ICGN sets sights on emerging markets expansion

The International Corporate Governance Network’s (ICGN) first board appointee from the Middle East, Dr Nasser Saidi, says he wants to push for a new focus on emerging markets within the investor-led organisation that represents more than $18 trillion of assets.

Saidi (pictured), who will chair the ICGN’s membership committee, says he will also spearhead a drive for new members in emerging markets.

While the ICGN claims membership across a broad range of capital markets across the globe, Saidi says that the organisation is under-represented in emerging markets, particularly in Asia, the Middle East and Latin America.

“More wealth is being created, particularly in Asia, but in emerging markets generally,” he says.

“So the ICGN should take a new orientation towards emerging markets.”

Saidi is the co-founder of Hawkamah Institute for Corporate Governance.

He is also the chief economist at the Dubai International Financial Centre Authority, a regulatory body that operates one of Dubai’s financial free zones designed to attract offshore investment.

Hawkamah aims to promote corporate governance in the region and in February partnered with Standard & Poor’s to build a composite stock index of 11 Middle Eastern markets that takes into consideration environmental, social and corporate governance issues.

Saidi says the ICGN has its historical roots in Europe and the US but that the particular concerns of emerging market investors need to be heard.

“What I want to bring to the table is precisely the kinds of issues that are relevant to emerging markets,” he says.

“If you look at the standards, codes and guidelines that typically get developed for corporate governance they are typically developed for highly developed, highly organised markets.

“But they are much less in tune with emerging markets where there are much more family enterprises and state-owned enterprises.”

Along with Saidi, the ICGN appointed to its board Erik Breen, the head of responsible investing and senior vice-president of European fund manager Robeco; and Carol Hansell, a senior partner at Canadian law firm Davies, Ward, Phillips and Vineberg LLP.

Saidi says pressing emerging-market concerns he wants to highlight include: market access for both emerging-market and developed-market investors to each other’s markets; issues to do with minority shareholders; and how markets are classified.

“Morgan Stanley, for example, classifies markets into frontier, emerging and developed categories, which makes a big difference for access by institutional investors,” he says.

“If you are classified as frontier you are not on the map so far as institutional investors are concerned. But the criteria that is typically used may be biased against emerging markets.”

Saidi says sovereign wealth funds in the Middle East are usually passive investors, but as long-term investors they need to take a more active role in the companies they invest in.

Saidi says that sovereign wealth funds and investment funds in emerging markets are long-term investors and they share many of the same interests in ensuring good corporate governance as pension funds and endowments in developed markets.

“The large sovereign wealth funds and investment funds in the Middle East are typically not represented on the boards of the companies they invest in,” he says.

“I think that should change, because they are looking at things as purely portfolio investors and being very passive, and as a result their interests are not being represented.”

While acknowledging that the Middle East and many emerging markets are still developing corporate governance practices, Saidi says that increasing the number of independent directors and improving board expertise are areas that need to be focused on.

Particularly where there was a predominance of family-run companies, having independent directors was a vital step towards improving corporate governance, Saidi says.

Along with Saidi, the ICGN board also has emerging market representation through Sandra Guerra, the founding partner of Better Governance, a Brazilian-based corporate governance consultancy.

The three new ICGN directors succeed Rients Abma from Dutch-based corporate governance forum Eumedion; David Beatty, from the Rotman School of Management; and Mark Preisinger, from Coca-Cola Company US.