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Institutional investors offered governance guidelines
An international body representing the interests of institutional investors, the International Corporate Governance Network (ICGN), has issued a new set of guidelines for members, urging them to be more transparent and representative.
The board of the ICGN approved the new guidelines this week, with chairman Mark Anson saying they had been drafted in recognition of the fact that shareholders are pushing for more rights.
“This is the right moment for us to recognise our responsibilities towards both our beneficiaries and the companies in which we invest,” he said. “Adhering to the principles set out in this statement will help these companies generate long-term value for the savers, who are the ultimate beneficiaries.”
The statement calls for institutional shareholders to be subject to oversight to ensure they are accountable to beneficiaries.
It said they needed to be transparent in their policies, manage conflicts of interest and ensure they had the expertise necessary to fulfil their commitments.
The ICGN document identified possible conflicts of interest as including the risk an institution may hold shares in a company whose pension fund it also manages, pressures to generate short-term gains from stock lending even though this means losing voting rights that may be used to secure long-term value and, in the case of public sector funds, pressure to vote at general meetings in the interest of public policy objectives rather than in the interests of beneficiaries.
AUTHOR
Mike Taylor
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