The International Corporate Governance Network (ICGN), the $26trn (€23.6trn) investor body, is working on a Global Stewardship Code that could be an international “passport” for institutional investors and a point of reference as countries look to introduce similar codes.
The initiative is a key part of the ICGN’s 2015/16 workplan and it’s hoped the proposed code would “help serve as an enabling device for investors to signal their stewardship intentions, particularly when investing in non-domestic markets”.
It builds on the ICGN’s existing policy framework, and adds to ICGN’s guidance on stewardship. The first stewardship code was introduced in the UK in 2010 and various countries have followed with similar measures.
A global stewardship code might serve several purposes, the ICGN reckons, but three primary applications could include serving as a “passport” for investors seeking to signal their stewardship policies and practices either when investing in markets without stewardship codes or when they invest in multiple markets with differing stewardship codes.
“This could allow investors to efficiently communicate fundamental stewardship standards in a global context,” the ICGN says in a new document outlining its policy priorities. The proposal will be put forward for consultation this month (November).
It could also be a reference point for investors on what stewardship entails – and to help guide jurisdictions seeking to establish their own stewardship codes by providing an “overarching model of stewardship”.The body – which recently said Goldman Sachs had become a member – has unveiled four policy priorities.
1. Promoting long-term investment perspectives while protecting minority shareholder rights.
2. Making successful stewardship a reality to support sustainable financial markets.
3. Tracking the changing boundaries of governance: culture, ethics, risk.
4. Seeking transparency through robust reporting, audit and metrics.
“We believe it is important to articulate our key policy priorities with our members, the regulatory community and other capital market participants,” said ICGN Chair Erik Breen, the former Head of Responsible Investing at Robeco who’s now with Triodos Investment Management.
The ICGN says it will also reach out to other standard setters and market participants, seeking to identify common ground and build cooperation where appropriate.
The London-based organisation has come down strongly against differential ownership rights, seeing it as a “flawed tactic” to encourage long-term investment. It successfully lobbied against dual class share structures in Italy earlier this year and made its concerns known about similar provisions in France’s Florange Act. It is in this context that it stresses the “importance of making good stewardship a reality in practice”.
On proxy voting, it sees scope for greater efficiencies across the voting chain and dialogue with intermediaries – particularly custodian banks. ICGN home page.