More than two years into the invasion of Ukraine, Rockwool A/S continues to maintain production at its Russian factories. The past year has seen the mineral wool manufacturer blacklisted amidst new reporting on its involvement in, and profits from, the Russian market.
With thousands of companies holding AGMs during proxy season, it’s hard to know where to start. Glass Lewis’ Controversy Alert service can help, identifying the most crucial meetings globally and allowing investors to make better informed voting decisions with the latest information in hand.
In this post, we provide a roundup of the AGMs taking place in the coming week that were previously highlighted by Controversy Alerts, and look deeper into the situation at Rockwool. To get alerted ahead of time, get in touch and sign up for Glass Lewis’ Controversy Alert service.
Controversy Alerts April 8 — April 12, 2024
April 10 Rockwool A/S; Controversy Alert issued March 21
April 11 AstraZeneca plc; issued March 21
April 11 Avanza Bank Holding AB; issued March 17
April 11 Julius Baer Group Ltd.; issued March 21
April 12 Unicredit S.p.A.; issued March 29
April 12 United States Steel Corporation; issued April 2
Deep Dive: Rockwool A/S
Rockwool A/S has described its decision to maintain control of four Russian factories via passive ownership as “…the least bad option available….” The company notes that it complies with all international sanctions, and has suggested that retaining the profits from the four factories is more ethically responsible than leaving them in Russian hands. Those profits have not been insubstantial – while Rockwool does not comment on financial details in specific countries, it has been reported that the company earned approximately DKK 522 million from its Russian operations in 2022 (roughly $75 million), paying DKK 133 million in taxes.
Ukrainian anti-corruption agency NACP has alleged that Rockwool’s contributions to the war effort go beyond their tax bill. In announcing that the company had been added to a blacklist of companies, the NACP stated that “through intermediaries, the Danish manufacturer continues to supply its construction materials to various state institutions, including the Russian Ministry of Defense…. In the years since the annexation of Crimea, Rockwool has supplied insulation materials to at least for 31 ships and submarines in the Russian Navy, including cruisers, destroyers, nuclear submarines, frigates, amphibious assault ships, minesweepers and reconnaissance ships.
As reports of Rockwool’s involvement have emerged over the past year, the company has provided additional disclosure to underline its compliance with applicable legislation, including cessation of investment and cross-border sales in Russia, along with cancellation of the license agreement that otherwise allowed a Russian subsidiary to use brand names and logos.
The company acknowledges that its presence in Russia represents one of four key risks it faces, involving potential loss of brand value, accidental breach of EU, U.S., or UK economic sanctions, and loss of key intellectual property and assets. Rockwool states that it “seeks to mitigate the risk of a decrease in brand value and reputation by engaging openly and extensively in the Danish public debate, primarily via the media, to explain the reasoning behind our decisions and to provide timely responses as questions arise.” In addition, the company has donated DKK 280 million towards reconstruction in Ukraine, with an additional DKK 100 million subject to shareholder approval at the upcoming AGM.
Whether shareholders remain satisfied with this approach, and the level of disclosure provided, remains to be seen; to date the company has not faced any significant voting opposition stemming from its involvement in the conflict.
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