Stewardship and Corporate Governance

Stewardship is a critical part of the investment process. In November 2020, the Asset Management Taskforce published its report, Investing with Purpose: Placing Stewardship at the Heart of Sustainable Growth. The report, which the IA provided the secretariat for, provides a blueprint for integrating stewardship into the investment process and seeks to cement the UK as a global centre of excellence in stewardship practice. 

Strong corporate governance practices are crucial to any business and set the foundations for long-term performance. Companies that function well are better placed to perform well – to the benefit of the company’s bottom line; its stakeholders, including its employees; and its shareholders.

At the IA, we have a range of initiatives to support our members' stewardship practices and work towards good governance at UK listed companies including our guidelines on corporate governance and share capital management, our Principles of Remuneration, the in-house corporate governance experts in IVIS, and a series of focused campaigns highlighting the key governance issues for investors each year.

Implementation of the Asset Management Taskforce (AMT Report)

The IA was tasked with the delivery of a number of recommendations within Asset Management Taskforce Stewardship Working Group report. These are set out below: 

The report called for the creation of a steering group to explore how stewardship and sustainable value creation could be embedded in the relationship between asset owners and investment managers. In response, the IA and PLSA published a report: Investment Relationships for Sustainable Value Creation: Alignment between Asset Owners and Investment Managers. 

In order to enable bondholders to fully participate in the stewardship of their fixed income assets, the IA developed guidance on Improving Stewardship in Fixed Income for investment managers, their clients, regulators and companies.

To enable shareholders to more effectively use requisitioned resolutions as an escalation mechanism to discuss a range of critical concerns with investee companies, the IA produced guidance to help overcome existing barriers to filing requisitioned resolutions.

IA Guidelines for Listed Companies

We work throughout the year to encourage the corporate governance approaches that will lead to long-term shareholder value for our members and ultimately savers.

The IA produces guidelines for listed companies on corporate governance, setting out investor expectations of their behaviour across a range of issues including executive remuneration, long term reporting and share capital management.  

Our work is headlined by our Shareholder Priorities for listed companies. This outlines the four areas that our members asked us to prioritise to drive long term value:

• Responding to Climate change
• Audit quality
• Stakeholder engagement and
• Diversity

These four issues present an opportunity to better the UK’s listed market; making it more diverse, future-proof, holistic and resilient. 

The document outlines investor expectations on each issue, the actions the IA is taking to improve them and the approach IVIS will be taking during the year to assist members in monitoring the improvements companies are making.

Our members have already shown that taking action on corporate governance issues can achieve positive and lasting results, improving company behaviour for the better. In 2019, we supported our members by focusing on three key issues they identified as critical for better run companies: diversity, executive pensions and quality of audit. The IA was pleased with the progress companies had made against these priorities in 2019.

For more information, please visit the IA’s Good Stewardship Guide 2021.

IVIS

The IA’s Institutional Voting Information Service (IVIS) is a corporate governance research service which analyses FTSE All Share and FTSE Fledging companies against the IA’s investee company guidelines, the UK Corporate Governance Code and best practice. Reports written by analysts focus synonymously on proxy reports, corporate governance conduct and ESG. In addition, the IVIS reports evolve in line with developing industry perspectives, All reports produced by IVIS are accessible to subscribers. 

Public Register

The Public Register was developed by the IA in 2017 and is the world’s first register tracking shareholder dissent at listed companies. The Register details companies in the UK FTSE All Share that have received significant opposition by shareholders to a resolution (written statements by a company’s board of directors detailing a binding corporate action), or any resolution withdrawn before a shareholder vote. In doing so, it helps to identify which companies are acknowledging shareholder dissent and how they are addressing their shareholders’ concerns. 

To view the Public Register, click here. 

Consultation Responses

In addition to the above, the IA responds to policy consultations to provide key industry insights and help shape the corporate governance and stewardship reform agenda. All of our consultation responses are included on the IA's Consultation Archive. Please click here to view the latest consultation responses.

MORE INFORMATION & CONTACT

See full details of how the IA is supporting its members on corporate governance in the member area.

Contact Sana Mirza-Awan, Ayan Tewari and Lawrence Baker.