United Nations Climate Change
Our aim is to help our clients understand the potential opportunities and challenges that COP25 may have on their business.
Welcome to Essential Corporate News, our weekly news service covering the latest developments in the UK corporate world.
On October 12, 2017 the Parker Review Committee, led by Sir John Parker, published its final report (Report) into the ethnic diversity of UK boards. This follows the report that the Parker Review Committee published in November 2016 which summarised the findings of their review so far and was prepared for consultation purposes.
The Report notes that UK citizen directors of colour represent only about two per cent of the total director population and 51 out of the FTSE 100 companies do not have any directors of colour. The Parker Review Committee believes that it is important that FTSE 100 and FTSE 250 companies change the way they approach the issue of ethnic diversity in the boardroom and the pipeline and as well as highlighting clear business reasons for increasing ethnic diversity on UK boards, the Report includes a number of recommendations as follows:
Increasing the ethnic diversity of UK boards
Development of candidates for the pipeline and plan for succession
Enhanced transparency and disclosure
The Report includes “Questions for Directors” in Appendix A and a “Directors Resource Toolkit” in Appendix B to help existing boards deliver on the recommendations of the Report. Appendix C sets out case studies, with organisations providing practical examples of the steps they have taken to improve diversity in their organisations and within their executive and board ranks.
The Report notes that based on the current rates of turnover amongst FTSE 100 directors, the Parker Review Committee estimates that to reach an ethnically diverse mix similar to that of the overall adult working population by 2021 (approximately 15 per cent), one in five new board appointees would need to be a person of colour. Taking into account typical board appointment cycles, they calculate that this would mean that, on average, each FTSE 100 company would need to appoint one minority director in the period to 2021.
The Parker Review Committee plans to stay intact at least through 2021 and will meet at least annually to assess efforts being made and progress in relation to the Report’s recommendations. It encourages FTSE 350 companies to adopt the recommendations on a voluntary basis but notes that if there is insufficient progress it may endorse that the recommendations (or relevant parts) become mandatory.
On October 12, 2017 the Department for Business, Energy and Industrial Strategy (BEIS) published a consultation paper seeking views on the UK Government’s proposals for a streamlined and more effective energy and carbon reporting framework. The consultation builds on responses to a consultation in 2015, “Reforming the business energy efficiency tax landscape” which showed support for mandatory reporting of energy use and carbon data by certain large organisations.
The proposals include the following:
The Government asks for responses by January 4, 2018 and encourages respondents to use the online e-Consultation platform.
On October 10, 2017 the Financial Reporting Council (FRC) wrote to companies highlighting changes to UK reporting requirements and setting out key areas where the FRC believes improvements can be made when companies prepare their annual reports for the 2017/18 reporting season.
The areas that the FRC considers require improvement include the following:
On October 13, 2017 the London Stock Exchange (LSE) published AIM Notice 47, notifying AIM companies that the LSE requires all AIM companies to have a Legal Entity Identifier (LEI) code, in order to ensure compliance with the obligations under MiFID II and the Market Abuse Regulation (MAR).
Market operators, such as the LSE, are required to collate LEI codes for each issuer with securities admitted to trading. An LEI code holds information that enables clear and unique identification of legal entities participating in financial transactions.
The AIM application form for admission of new securities to trading to AIM has been amended to require an LEI. AIM companies must register for an LEI by November 30, 2017 if they have not already done so and the AIM Notice provides information on how to do that.
On October 11, 2017 the Department for Business, Energy and Industrial Strategy (BEIS) updated its webpage which provides guidance on the reporting requirements for business payment practices and performance. This now states that businesses can publish their reports online.
The Reporting on Payment Practices and Performance Regulations 2017 and the Limited Liability Partnerships (Reporting on Payment Practices and Performance) Regulations 2017 came into force on April 6, 2017 and they have introduced a “duty to report” which requires qualifying companies and limited liability partnerships to publicly report twice a year on their payment practices and performance on a Government-provided web service.
The webpage provides a link to updated guidance for those businesses which have to comply with the new statutory reporting duty as well as details about the Government’s new digital service. Businesses can use the digital service to check if they need to publish a report, publish the report itself or search for a report. A contact address is also given for queries related to the reporting requirement or digital service.
On October 11, 2017 the Best Practice Principles Group (BPP Group) launched a consultation that seeks views from investors and companies on whether the Best Practice Principles for Shareholder Voting Research and Analysis (the Principles) have been effective in ensuring the integrity and efficiency of the services provided by shareholder voting analysts and advisors.
The Principles, introduced in 2014, were developed by the industry to provide a voluntary performance and reporting framework, to promote a greater understanding of its role, and to promote the integrity and efficiency of processes and controls related to the provision of these services and management of any conflicts of interest.
The BPP Group has also published a consultation questionnaire, which asks various questions including the following:
The BPP Group is keen to hear from investors, companies and other providers of voting research and related services on their experience by December 15, 2017. A decision has not yet been taken on whether there will be a second consultation on draft revised Principles and reporting arrangements. This is likely to depend on the extent of any revisions proposed, and will be informed by the responses to this consultation. If it is decided that a second consultation is not necessary, then the aim would be to publish a report setting out the findings and conclusions of the review, together with the revised Principles and details of the reporting and monitoring arrangements in April 2018. If there is a second consultation, it will begin in April2018 and the revised Principles and other documents will be published in July or August 2018.
IMO 2020 is almost upon us. Readers are well aware of the impending switch to 0.5 percent fuel mandated by Annex VI of MARPOL which will cause an anticipated drop in HSFO demand, the potential hazards of new untested LSFO blends, the concerns around scrubber operations, the debate over open loop versus closed loop, and the myriad of other risks associated with the impending regulatory change.