New governance guidelines for fiduciary investors

The International Corporate Governance Network has published an updated set of guidelines for fiduciary investors to help assess and control corporate risk in their portfolios.

The guidelines, launched at last week’s ICGN mid-year conference in San Francisco, provide more detail in the recommendations for funds in their assessment of companies in which they invest and ways to improve the governance of those companies.

The mid-year conference was hosted by the two big Californian public sector funds, CalPERS and CalSTRS, and featured a discussion between Philip Angelides, the chair of the US Financial Crisis Inquiry Commission looking into causes of the global financial crisis, and Lord John McFall, former chairman of the House of Commons Treasury Select Committee and member of the Future of Banking Commission in the UK. There were 25 speakers at the one-day event, on October 7, which was preceded by a member dinner. Investors in the room were said to represent almost $10 trillion in assets.

Anne Stausboll, chief executive of CalPERS, said the ICGN had made great strides in advancing the goals of the conference, which were to bolster financial sustainability and restore market stability, corporate value and public trust.

Jack Ehnes, chief executive of CalSTRS, said governance and sustainability were significant risk factors facing investors, comprehensively addressed by the conference and the launch of the new corporate risk oversight principles.

Integration of ESG and sustainability related issues into a pension fund’s investment process was a recurrent theme in the various conference sessions.

The new principles are designed to be observed, voluntarily, alongside previous principles, primarily from the 2009 Global Corporate Governance Principles publication which included advice on risk management, effective company board behaviour, responsibilities of boards and also how they should handle whistle-blowing behaviour.

There are about 500 members of ICGN – mainly big pension and other funds – in 50 countries.

The latest publication provides further detail on: guidance for the internal board and company process on corporate risk oversight; guidance on investor responsibility in the context of corporate risk oversight; and, guidelines on board and company disclosure of the risk oversight process.