US Stewardship and Corporate Governance framework launches
The Investor Stewardship Group, a collective of some of the largest US-based institutional investors and global asset managers, along with several of their international counterparts, have launched the Framework for US Stewardship and Governance.
The initiative aims to establish a framework of basic standards of investment stewardship and corporate governance for US institutional investor and boardroom conduct.
The Investor Stewardship Group represents some USD17 trillion in assets under management, largely comprising the retirement and long-term savings of millions of individual investors around the world, and is being led by the senior corporate governance practitioners at institutional investor and investment management firms.
At launch, the Investor Stewardship Group comprises BlackRock, CalSTRS, Florida State Board of Administration (SBA), GIC Private Limited (Singapore's Sovereign Wealth Fund), Legal and General Investment Management, MFS Investment Management, MN Netherlands, PGGM, Royal Bank of Canada (Asset Management), State Street Global Advisors, TIAA Investments, T Rowe Price Associates, ValueAct Capital, Vanguard, Washington State Investment Board, and Wellington Management.
“In markets around the world, there are well-established governance and stewardship codes. The Investor Stewardship Group’s goal is to codify the fundamentals of good corporate governance and establish baseline expectations for US corporations and their institutional shareholders,” says Anne Sheehan (pictured), director of corporate governance at the California State Teachers' Retirement System. “The group brings all types of investors together and enables us to speak with one voice on these fundamental issues.”
The initial standards focus on corporate governance principles for listed companies and investment stewardship principles for institutional investors. Taken together, the standards form a framework for promoting long-term value creation for US companies and the broader US economy.
“This initiative reveals the depth and breadth of agreement amongst institutional investors,” says Rakhi Kumar, managing director and head of asset stewardship at State Street Global Advisors. “The stewardship principles encourage all investors to take responsibility for owning the stewardship process and being accountable to those whose assets they manage. We encourage all institutional investors to join the Investor Stewardship Group to further these corporate governance and stewardship principles.”
Noted Glenn Booraem, principal and fund treasurer at Vanguard, says: “We believe that the principles detailed in the framework will further the productive dialogue and, most importantly, continue to drive positive change among institutional investors and the companies in which they invest. By articulating this set of shared behavioural expectations, we seek to promote our common objectives to create sustainable, long-term value for all shareholders.”
The framework goes into effect on 1 January 2018 to give US companies time to adjust to its standards in advance of the 2018 proxy season.