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May 23, 2025

NYSE Top 5

Following along from last week’s intro - a quick aside into the contents of the House bill’s rollback of IRA tax credits (from Akin Gump, here), with a reminder that these could change after the Senate takes up the bill.

Then, it’s time to relax and start the official kickoff to summer early - enjoy a fake beach read here, get out for a fake run here , rev the “engine” in your EV sports car with a fake transmission here, and instead spend two minutes of that time you’ve freed up with the Top 5…

-Brian Matt, CFA, Head of Sustainability Advisory, NYSE
brian.matt@nyse.com
 

1. French government joins German support for repealing CSDDD

Stepping back a week, newly-elected German chancellor Merz had restated his deregulatory stance on both the German supply chain due diligence laws currently in force, as well as the broader CSDDD that’s been paused by the EU in his first visit to Brussels. French President Macron added on this week: “Clearly we are very aligned now with Chancellor Merz…CSDDD and some other regulations have to not just be postponed for one year, but to be put out of the table,” and, “I’m not even speaking about the content. I’m just speaking about how to synchronize with the U.S. and the rest of the world.” 

Note that repeal is far from certain, with other EU member states supporting the existing structure, and this Trellis article is a reminder that member states might take up local versions of the legislation if the EU pulls back. Outside of keeping your government affairs’ team’s ears to the ground, not much to do yet, but keep your EU country-by-country footprint at the ready as well.
 
 
 

2. EU & UK agree to link Emissions Trading Systems

Headed in the opposite direction from the above balkanization, this week’s meeting between EU president von der Leyen and UK prime minister Starmer produced an agreement in principle to link the two regions’ carbon allowance markets (ESG Today here). This White & Case memo is a good read as an update to how that process might work as well as the current status of CBAM - note that the UK’s version of CBAM is under consult through July 2025 and expected to publish its details later this year. (As usual - you can track carbon pricing through ICE Futures Europe here - the market reaction was a roughly 6% jump in UKA futures to over GBP55). One blueprint might be the current interoperability between the Swiss and EU emissions trading systems, which has been running since 2020. 

A deeper read on carbon border adjustments that follow on from the latest Senate proposals from the Council on Foreign Relations is here, as well as a reminder to keep an eye on any place your firm is doing business that might be underway with their response to the onset of payments to the EU CBAM starting next year.
 
 
 

3. SquareWell Partners study - 2025 voting guidelines less prescriptive, no pullback on climate expectations

We covered the first version of this study of the Top 65 global investors’ voting policies from advisory firm SquareWell Partners in Top 5 #121 in January 2024; this version coming later in 2025 might have a lot to do with the later release of so many firms’ policies covering this season. A few highlights here, and the full report is available with free reg here.

You’ll find a simple chart of voting alignment with management from each of these Top 65 on 2024’s high-profile meetings on Page 37, and the appendix may be useful in its own simply to have the links to many of the policies of the Top 65. Page 22 notes the citations from the Top 65 across the top ESG ratings providers (MSCI is in use at 54 of 65), as well as highlighting the increased use of in-house methodologies, as described by firms like AllianceBernstein and Legal & General. To our headline above, 43 of 65 directly address Scope 3 emissions reporting in their voting guidelines, whether or not they support specific proposals on the topic.
 
 
 

4. SEC announces roundtable and review of executive compensation disclosures

Yes, this is taking place right in the middle of proxy season, but those that hold the pen on the proxy, and CD&A in particular, should take a look at the set of questions published by Chair Atkins (here) and add the roundtable ( here) to your calendar. Questions center around streamlining disclosures and identifying those that may not be adding any value to investors’ evaluation of management compensation plans. Three “hot topics” included in the request are around P4P and clawbacks, the definition of “compensation actually paid”, and the definition of perquisites and how to measure them. 

There’s a formal comment period open as well, and companies and investors may want to add their inputs - we’ve heard comments from asset managers over time about increasing complexity of compensation disclosures as well as the CEO-to-median-employee ratio. There may be an opportunity here to help shape this conversation with investors. 
 
 
 

5. Research: Why do ISS “against” recs on say-on-pay jump in June AGMs?

We’ll deliver the punchline of this thinkpiece first in that the results are not conclusive…but the team at comp consultant Exequity does make some interesting observations. 46% of annual say-on-pay votes occur in May, 26% in June, but June’s AGMs show 19% “against” recommendations versus 9% in May. There’s no variation found in sectors, even with the January fiscal year from retailers included. Further, there’s no evidence that companies that have low say-on-pay one year push their AGM date back into June the next year. 

The chart at the end of the piece might show the most plausible explanation; proxy advisory research is a seasonal business that requires digesting large amounts of data from comp disclosures into a recommendation, and the largest amount of proxies are filed in the March and April time periods, leaving more time to produce reporting for later AGMs. Corollary to the SEC’s inquiry above - anything that makes compensation data easier to read and faster to produce and verify for companies might help speed up the analysis that investors need to perform. 
Which career choice is the best match for the shelf life of this edition of the Top 5?

GoT Hand of the King  I  Spinal Tap drummer I  Star Trek redshirt"
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