As more and more companies adhere to environmental, social and governance practices, or ESG, financial services firms have started to fall under scrutiny for their practices. It marks a shift from the early days of ESG, when much of the attention was focused on industrial companies and environmental concerns.
Since March of last year, the number of public financial services organizations pressured by activist firms in regulatory filings has grown substantially, from 13 to 20, a 54% increase over the equivalent preceding period, according to a Bloomberg compilation.
The activist firms are pressing for change in a variety of ways, including calls for more diversity in board representation and opposition to some mergers. Merger opposition can occur when the missions and values of the buying and selling companies don’t match.
It is increasingly hard for financial services organizations to dismiss these concerns, as doing so could cost them potential investment in the future.
All of this change comes on top of announcements by organizations like the Business Roundtable and Goldman Sachs that called for changes in corporate governance. We expect added interest around business ethics and end-user financial access, particularly among middle market companies, which often follow their larger peers.
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