Collective Engagement Working Group issues first report
15 recommendations have been handed down by the Collective Engagement Working Group in a 24 page report 3 commissioned by the IMA, NAPF and ABI, issued on December 3rd. Almost half centre on the structure and role of a new Investor Forum. This proposal lies at the heart of the report and its primary conclusion that there is a need to ‘change the culture around engagement.’
The recommendations encompass improving accountability in the investment chain to better align manager behaviour with asset owners interests and policy, confidentiality protections around information sharing and the definition of measures of success for the Forum.
The report also foreshadows a governance structure comprising both asset owners and managers and the establishment of company or specific Engagement Action Groups to address serious engagement issues. However it does skirt around the issue of executive remuneration recommending that this not be a ‘core focus’ of the Forum but potentially be considered if they become more of a ‘strategic question’ symptomatic of ‘broader issues.’
While cultural change can be somewhat nebulous a concept to measure, one recommendation may be warmly received by active asset owners looking to lift direct engagement. Recommendation 8 of the report proposes that major listed companies should hold an annual strategy meeting for institutional investors, outside the results cycle, where investors and company executives to discuss governance and the company’s long-term strategies.
A target date of June 2014 has been set for establishment of the forum.