UK- The Institutional Shareholders’ Committee, the association that represents the bulk of UK institutional investors, has launched a series of new principles aimed at encouraging shareholder activism. It maintains the principles are the first comprehensive statement of best practice on the responsibilities of institutional shareholders and investment managers towards the companies in which they invest.
The principles are seen as important due to the clout of their backer. Making up the ISC are the Association of British Insurers, the Association of Investment Trust Companies, the Investment Management Association and the National Association of Pension Funds.
They aim to secure value for pensions scheme members and individual savers through consistent monitoring of the performance of the companies they invest in. The principles make it clear that if companies fail persistently to respond to concerns from shareholders and investment managers, ISC members will vote against the board at general meetings.
The principles set out best practice for institutional shareholders and investment managers under which they will:
-Maintain and publish statements of their policies in respect of active engagement with the companies in which they invest
-Monitor the performance of and maintain an appropriate dialogue with those companies
-Intervene where necessary
-Evaluate the impact of their policies
-Report, in the case of investment managers, back to the clients on whose behalf they invest
In the coming months ISC members will encourage all their own members to adopt and comply with the principles as widely as is possible.
Ken Ayers, chairman of the NAPF Investment Council says: “shareholder activism, for too long, has been an ad hoc affair. Now, for the first time, there are comprehensive guidelines available, based on best practice and offering practical tangible help to institutional investors.
“These guidelines make life easier for shareholders in developing their corporate governance strategies and will help ensure best practice among the companies in which they invest.”
Lindsay Tomlinson of Barclays Global Investors and chairman of the ISC says: “we, as institutional investors, invest on behalf of millions of individual savers and we owe it to them to try and ensure that the performance of companies in which we invest is up to scratch.”