The make-up of trustee boards should change to ensure trustees can be “courageous” and invest for the long term, the head of research at the UN-backed Principles for Responsible Investment (PRI) has argued.
Helene Winch, who prior to joining the PRI was head of policy at the BT Pension Scheme, also said there was a need to increase the number of women trustees and called for a reduction of those drawn from the population of retired workers.
Speaking at the RI Europe conference in London, Winch underlined the importance of trustees understanding their fiduciary duties.
But she added: “We need our trustees to actually be brave when they are making their investment decisions and think outside the box. And maybe we need to reorganise the way trustees work, have a few more women, a few more non-retired people in that industry who are really driving forward investment decisions.”
Her call for changes to trustee boards follows on from Dutch supervisor De Nederlandsche Bank recently arguing that both diversity of members and dissenting views were important on boards.
Winch also criticised that many asset owners only paid lip service to the benefits of long-term investing, and said very few had “actually defined how long they are talking about”.
She was echoing comments made by fellow panellist Matthew Kiernan, chief executive of Inflection Point Capital Management, who said it was “easy to come up with a compelling case for long-termism”, but that this did not necessarily translate into action.
“The reality on the ground is that there is an acute shortage in intellectual and organisational courage – that’s what’s in short supply,” he said.
“In the context of the highly intermediated value chain we all live in, it is exceptionally difficult to pursue a long-term approach, despite its manifest advantages.”