Norway’s Government Pension Fund Global should be a “beacon in the darkness”, espousing the benefit of long-term investing over short-term gain, the chair of the UK’s Collective Engagement Working Group has suggested.
James Anderson, responsible for overseeing the initial development of the investor forum proposed in a 2012 report by academic John Kay, also likened the battle to convince sovereign wealth funds (SWFs) to be less short-termist to a fight for the funds’ souls.
He said SWFs were “instinctively not keen on engagement”, but that the forum could help allay some of their concerns and allow them to make their presence known without requiring them to “stick their heads above the parapet”.
“I think in many cases these sovereign wealth funds are cautiously feeling their way,” Anderson told IPE. “Of course they have sensibilities, and of course they have big skills of their own, but I do worry we are fighting for their soul over the next few years. There is a temptation for them, however stupid it may seem, to become near-term profit maximisers obsessed by the next quarter.”
Anderson added: “It’s a very, very important issue that we will try and do our best on in the years ahead – to get them to play the important role they can.”
The group chair also expressed disappointment that the NOK4.7trn (€581bn) Government Pension Fund Global, Europe’s largest institutional asset owner, had not been “more of a beacon in the darkness” in promoting the benefits of long-term investing.
However, he said convincing large investors, including global SWFs, to back the investor forum publicly upon its launch in mid-2014 should not be viewed as the sole measure of success.
“It would be very ironic if we got too obsessed by counting and numbers, where that’s not what we should be doing,” he said.
Instead, he noted that it would be more important to focus on how the collaborative spirit of the forum could bring about change in the way UK-listed companies planned for the future.
“What we really do believe we should be importantly involved in is trying to check that each company has got a strategic vision, and that strategic vision is not simply expressed in ‘Our targets for 2014 are X, Y and Z’,” he said.
For more on corporate governance, see the Special Report in the February issue of IPE