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Investors collaborate on governance guide

A practical guide to good governance for pension board trustees was one of the results of the Rotman ICPM Board Effectiveness Program which included participants from 21 funds from nine countries.

The program, the first of its kind to be aimed specifically at board members of pension funds and other long-horizon investment institutions, looked at the functionality of boards, examining when they get stuck and why, as well as the right way for a board to approach strategy, planning and execution.

The impetus for the program came from the desire of the program’s academic director, Keith Ambachtsheer, to provide help to pension fund boards to overcome areas where they may be dysfunctional, which he believes arise from a desire to implement rather than oversee.

The program asked participants to submit in advance the top challenges facing their boards. This revealed good governance and sensible investment beliefs as the two of the key challenges.

As a result of the program, which is collaboration between Rotman Executive Programs and the Rotman International Centre for Pension Management, a plan was developed for trustees to use as a guide.

The good governance advisory team decided on three key steps to implementing a governance improvement program:

  1. Create a current board skills/experience matrix and document board member roles and behaviours.
  2. Revisit the organisation’s mission and mandate, formalise board processes and agree on board norms and behaviours.
  3. Implement the roadmap through updating board policy documents, through internal board bonding sessions and external board training.

Similarly participants developed a step-by-step guide with regard to sensible investment beliefs and organisation design that included:

  1. Investment beliefs should be explicit
  2. If you have scale then insource
  3. Insource in stages, with public equities first
  4. Prepare the ground for the required compensation plan
  5. Build capacity for internal management.

The other challenges nominated by the board included robust risk management, effective stakeholder communications, and financial sustainability.

The program will be held again next month, and is already sold out, but to register for future offerings visit www.rotman.utoronto.ca/icpm