The rise of index investing, where passive investors are now active owners, has been a game changer across global markets. As the investor ecosystem rapidly evolves, and with capital  fungible across borders, investors are making more demands from their portfolio companies and looking carefully at the long-term sustainability of their investments.

To this end, Farient Advisors LLC and our Partners in the Global Governance and Executive Compensation Group (GECN Group) recently interviewed 25 global investors to understand their hot button issues for 2019 and beyond. The “2019 Seven Lessons from Engaged Investors” research highlights how boards of directors and management can better prepare for shareholder engagement.

From Australia and Asia to the E.U., U.K. and U.S., three high-profile issues continue to emerge around environmental, social, and governance (ESG): (1) Climate Change, (2) Human Capital and Diversity, and (3) Executive Compensation.

Throughout the interviews, investors expressed deep concerns that corporations are not providing enough transparency in their disclosures to show the alignment (or lack thereof) of shareholder, stakeholder and executive interests on these issues. This research highlights the importance of corporate responsiveness and engagement with investors, providing insights into where investors and stakeholders are challenging corporations and governments to look beyond shareholder value and “do the right thing.”

We invite you to anticipate investor concerns and prepare your board and executives for future shareholder engagement on the issues we identify in this report:

  • Executive compensation pitfalls that can impact say on pay
  • Transparency red flags that may be missing from corporate disclosures
  • Questions boards should ask to ensure better engagement with shareholders

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