It’s emerged there are now two separate projects to set up an investor forum in the UK to boost engagement with companies, one involving major pension funds, the other being driven by the three investment industry trade bodies.
An investor forum was one of the key recommendations of last year’s government-backed Kay Review and some of the country’s biggest pension funds are set to meet tomorrow (March 28) to thrash out their initial plans.
They are being marshalled by Alan MacDougall, managing director of governance advisory firm PIRC.
Although he declined to name the funds, it’s likely the group will feature some of the country’s leading asset owner names.
But this initiative comes as the fund management body the Investment Management Association (IMA) says it has teamed up with the National Association of Pension Funds and the Association of British Insurers to form an investor forum ‘working group’.
It would “examine ways in which the considerable amount of existing collective shareholder engagement can be built upon”, said IMA Chief Executive Daniel Godfrey. It seems initial scepticism from the likes of Robert Talbut, the influential chair of the ABI’s Investment Committee, has been overcome.
The twin-track situation reflects the difficulty of coordinating investors, which star fund manager Neil Woodford of Invesco Perpetual has already likened to “herding cats”.
An investor ‘forum’ has existed in one form or another since at least the mid-1970s with varying degrees of success and designations. Most recently, in 2011, the trade body-backed Institutional Shareholders Committeemorphed into what is now the Institutional Investor Committee. The Kay Review stipulated that the new forum should be “formally independent of any existing body” with its own secretariat.
Speaking at PIRC’s annual conference, Railpen Investments’ Head of Corporate Governance Frank Curtiss said Kay was clear that the new body should be a “new page”. His boss, Railpen CEO (and former NAPF chairman) Chris Hitchen was a member of the Kay panel. Curtiss said the trade bodies were working behind the scenes as a “midwife that will then withdraw”.
Curtiss also suggested that asset owners could make membership of the forum a requirement of investment mandates, similar to the way some pension funds require their asset managers to be signatories to the Stewardship Code. And he added that investment consultants were a constituency that had to be won over.
David Pitt-Watson, the former Hermes chief who’s now an executive fellow at the London Business School, argued it was vital the forum acted on behalf of the ultimate beneficiaries of pension funds.
A key consideration in developing the forum will be the participation of major non-domestic investors, a potential issue given that few have publicly backed the Stewardship Code so far. The IMA’s Godfrey said the working group members would be drawn from life companies, asset managers, pension funds and others “including overseas investors”.
Kieran Quinn, the chair of the £12bn Greater Manchester Pension Fund, said the Local Authority Pension Fund Forum (LAPFF) which he heads would also “be taking a full and active interest” in the forum.