Responsible Investor

When we bring forward cases in the US with institutions of their quality it very much changes the cast which otherwise looks like the usual suspects of US trade unions or public sector pension funds – the known shareholder activists.

Responsible Investor: Are they proving successful at getting heard in the US?

Bob Monks: It really depends on the competency of the individuals involved at the funds. Unfortunately sometimes the most influential individuals are at the pension fund for three or four years and then leave.
But I think overall there is a trend that it is considered best practice to be active shareholders and there is a larger coterie of people involved.
In the area of the environment, the fact that in the UK the standards are much higher than in the US means it has bought credible people to the US saying: not only can we live with improvements in environmental management, but we have to live with this! There is a good flow of leadership going from east to west.

Responsible Investor: Some of your comments suggest you are discouraged by the amount of progress that has been made:

Bob Monks: This is not a line of work for people who have the word ‘discouraged’ in their vocabulary. I see a lot of evidence that there is some improvement and I feel very comfortable about that. Sometimes these issues get solved in ways that none of us understand. One of the best ways is a virtually universal agreement on transparency, the kind of thing you see in the work done by the Carbon Disclosure Project; again a UK initiative.

If you’re living in a world of information then you are able to make good policy. Once you have the information, you then have to see if you can get consensus behind your initiatives. In the US, the President is opposed to initiatives of this kind, and has been for the last six years. It’s not an efficient administration from this point of view.

“This is not a line of work for people who have the word ‘discouraged’ in their vocabulary.”

What will happen in the election in a year and a half’s time I think we can be more optimistic about.
Responsible Investor: What do you think about recent criticism of the Sarbanes Oxley legislation as being anti-competitive for the US.

Bob Monks: There’s an old expression of people from the state of Maine where I’m from, which goes: what you see depends on where you sit. When Elliot Spitzer was sitting as a prosecutor he saw one thing and now he’s sitting as a Governor of a state whose tax revenues derive from the enterprises in his state he sees a slightly different thing. But he’s an honest man who’s not going to compromise his principles. I think the reaction on Sarbanes Oxley is overblown. It is almost like a red flag of rebellion that the corporate community is waving to indicate how government is destroying jobs and getting in the way of business. Most of this is very unfair.
One result of Sarbanes Oxley was to examine closely what turned out to be the most despicable industry in terms of the US corporate scandals: the accountancy

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