While not in any way subverting the importance of corporate practices that support a long-term stakeholder interest (including E&S risk mitigation), Vanguard posted a welcome statement acknowledging the COVID-19 crisis circumstances companies are grappling with and the associated need for flexibility.
Here is a key excerpt:
During this period of acute risk and volatility, we recognize the need for companies to exercise judgment and flexibility as they balance short- and long-term considerations. We understand, for example, that many companies are adapting their approaches to shareholder meetings or changing capitalization strategies to meet immediate business needs. Companies that communicate clearly and regularly in times of crisis can provide much-needed reassurance to their investors and other stakeholders.
The statement is also noteworthy for Vanguard's express appreciation of the board's work involved in managing the crisis: "The directors of public company boards have been elected by their shareholders to serve as their eyes, ears, and voice in the boardroom. We thank directors for the work they are doing, and we ask that they keep the interests of long-term shareholders at the forefront as they help guide companies through this crisis." We recently noted Vanguard's statement on annual shareholder meetings that welcomed companies' use of virtual meetings in recognition of the COVID-19 risks associated with in-person meetings. State Street's message to boards in its "Stewardship Engagement Guidance to Companies in Response to COVID-19" noted that - notwithstanding its expectations of company progress and performance on material ESG issues (see our prior report here), COVID-19 necessitates a focus on immediate/near-term actions - including those relating to financial stability such as reduced capital spending. State Street nevertheless encourages companies to avoid "undue risks that are beneficial in the short term but harm longer-term financial stability and the sustainability of your business model" and to communicate to investors COVID-19's potential impacts on the business and the company's approach to material ESG issues in relation to its long-term strategy. This post first appeared in the weekly Society Alert!