Coronavirus Round-up: Investors target pharmaceutical companies

The latest news on the Covid-19 outbreak and investment

Investor members of the Interfaith Center on Corporate Responsibility (ICCR), the US faith investment body, have asked 14 pharmaceutical companies to work together on developing healthcare technologies to help fight COVID-19. In a letter sent April 1, ICCR – which represents more than 300 members representing $500bn in AUM – asked CEOs of firms including GlaxoSmithKline, Johnson & Johnson and Pfizer to “take the right steps…to ensure equitable access across populations and geographies, and to quickly and safely scale up diagnostic measures, treatments and when available, a vaccine”. Among specific measures requested were that the companies share compounds, assets and data with researchers, and support low- and middle-income countries by not enforcing intellectual property rights. They also asked that the firms govern with financial prudence and a “commitment to honour their social licenses”, citing $700m investment of taxpayer money in biopharmaceutical R&D since 2002. Lauren Compere, Director of Shareholder Engagement at ICCR member Boston Common Asset Management, said in a statement: “We have long engaged these companies, both individually and collectively via roundtables, around strategies to increase the access and affordability of lifesaving medicines. We know they have the capacity to do this; we also know they will accomplish more and faster if they work together.”

Sweden’s KPA Pension, the local government-focused pension scheme that is part of Folksam Group, has reportedly invested a further SEK530m (€48m) in two bonds aimed at alleviating Covid-19’s social and economic impacts. SEK430m was invested in a Nordic Investment Bank issuance funding healthcare and financial support projects in Nordic countries and Baltic states, while around SEK100m was invested in a bond issued by the European Investment Bank. KPA Pension CEO Britta Burreau said the investments would be “of direct benefit” to its clients. 

UK fund management trade body the Investment Association, whose members collectively own a third of UK publicly-listed companies, has written to the Chairs of FTSE350 companies asking them to “take into account the suitability and sustainability of a dividend payment” in light of the Coronavirus crisis. The letter, which the IA said expressed “the industry’s commitment to supporting British business during the extraordinary economic circumstances”, said shareholders expected transparency on dividends, and that payments be restarted “as soon as it is prudent to do so”. It also covered shareholder commitments and expectations regarding engagement, AGMs, executive pay, financial reporting and additional capital.

Squarewell Partners has released guidance on how investors can manage their stewardship responsibilities in light of COVID-19. Topics covered within the guidance include what investors are expecting in terms of communication, dividend payments, executive pay and AGMs. To compile the guidance, the firm spoke with 20 institutional investors, collectively managing around $7trn, on how they will be approaching their stewardship responsibilities under Coronavirus restrictions and market uncertainty. 

The UK’s Financial Conduct Authority and Prudential Regulation Authority have loosened their expectations around the role of Senior Managers for both solo- and dual-regulated firms in light of the Coronavirus pandemic. The revised guidance covers senior management responsibilities, furloughing senior management functions, reallocation of responsibilities, and certification requirements. Further work is being carried out on whether guidance on temporary arrangements for senior management functions is adequate. 

Green bonds have performed slightly better than traditional bonds during the Coronavirus crisis so far, according to new NN Investment Partners analysis looking at the short- and long-term implications of the pandemic for green debt. NNIP Lead Portfolio Manager Bram Bos said the difference in performance could be rooted in the absence of airlines and energy companies from the green bond corporate index. The research also found that, while short-term sell-off is impacting the whole market, green bond demand and flows remain intact, as well as suggesting that unprecedented policy spending could boost the sovereign green bond market.

Nations that build new coal capacity as a post-pandemic economic stimulation measure could be burdened with uneconomic and polluting power for decades, a move China appears to be considering, according to a new Carbon Tracker report. The paper, titled Political Decisions, Economic Realities, finds that nearly half the global coal fleet could be cashflow negative in 2020 on an underlying basis, with new building concentrated in regions where generators are subsidised either directly or indirectly to maintain their financial viability. Read the full paper here. 

Glass Lewis has launched a tracker of all the AGMs impacted by Coronavirus. This table will be updated weekly. Check back to stay informed about meeting changes.