Research
Emma Currier, Michael Shavel, Sebastian Vanderzeil – Thursday, May 18, 2017
The analysis indicates that automation is set to alter the retail industry’s labor profile. If companies migrate towards a high-touch, experience-based strategy, then it is possible workers will receive improved training and higher wages, and there will be fewer layoffs. If companies adopt a heavily convenience-oriented strategy, more tasks will be automated and less labor required. To date, companies’ discussions around implementing technology suggest that technology is aimed at complementing labor. However, should structural price and cost issues persist, technology may be viewed as a potential substitute for labor. The most likely outcome is a mix of experience and convenience strategies, though this could still result in material layoffs in the retail sector. Because retail represents approximately 10% of the total US labor force, any systematic deployment of automation is likely to reduce the number of retail jobs by a figure in the millions.
IRRCi, IRRCi Research
6 to 7.5 MILLION U.S. RETAIL JOBS AT RISK DUE TO AUTOMATION
Women and Working Poor Most Likely to Become “Stranded Workers”Webinar on June 8th at 1 PM ET to Review Findings
NEW YORK, NY, May 18, 2017 – A new analysis finds that 6 to 7.5 million retail jobs likely will be automated out of existence in the coming years, leaving a large portion of the retail workforce at risk of becoming “stranded workers.” Retail cashiers are at highest risk for automation technologies, and women hold 73 percent of these positions. Some 16 million Americans are employed in retail, which represents 10 percent of the nation’s working population and generates 6 percent of U.S. gross domestic product (GDP). A lack of disclosure on key labor metrics by retailers put investors in the dark on how these companies are responding and what the fate of their workers could be. These findings are contained in a new study, Retail Automation: Stranded Workers? Opportunities and Risks for Labor and Automation, conducted by Cornerstone Capital Group (Cornerstone) and commissioned by the Investor Responsibility Research Center Institute (IRRCi). The report identifies the structural factors catalyzing change in the retail industry and is authored by Sebastian Vanderzeil and Michael Shavel of Cornerstone. Download the report here. A webinar is scheduled for Thursday, June 8th at 1 PM ET to review the findings and respond to questions. Register at no charge here.
“This in-depth examination of retail automation gives investors insights as they consider investment risks and opportunities,” said Jon Lukomnik, IRRCi executive director. “While the findings are important to investors, they should sound the alarm for economists and political leaders. The shrinking of retail jobs in many ways threatens to mirror the decline in manufacturing in the U.S. Moreover, in this case, workers at risk are already disproportionately working poor, so any disruption may cause strains in the social safety net and stresses on local tax revenues.”
“The retail landscape is changing rapidly and investors need to understand the social and governance issues impacting valuations for public companies in this sector,” said Erika Karp, Cornerstone founder and chief executive officer. “Retailers are facing a perfect storm: they need to balance demand for wage increases with the negative optics of future job losses. The winners in retail will be companies that provide recruitment, retention and training for workers and innovate with forward-thinking future store strategies.”
Among the report’s findings:
- Some 36% of retail workers currently receive some form of public assistance and the average retail worker is age 38. Contrary to perceptions, 71% of retail workers are full-time employees.
- Of the 30 companies analyzed in this report, most are considering the use of in-store technology such as mobile devices, self-checkout, digital kiosks and proximity beacons. In addition, sensor-based checkouts and smart shelves are a growing technology, as found in Amazon Go stores.
- The report indicates that WalMart and other large retailers have greater market share in communities with less than 500,000 people. If employment trends correlate to market share location, retail automation by retailers could disproportionately impact these smaller communities.
The report details the technologies retailers are deploying, looks at the drivers of automation, and provides a framework to analyze the automation strategies of 30 large retail companies. In some cases, technology is complementing labor by freeing workers from mundane tasks and facilitating a more personalized customer experience. In others, technology has the potential to automate a significant part of the sales process and render a range of jobs redundant. Taken together, store closures and technology have the potential to dramatically alter the employment landscape in America.
Retail Automation: Stranded Workers? Opportunities and Risks for Labor and Automation examines current and potential automation initiatives across 30 retail companies, chosen based on market capitalization and comparability and provides analysis of the characteristics of current retail workers, including gender and location, and assesses stakeholder groups that may be impacted by changes to retail labor. It also uncovers how large, publicly-listed retail companies are positioned to manage automation and labor through the industry’s transition.
The Investor Responsibility Research Center Institute is a nonprofit research organization that funds academic and practitioner research enabling investors, policymakers, and other stakeholders to make data-driven decisions. IRRCi research covers a wide range of topics of interest to investors, is objective, unbiased, and disseminated widely. More information is available at the IRRCi Website
Cornerstone Capital Group is an SEC-registered Investment advisor focused on helping its client base of individuals, family offices, foundations and endowments to align their investments with their mission, values or interests while seeking to achieve competitive investment returns. Cornerstone works with asset owners, corporations and financial institutions to promote new research in the field of Environmental, Social and Governance analysis. More information is available here.
Media Contacts: Kelly Kenneally | +1.202.256.1445 | kelly@irrcinstitute.org | @irrcresearch Betsy Emerson | +1 646-930-4257 | betsy.emerson@cornerstonecapinc.com| @Cornerstone_Cap
