UK/EUROPE - The introduction of a UK Stewardship Code for institutional investors could lead to similar guidelines being issued by the European Commission across all member states.

Carl Rosén, executive director of the International Corporate Governance Network (ICGN), told delegates at a National Association of Pension Funds (NAPF) seminar on Corporate Governance: "Pension funds are the real agents of change when it comes to corporate governance and they are the investors with the longest time horizon".

Outlining the work of the ICGN and governance developments in different countries, he welcomed the introduction of the new Stewardship Code and the prospect of the Financial Reporting Council (FRC) overseeing it.

"We have seen a lot of codes, but not many that have been overseen. At this stage, it is still a bit vague, but it is a good starting point that will move on to better and better practices."

He pointed out that currently 24 of the 27 countries in the European Union have some type of voluntary code on governance, but added: "I would be surprised if the EU didn't use the opportunity to issue guidelines, when it comes, for stewardship codes for institutional investors to be applied in each member country".

Rosén suggested in his presentation that a big question mark over the next year would be the impact of the new EU Commission and the possibility of any new governance initiatives. He noted initiatives on executive pay and corporate governance in banks had been issued in 2009.

And on the issue of executive pay he predicted: "I think we can expect one thing, that is when it comes to a say on pay it will be more than a guideline, it will be a requirement to have say on pay in all member states." However, he recognised this is less of an issue for countries such as the UK where the subject has already been tackled.

Meanwhile, Howard Jacobs, trustee director of the Universities Superannuation Scheme (USS), said it was important for larger pension funds such as USS to "take a leadership role and keep on pushing as best we can" on corporate governance issues.

He added: "We take this stuff very seriously. Of course, there will be set backs and of course progress can be uneven, but then what in this life isn't? It is really, really important that large funds that have the resources - because it is time intensive and it does cost money - get stuck in and stay stuck in on this stuff."

Speaking from a personal view, he also dismissed suggestions that there is "any sort of fiduciary bar to having proper regard to any of this stuff," and added "that is just nonsense under English law".

Instead, he claimed corporate governance and social and responsible investing (SRI) "should be an integral part [of a pension scheme] and the reason it is not an integral part in places is because it is hard to monetarise. And if you can't monetarise it, it does not count. In my view it is a big abrogation of the role of trustees to sit and say because we can't do everything we shouldn't do anything."

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