Weekly update, 29th May 2020
As we reach the end of May, the record books are being rewritten and there is a growing interest in carbon transparency from investors.
This week the chairman of the Police Federation warned the public not to drive if they think their eyesight is impaired1. Of all the unprecedented, deeply saddening and perplexing things that we have seen during the pandemic this was certainly one we didn’t expect to be writing about, but here we are.
More gloomy economic data precipitated by the pandemic continues to be announced, seemingly each time reaching new record highs or lows. US jobless claims, which we have mentioned previously, are now north of 40 million2. Meanwhile, businesses across the world are now starting to report significant redundancies. Renault is due to cut 14,600 jobs3, EasyJet has announced it will cut 4,500 jobs4 and the British manufacturing industry is poised to make tens of thousands of workers redundant after orders have virtually disappeared.5
There are still rays of sunshine in all the darkness. With easing of the lockdown taking place to different degrees in different countries, consumer confidence figures are slowly beginning to pick up. The US saw a rise in consumer confidence in May,6 as well as a lift in home sales which beat expectations7. Positive noise out of the Bank of England also suggests that the recession may not be as bad as feared and the recovery may be quicker than people are expecting8. Although in our opinion it is too early to make a strong call, these are promising signs that we will continue to examine.
Without quoting Rudyard Kipling entirely and repeating something we have said from the beginning, it is important to ‘keep your head’ in these times. Do speak with us anytime you wish to.
In environmental news, there was shareholder dissent at the Annual General Meeting (AGM) of Chevron this week. Investors decided to go against the wishes of executives at the oil and gas major in order to pass a resolution that demands disclosure on lobbying9. These new reports should detail whether the company is funding trade organisations that do not align with the Paris Climate Accord to keep global temperature increases well below two degrees Celsius. Similar proposals received high-profile backing ahead of another AGM at Exxon Mobil, with large asset managers vocalising their support for more comprehensive reporting practices and better corporate governance10. Whilst climate conscious investors had less luck swaying the vote in this instance, 37.5% did vote in favour of better lobbying disclosure11. This is a clear indicator of an appetite for transparency on carbon transitioning, so investors can check the validity of strategies to cut emissions.
Shareholders have an important role to play in advocating for changes that benefit society and the environment. At Holden & Partners, we take great care to analyse the engagement practices of asset managers whose funds we select. We want to see that they are engaging with investee companies to improve their impact and that they support strategic shareholder resolutions such as those detailed above.
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2 https://finance.yahoo.com/news/coronavirus-covid-weekly-initial-jobless-claims-may-23-164848387.html
4 https://www.bbc.co.uk/news/business-52830665
8 https://www.theguardian.com/business/2020/may/26/uk-recession-bank-of-england-economist-andy-haldane
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