Entire equity investment chain must embrace long-term approach – UKSIF
UK - All parts of the equity investment chain need to embrace a long-term approach to wealth creaition, the UK's sustainable investment and finance association UKSIF has urged.
UKSIF chief executive Penny Shepherd - speaking as she submitted evidence to the Kay Review, which will examine regulation of the UK stock market - said everyone from asset owners such as pension funds to companies, regulators and civil society needed to play a part in "restoring" equity markets to their "proper" role.
"This is urgently needed by companies, savers and society as a whole," she said. "Pension funds and other asset owners must drive change by incentivising their managers to act in a long-term way and by embracing best practice on transparency."
Shepherd, who is also a member of the Green Investment Bank's advisory board, said merely publicising responsible investment procedures was not enough.
"We are already seeing examples of brilliant practice from leading corporate and public sector pension funds, but many more need to follow their example," she said.
"All actors in the chain can improve the way the markets behave, but it is companies that are perhaps the strongest link in the chain."
She urged companies to encourage their own pension funds to be long term and responsible investors.
"Too many major companies that recognise the importance of sustainability in their business strategies do not help their corporate pension schemes to appreciate the challenges ahead," she said.
Shepherd added that companies needed to disclose the "key" data on how their business models were affected by growing resource constraints and social pressures.
"If companies do not assess and report effectively on how they will address ESG risks and opportunities, how can the market assess their potential for sustained success over the long term?" she asked.
The Kay Review, launched in September and chaired by economist John Kay, is examining whether the stock market encouraged companies into taking a short-term approach to business.