UK’s Myners sees UN PRI having little “real world” impact

Directors, executives and fund managers don’t mention it, says influential former minister

Lord Myners, the former UK financial services minister who is one of the foremost voices in corporate governance and shareholder engagement, says he sees little “real world” impact of the United Nations-backed Principles for Responsible Investment (UN PRI).

“I find it quite difficult to see the UN PRI having any positive impact,” Myners said on the sidelines of Responsible Investor’s ESG Europe conference in Amsterdam. “In the real world most company executives and most company directors and most institutional fund mangers do not mention the PRI.”

“My concern is it’s a matter of signing up, with no sanction no obligation, no vetting,” Myners, the author of an influential UK government-backed report into institutional investment a decade ago and now a partner at activist fund firm Cevian, said. The PRI, launched in 2006, now has 917 signatories.

Myners, who formerly led fund firm Gartmore as well as chairing UK corporates such as Marks & Spencer and Guardian Media Group, was also critical of some of the managers who have signed up to the Stewardship Code, the UK’s year-old set of standards for institutional owners.

He said a number of them are overstating the extent of the involvement in governance. The Code “is about uniform signing up to a pretty low set of standards” he added.Myners, who admits he sometimes overstates his case to get a response, was also scathing about “North Korean” style annual director elections, noting that candidates typically receive 98% support.

He wanted shareholders to take much greater and active interest in the composition and monitoring of boards. “It’s a fundamental right and responsibility of shareholders to ensure that the company is in the right hands,” he said – adding that his new firm Cevian will not elect a director without meeting them first.

Myners also discussed the prospects of the UK government-backed Kay Review into long-termism in the markets, which he said has the potential to have significant impact.

“He’s got a lot of relevant background, he’s thoughtful and he’s his own man,” Myners said of Professor Kay. But “having seen politics from the inside” Myners said he was aware how politicians can kick things into the long grass. The success of the review would depend on how persistent Kay proves in keeping it on the agenda.

As for executive pay, Myners argues that there is too much importance on incentive plans that are too complex and “arithmetical”.
“Weak and lazy directors hide behind remuneration plans,” while good directors have the confidence to use more qualitative judgment. He called for shareholders to reject any remuneration plan that is longer than two pages of standard type.