Sustainability Snippets - May

The sustainability landscape continues to evolve, shaped by regulation, market practice and changing investor priorities. With this, expectations for asset owners, investment managers and companies are also changing. In our monthly sustainability blog, we aim to bring clarity by focusing on the developments we believe have the greatest relevance for investors.  

SpaceX: to infinity and beyond control 

SpaceX has now completed its initial public offering (IPO), listing on the Nasdaq stock exchange. The scale of the deal is grabbing headlines, but responsible investors should look closely at the terms on which capital has been raised. The company listed with a dual-class share structure that leaves ordinary shareholders with limited influence, while Elon Musk retains control through super-voting shares. That represents a clear governance risk, particularly for a business set to play a major role in artificial intelligence (AI). 

By modifying its index inclusion rules, Nasdaq is also enabling companies like SpaceX to enter major benchmarks quickly, even with a very small public float. This effectively forces passive funds to buy into the listing before true price discovery occurs. Combined with weak shareholder rights, this guaranteed demand creates a treacherous dynamic for investors and sets a troubling precedent for future high-profile listings such as Anthropic and OpenAI. 

Rather than waiting for these companies to list, asset owners and investment managers should be proactive. They should engage early through letters, meetings and ongoing dialogue, and consider joining collaborative initiatives such as the Investor Coalition for Equal Votes (ICEV) to push for fair voting rights and stronger governance standards. 

For passive investors, the challenge is particularly acute, but they are not powerless against this trend. Asset owners can ask their managers to develop governance-screened passive strategies that exclude companies which do not adhere to one-share-one-vote principles. This would not only help manage risk, but also send a clear message to companies: if you weaken shareholder rights, you limit your access to capital.  

TPR: automation without abdication 

The Pensions Regulator (TPR) recently published its AI plan, setting out initial expectations for how trustees should govern the use of AI. AI could improve administration, decision making and member engagement, but TPR is clear that it also introduces new risks, including AI‑driven scams, bias in decision making and increased cyber threats. Crucially, the regulator confirms that trustees and scheme managers remain accountable for outcomes, even where AI systems or third-party providers are used. 

TPR expects schemes to take a more structured approach to AI governance. This includes establishing clear oversight of how AI is used, carrying out rigorous testing and ongoing monitoring of systems, and identifying and managing risks on a continual basis. Trustees are also expected to focus on data quality, understand how AI is being deployed across their scheme, and take steps to protect members from AI-enabled fraud.  

Asset owners should engage with service providers (including asset managers) to understand where AI is being used, how risks are being governed, and whether appropriate controls are in place. Where gaps exist, investors should push for stronger governance, clearer accountability and better data practices. Separately, for further insight on the governance and stewardship of AI, check out our Q4 2025 RI News and Views. 

Pricing-in people: a focus on social risk 

The Taskforce on Inequality and Social-related Financial Disclosures (TISFD) has released the first draft of its global framework, aimed at improving how businesses and investors understand and report people-related risks and opportunities. The framework focuses on issues such as inequality, human rights, labour conditions and wider social impacts, recognising that these are increasingly shaping business performance, investment outcomes and financial stability. It sets out proposed disclosure recommendations to help organisations assess their impacts, dependencies, risks and opportunities related to people and is designed to support better decision making and clearer accountability to stakeholders. 

Importantly, the framework has been built to align with existing standards such as the International Sustainability Standards Board (ISSB), Global Reporting Initiative (GRI) and European Sustainability Reporting Standards (ESRS) and mirrors the structure of the Taskforce on Climate-related Financial Disclosures (TCFD) and Taskforce on Nature-related Financial Disclosures (TNFD). While still in draft form and open for consultation ahead of a final version expected in 2027, it signals a clear direction of travel: social and inequality-related risks are being positioned alongside climate and nature as financially material issues for investors. 

Asset owners and their investment managers should view the first TISFD draft as a signal of where expectations are heading, rather than a new standalone reporting requirement. As investors continue to grapple with inequality and social factors, the priority will be to embed these considerations into existing sustainability frameworks and disclosures. Engaging with the draft now can help investors shape their approach early, identify gaps in current practice, and ensure social risks and opportunities are integrated rather than handled in isolation.

Important Information

This blog is based upon our understanding of events as at the date of publication. It is a general summary of topical matters and should not be regarded as financial advice. It should not be considered a substitute for professional advice on specific circumstances and objectives. Where this blog refers to legal matters please note that Hymans Robertson LLP is not qualified to provide legal opinion and therefore you may wish to obtain independent legal advice to consider any relevant law and/or regulation. Please read our Terms of Use - Hymans Robertson.