EUROPE - The Investment Management Association’s (IMA) submission to a UK parliamentary inquiry into the corporate governance and remuneration of systemically important financial institutions (SIFIs) - financial institutions whose failure could trigger a global financial crisis - has acknowledged that failings in the governance of SIFIs were a contributory factor to the financial crisis.

The risk posed by such failings to society mean that a distinctive approach is needed in implementing governance solutions for SIFIs, according to the IMA, the trade body for the UK’s £3.9trn (€4.9trn) asset management industry.

The organisation said that while it was “inevitable” such an approach would involve regulators, it was important that a balance was maintained between the constraints of regulation and allowing boards to decide what is in shareholders’ best interests.

Liz Murrall, IMA’s director of corporate governance, said: “It is important that any regulatory approach to a SIFI’s governance does not undermine the role played by shareholders in holding boards to account.

“Nevertheless, there is a limit to what engagement can achieve as asset managers do not run companies, do not set strategy, nor are they insiders in that they only have access to the same information as the market as a whole,” she said.
Also in the UK, Scottish Widows Investment Partnership (SWIP) has welcomed new guidelines by the International Energy Agency (IEA) on responsible hydraulic fracturing in the extraction of shale gas - more commonly known as fracking.

The IEA’s Golden Rules provide a summary of the environmental challenges associated with shale gas and a roadmap for the development of international regulation of this new energy source.

Craig Mackenzie, head of sustainability at SWIP, said: “Without effective regulation and an energy policy that aims to reduce carbon emissions, we fear there will be growing opposition to shale gas from environmentalists and the wider public.

Mackenzie said that SWIP, as a major shareholder in the oil and gas sector, viewed the proposals as an “excellent blueprint” for building public trust.

The asset manager viewed shale gas as a “game changer” for the energy sector, allowing for improved energy security and reduced energy bills globally.

However, shale gas also gives rise to serious environmental and climate change concerns - SWIP recently expressed concerns about the climate impact of fugitive methane emissions from the shale gas extraction process.

For shale gas to be sustainable it is vital that it is exploited in the context of effective environmental regulations and an energy policy aimed at reducing carbon emissions in line with internationally agreed objectives, the manager said.