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ESG investor activism is off to a hot start this year across the consumer and retail sectors, with Carl Icahn's move on McDonald's the latest example.

Why it matters: Environmental, social and governance issues spurred an increase in activist efforts in 2021 versus 2020. Separate reports from corporate law firms Skadden, Arps, Slate, Meagher & Flom and Sullivan & Cromwell project that 2022 will be higher still.

Catch up fast: When it comes to ESG activism, oil companies (to their own chagrin) have garnered most of the headlines.

Engine No. 1's bid last year to add three climate-conscious directors to the board of Exxon Mobil is touted as the most successful to date.

Driving the news: Icahn is preparing a proxy fight at McDonald's if the burger flipper doesn't stop using pork suppliers that allegedly house pregnant sows in small metal crates, Bloomberg reported.

In a twist, this time it's not about money for Icahn, as he only holds $25,000 worth of shares — it's about the humane treatment of pigs. McDonald's did not immediately respond to my request for comment.

What's happening: Activists have their eyes on a number of situations ranging the full spectrum of ESG. 

In January, shareholders at Costco approved a proposal asking the company to increase emission reduction targets.

In early February, Legion Partners Asset Management called on Guess' independent directors to oust brothers Paul and Maurice Marciano over sexual assault and harassment allegations. Guess refuted those claims.

Unilever has dual issues. The company is being criticized by Fundsmith, its ninth-largest shareholder led by CEO Terry Smith. That claim is focused on sustainability to the detriment of business fundamentals, as Reuters reports. Unilever has also attracted the attention of activist investor Nelson Peltz, whose Trian Fund Management now owns a stake.

By the numbers: In all, 39 E&S proposals gained support in 2021, nearly double the 21 notched during a record 2020, and more than triple the 12 recorded in 2019.

15 proposals were related to the environment.

13 were focused on board and workforce diversity, as well as other employee-related matters. 

10 were tied to a company's political contributions or lobbying efforts and 1 fell in "other."

The big picture: Since the beginning of the pandemic issues from climate change to diversity, equity and inclusion have taken center stage, and are now puncturing U.S. board rooms via activist campaigns.

1 big thing: Icahn's pig peeve and the era of ESG activism

A sow is confined to a farrowing crate, with bars to prevent the pig from turning around.

A sow is being held in a farrowing crate, which prevents the animal from turning. Photo: Christian Adam/ullstein bild via Getty Images

Activist investor Alta Fox Capital is calling on toymaker Hasbro to spin-off Wizards of the Coast, its sci-fi and fantasy-based gaming segment, claiming it would "unlock" more than $100 per share or $13 billion in shareholder value.

Why it's the BFD: Hasbro handily beat expectations for both revenue and profit when it reported fourth-quarter earnings a week ago, but investor response was muted, so investor sentiment is speaking.

Mattel also reclaimed the licensing rights to the Disney princesses from Hasbro.

 And Hasbro is vulnerable as it switches to a new CEO: Chris Cocks, currently president of Wizards of the Coast, steps into the role on Feb. 25, succeeding former CEO Brian Goldner who died in October.

The latest: To push its agenda, the hedge fund is nominating five director candidates for election to Hasbro's board at the company's 2022 annual shareholder meeting, which has not been announced.

Alta Fox, holding a 2.5% stake in Hasbro, claims it attempted to work with Hasbro behind the scenes, but said the company continues to follow a failed strategy.

Hasbro said in response it has spoken with the hedge fund and that it will review its nominees.

2. The BFD: Alta Fox makes a play for Hasbro

Dungeons and Dragons fans dress up as goblins, donning red dreadlocks, yellow eyes, scaly skin and jagged fangs.

Batiri goblins attend a Wizards of the Coast event. Photo: Mat Hayward/Getty Images for Dungeons & Dragons

French luxury group Kering said in conjunction with its earnings release yesterday that it is on the lookout for acquisitions.

Why it matters: As both Kering and its rival LVMH's recent quarterly results show, consumer appetite for luxury is bigger than ever. Though both companies have proved they can grow organically, M&A also plays an outsized role in their expansions.

Between the lines: Kering CEO François-Henri Pinault told CNBC in an interview that "the portfolio of brands is not perfect, so I can improve it significantly going forward."

"We have a team here internally very active full-time on the M&A front looking at the opportunities that make sense for us," he said.

Pinault said it could be tactical, to reinforce some of Kering's existing businesses. "We did that last year with the acquisition of Lindberg, the high-end (Danish) eyewear brand. It will reinforce the old Kering eyewear business we have," he added.

The big picture: The battle for coveted luxury assets is fierce, however, LVMH too, has been active on the M&A front, closing a deal to buy American jeweler Tiffany for nearly $16 billion in 2021. 

3. Retail therapy: Kering's appetite for M&A

Illustration of a therapy sofa with five shopping bags positioned on the seats.

Relex Solutions, a Finnish provider of retail planning software, raised €500m led by Blackstone Growth at a €5b valuation. http://axios.link/Stln

Anvyl, an NYC-based supply chain relationship management startup, raised $15m in Series B funding. B Capital Group led, and was joined by insiders AlleyCorp, Company Ventures, First Round Capital and Redpoint Ventures. www.anvyl.com

L Catterton invested in Enova, maker of a Chinese premium pet food brand called Pure & Natural. http://axios.link/G92j

Fanatics will acquire vintage team jersey maker Mitchell & Ness for around $250m. Fanatics partners on the deal include Jay-Z, Meek Mill, Lil Baby and Maverick Carter, per the New York Post. http://axios.link/YUmt

Sunrise Brands, a Los Angeles-based apparel group, acquired fashion label Rebecca Minkoff, reports WWD. http://axios.link/u6fn

Windsor Fashions, the 85-year-old maker of special occasion dresses backed by PE firm Sun Capital, is planning to file for an IPO, reports Bloomberg. It could be valued at as much as $1 billion. http://axios.link/et4Y

Blueland, which sells house cleaning and personal care products with the aim of reducing single-use plastic, raised a $20m growth investment led by Prelude Growth Partners. To date, the company has raised $35m. http://axios.link/H84c

Kodiak, a maker of high-protein and whole-grain food products, raised an undisclosed amount of funding from Patricof Co, an investment platform for professional athletes such as Joe Burrow and Travis Kelce. It joins L Catterton as a backer. http://axios.link/wfGz 

4. Retail transactions

Good morning, Retail Readers, and here we are again, another week in the bag.

What are you thankful for this Friday? I would hazard to say activist investors, as they give all of us plenty to chew on, and that's literally the case today.

🚨Situational awareness: There will not be a Retail Deals newsletter on Monday, as we honor Presidents Day. We'll be back in your inbox Tuesday. 

In case you thought you’d go into the long weekend without some Peloton news, fear not! In a convergence that might get couch potato gamers to become bike potato gamers, Peloton has released its Lanebreak gaming mode,  Axios’ Stephen Totilo reports. 

And remember to tell your friends to sign up for this newsletter if you haven't already.

February 18, 2022

1 big thing: Icahn's pig peeve and the era of ESG activism