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ESG roundup: ICGN, 30% club, IIC, UK Bribery Act

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  • ESG roundup: ICGN, 30% club, IIC, UK Bribery Act

GLOBAL - The International Corporate Governance Network (ICGN) has published two new best practice guidelines - the ICGN Guidance on Political Lobbying and Donations and Model Contract Terms Between Asset Owners and Managers.

Key areas of focus of the ICGN Model Contract Terms are the time frame for investment risk and opportunity, the integration of financial and non-financial factors, stewardship, pay structures, portfolio turnover and transparency.

Paul Lee, director at Hermes EOS, who chaired the working group that developed the Model Mandate, said: "The aim of the Model Mandate is to provide asset owners with model contract terms that aim to ensure their fund managers act fully in their long-term interests.

"We focus on those areas where the interests of fund managers and their clients may diverge and establish standards that should encourage fund managers to focus fully on their duty to their clients."

The ICGN Statement and Guidance on Political Lobbying and Donations was developed in response to widening jurisdictional divides around the extent of corporate lobbying in the political process and the ability of investors to influence.

The ICGN is advocating for political donations to be supported by a transparent policy framework, a business rationale, shareholder support, robust board oversight and clear public disclosures.

In the US in particular, the subject of corporate political contributions has become very sensitive, according to ICGN.

Both guides will be launched at the ICGN London Dinner on 19 March ahead of its London conference the following day.

In London, the 30% Club has welcomed the findings of the latest Cranfield Female FTSE report, which shows the proportion of women on FTSE 100 boards has jumped to 15.6% from 12.5% a year ago.

Helena Morrissey, chief executive at Newton Investment Management and founder of the 30% Club, said: "We concur with Cranfield's suggestion that the rate of change is also likely to continue to accelerate as more companies embrace change, and that 30% female representation on FTSE 100 boards is well within reach by 2015."

As part of the next stage of the 30% Club's campaign to increase diversity on boards and help provide a framework for engagement under proposed revisions to the UK Corporate Governance Code, the 30% Club Investor Group has published some best practice guidelines for investors to engage with companies on this issue.

Emma Howard Boyd, sustainable investment and governance director at Jupiter Asset Management and chair of the 30% Club investor group, said: "We acknowledge that there will be no one-size-fits-all approach and that companies and boards must be able to take the approach that they feel is most relevant to their company and explain why this is the case to their shareholders.

"We also recognise that, if companies fail to address the issue, we must be prepared for legislation and the imposition of quotas in the UK as we have seen elsewhere in the world."

Meanwhile, the Institutional Investor Committee (IIC) - comprising the ABI (Association of British Insurers), IMA (Investment Management Association) and NAPF (National Association of Pension Funds) - has welcomed measures to address remuneration excesses in the boardroom as detailed in the consultation paper by the Department of Business Innovation and Skills (BIS) on enhanced shareholder voting rights. 

The IIC fully supports BIS's aims of encouraging more engagement between companies and shareholders and creating a strong link between incentives and performance.

As part of this, the IIC will further develop the Principles of Remuneration issued by the ABI last year.
 
Douglas Ferrans, chairman at the IIC, said: "Shareholders are primarily concerned with the returns from sustainable business success, and executive management should only be rewarded on this basis - payment for failure is not acceptable in company boardrooms.

"It is essential that great companies are created and preserved for the benefit of shareholders, and appropriate incentives form an important part of this.

"We support boards in achieving this success, but will also hold them to account on this and their remuneration through active engagement and voting."

Lastly, eight months since the entry into force of the UK Bribery Act 2010, the Serious Fraud Office (SFO) is investigating alleged corrupt corporate behaviour in diverse industries.

Whilst the SFO has made it clear that the identities of these companies must remain confidential at this early stage, at least some of these investigations have been prompted by cooperation with US authorities and self-reporting by corporate officers - it is reported that the SFO's whistleblower hotline is receiving 500 calls a month, and the whistleblower section of its website has had 200 hits.

UK enforcement of the act and resulting penalties are therefore influenced by coordinated, cross-border prosecutions involving US, UK and other countries' authorities, in relation to bribery and other corruption offences, such as money-laundering, and financial services regulatory infringements.

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